New Jersey law will benefit Nevada

Last month, Nevada won the race to legalize intrastate online gambling. And Nevada won again this week when New Jersey became the second state to authorize Internet wagering.

Yes, the two states will have different regulatory structures and different cuts from online play. Each state took the bold step out of self interest, as a way to its gaming market into a growing, potentially limitless customer base.

But the world’s largest gaming companies are headquartered in Nevada. And those companies have a presence in New Jersey, where online gamblers will have to establish accounts with brick-and-mortar casinos before they can play on the Web. Nevada’s casinos largely have already entered partnerships with Internet poker companies to make sure they’re ready to launch online play the moment the states say “Go.”

Now that two states have legal online gaming, the next step is negotiating a compact that allows Nevada and New Jersey players to wager against one another. The new laws of both states allow such compacts as a way around federal law, which confines Internet wagering within each state’s borders. Although Nevada has the regulatory and industrial might to lead Internet gaming — more than a dozen online gambling operators and vendors already have licenses — the state’s small population won’t provide nearly enough players to make the undertaking worthwhile.

California and Massachusetts have online legislation pending before their legislatures. In a Wednesday report, Fitch Ratings said other states will quickly follow Nevada and New Jersey to get in the game.

“The potential agreements to pool players between states as contemplated by the Nevada bill can likely be attributed to similar practices in the lottery industry, such as Powerball,” the Fitch Ratings report said.

As we have written before, federal legislation that provides a single, national regulatory framework for online poker is a preferable solution. But who knows when that might arrive? Nevada was wise to step forward and lead. Regardless of how the growth of the online poker industry plays out, Nevada stands to benefit greatly. There is no stuffing this genie back in its bottle.