Finance

New Jersey Becomes 3rd State to Bet on Online Gambling

November 21, 2013
 

New Jersey is poised to become the nation's most populous state to allow extensive Internet gambling, an experiment that state officials hope will lift the fortunes of its struggling casino center, Atlantic City, though how much remains unclear.

A test phase allowing thousands of gamblers to place online bets begins Thursday. If all goes well, the state will officially sanction the gambling on Tuesday for the Atlantic City casinos that contracted with online gambling services. Bettors will have to be physically situated in New Jersey to play.

"In the state of New Jersey, you will be able to play pretty much anytime and anywhere," said Ben Carter, digital director for Betfair, a large British online gambling company working with Trump Plaza Hotel Casino.

The new way to gamble comes at a crucial moment for Atlantic City, where casino revenues as of 2012 had declined by more than $2 billion from the peak in 2006. A new resort that opened last year, Revel, didn't reverse the trend, as the state lost business to gambling options in neighboring states such as New York and Pennsylvania.

Analyses vary widely for how much revenue Internet betting will draw in its first year. The variables are many, including the size of the market, whether banks will process the transactions and whether the state will give the green light to operators for a full launch next week.

Most observers agree online gambling will help Atlantic City and the state, which will take 15% of each online bet—up from the 8% it levies on gambling in physical casinos. Casinos get a cut of online revenues and could attract customers with promotions.

"Obviously it's going to help," said Israel Posner, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at the Richard Stockton College of New Jersey. "It's really an entirely new business."

States have raced to implement online gambling since a 2011 U.S. Department of Justice ruling allowed Internet bets by players within a state's borders. Delaware in 2012 was the first state to legalize online gambling; Nevada and New Jersey followed last February. Nevada allows only online poker; New Jersey will offer a full range of games. Online gambling is legal in Canada and much of Europe.

Online gambling legislation has been introduced in eight other states, with active bills in California, Massachusetts and Pennsylvania, according to Gambling Compliance, an industry publication.

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