New Jersey governor vetoes online gaming bill

Efforts to legalize online gambling in the United States were dealt a setback Thursday when New Jersey’s governor vetoed a bill that would have made his state the first in the nation to legalize online gaming.

In his veto message, Republican Gov. Chris Christie questioned whether the measure would survive “judicial scrutiny” under the state constitution unless voters were asked to approve the measure through a ballot initiative.

In Nevada, it’s legal for gamblers within the state’s borders to make sports bets remotely by setting up a casino account and downloading software onto a home computer, downloading a cell phone application or by using a pager. Online poker is illegal in Nevada.

Sports wagering using smart phone applications and computers is not illegal because it occurs over private wireless networks and not over the Internet. The gambling also doesn’t cross state lines.

Christie said he had a number of “significant concerns” with the legislation, especially the expansion of casino gaming outside of Atlantic City.

The New Jersey state constitution requires casino gambling to be restricted to the territorial limits of Atlantic City. Christie rejected the argument that by placing servers in Atlantic City, the bill would satisfy constitutional requirements.

Voters approved Atlantic City gambling in 1976. Christie said he was worried the bill would expand gambling “in a manner that is contrary to the public’s sentiment with regard to these activities.”

The bill would have allowed New Jersey residents to place bets through websites operated by casino companies in Atlantic City.

Boyd Gaming Corp. and Caesars Entertainment Corp., both based in Las Vegas, own properties in Atlantic City and would be eligible to run online gaming websites.

“We have certainly been paying attention to it,” Boyd Gaming CEO and President Keith Smith told analysts in a conference call on Tuesday. “We would be a beneficiary of that if it were to go forward, and so we’re prepared to take advantage of it if it goes forward.”

A Boyd Gaming spokesman declined to comment Thursday. Boyd Gaming would establish an online presence in Atlantic City with its Borgata.

“We were concerned the bill would not survive judicial scrutiny under the state’s constitution unless it was approved by the voters,” said Jan Jones, senior vice president of governmental relations with Caesars Entertainment. “We would be supportive of a referendum. But we still a federal solution makes the most rational sense.”

Jones said a federal law legalizing online gambling would establish a specific set of rules and regulations, allowing states to decide on their own whether to opt into a federal program.

Caesars Entertainment’s Atlantic City properties include Bally’s, Caesars Harrah’s, Showboat and Wild Wild West.

“There is no reason why it shouldn’t be legal,” said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. “In the end it comes down to the states need the money and people want to do it.”

Schwartz said once a state legalizes Internet wagering “it’s going to push Nevada into legalizing online gambling.”

Despite Christie’s veto, state legislatures across the country continue to work on similar bills as states try to find new sources of revenues. In Iowa, an online poker bill was approved late Wednesday by the Senate State Government Committee in a 9-6 vote.

The bill, which will now go to a vote in the full Senate and would need approval from the House, would allow casinos in Iowa to offer online poker to residents of the state. Other forms of online gambling are being considered in Florida and California.

“I am not at all surprised by the governor’s decision to veto this bill,” said Richard Bronson, chairman of U.S. Digital Gaming. “It takes time to do the legislation right.”

Bronson’s online gaming technology company, based in Beverly Hills, Calif., is involved in efforts to legalize online gambling in Iowa, Florida and California.

Bronson said he still believes the issue will be solved on a state level.

“This is a states’ rights issue,” he said. “We will see before the end of the year one state will do it. Then it will open the floodgates.”

Contact reporter Chris Sieroty at
csieroty@reviewjournal.com or 702-477-3893.