New Jersey and the Future of Online Gambling

March 18, 2013

Online PokwerRecently, New Jersey joined the growing list of states that permit some form of online gambling.  Like Nevada and Delaware, New Jersey now permits properly authorized parties to offer online gambling to residents of the state.  The growing willingness of states to permit regulated online gambling is seen by many as a sign of a bright future for the gaming industry.

The New Jersey law permits casinos located in New Jersey to offer poker, blackjack, and slots to New Jersey residents using online systems.  The law does not permit online gambling access for people located outside of New Jersey.

State online gambling initiatives were long impeded by the federal government.  Until recently, the U.S. Department of Justice took the position that online gambling activities violated federal law.  In 2011, the Justice Department abandoned that position in a move that facilitated state action authorizing online gambling.

After the change in policy by federal law enforcement authorities regarding online gambling, states began to consider online gambling programs.  Several states authorized online sale of state lottery tickets.

States including Nevada and Delaware moved to authorize a range of online gambling activities.  It is anticipated that the online gambling operations in those two states will be in service later in 2013.

Some industry observers anticipate that Nevada and New Jersey may attempt to coordinate their online gambling efforts.  Nevada recently enacted legislation authorizing the state to enter into agreements with other states in order to pool their online gambling operations.  Some expect Nevada to attempt to establish an online gambling pool with New Jersey in the future.

Reportedly, a number of the leading companies in the casino industry, such as Caesars Entertainment Corporation, are actively expanding their online gaming operations.  In addition, industry leaders in the online gambling market appear to be moving to take advantage of the emerging state opportunities.

Online gambling company, PokerStars, recently announced that it had agreed to purchase a casino in Atlantic City.  Some observers suggest that this acquisition may be designed, in part, to position PokerStars to offer services under the New Jersey legislation.

Although the U.S. Department of Justice no longer prohibits certain online gambling operations, the Congress has been far less willing to re-consider its opposition to online gambling.  Several Congressional attempts to facilitate online gambling have failed, and it appears unlikely that Congress will support online gambling in the near future.

Led by a handful of states, online gambling opportunities appear to be growing, yet their future remains uncertain.  Although significant opposition to online gambling continues to be present in Congress and in many states, the substantial financial opportunities online gaming offers are highly attractive to a growing number of state governments currently facing dire financial circumstances.

Online gambling’s future may well be dependent on whether the financial desperation of state governments overrides their concern about the potential social and political implications of expanded gambling activities in their jurisdictions.