Nevada and New Jersey Jockey for Online Gambling Revenue
By Jim Malewitz, Staff Writer
Looking to stay a step ahead of New Jersey, Nevada Governor Brian Sandoval is urging lawmakers to quickly pass legislation that would expand online gambling and allow the state to reap millions more in tax revenue.
On Friday (February 8), one day after Governor Chris Christie gave conditional support to a bill that would open up New Jersey to gambling on the Internet, Sandoval released a statement saying “the need to act quickly has become even more important.”
Nevada and Delaware are the lone U.S. states that allow online gambling, but only inside state lines. The Nevada legislation would allow Sandoval to enter into agreements with other states, drastically expanding the market.
“This bill is critical,” he said.
In New Jersey, Christie vetoed similar legislation applying to Atlantic City, but said he would sign a version that included “commonsense safeguards to limit risks of gambling addiction, corruption and improper influence.”
Christie’s proposal would require elected state officials to disclose connections to operations seeking licenses, while barring them from working for such companies or affiliates. He also proposed raising a tax from 10 percent to 15 percent, and sending more money to programs that treat gambling addiction. Each year, the state would study the potential harms of the expansion.
“Our State cannot carelessly create a new generation of addicted gamers, sitting in their homes, using laptops or iPads, gambling their salaries and their futures,” Christie said.
Senator Raymond Lesniak, the bill’s sponsor, called the changes “minor,” according to Bloomberg, and said he expects the revised bill to show up on Christie’s desk by March, with the first online bets coming in September.
New Jersey and Nevada aren’t the only states jockeying for status in online gaming with hopes that revenues will alleviate budget strains.
At least five other states — California, Hawaii, Iowa, Illinois and Mississippi — have introduced legislation that would legalize the games, according to the National Conference of State Legislatures. The push follows the U.S. Department of Justice’s announcement last December that the Wire Act, which prohibits types of interstate wagering, applies only to a “sporting event or contest.” Other types of gambling, such as online poker — previously thought to be illegal — would fall outside its scope.
It’s not clear how much money the move would yield for states. Lesniak has said his bill — without Christie’s changes — would yield $475 million each year. Delaware projects it could take in $3.75 million in its first half year. In Iowa, a state study found annual revenues could range from $3 million to $13 million.
But most states fear those revenues will be reduced as Congress weighs whether it should regulate the industry — a move they describe as a “power grab.” Last year, U.S. Senator Harry Reid, a Nevada Democrat, pushed a plan that would have regulated and taxed the games, sending revenue to states. But it would have barred states from creating a broad category of online games imitating those found in casinos, such as slot machines.
The National Governors Association criticized that effort last October in a letter to Congressional leaders.
“As you know, states that authorize gaming in whatever form derive significant revenues critical to help fund programs for education, senior citizens, military veterans, and other important services,” said the letter, signed by Pennsylvania Governor Tom Corbett and Kentucky Governor Steven Beshear. “We urge Congress to engage with us during the entire legislative process on matters like this that could preempt or otherwise alter the authority of states.”