New Jersey Governor Chris Christie signed legislation authorizing online gambling in the state, clearing the way for Internet betting to begin this year.
The governor, a first-term Republican seeking re-election, signed the bill shortly after it passed the Assembly and Senate with changes he had sought. He said online gambling will help the state’s struggling casino industry.
“This was a critical decision, and one that I did not make lightly,” Christie said in a statement. “But with the proper regulatory framework and safeguards that I insisted on including in the bill, I am confident that we are offering a responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole.”
Christie conditionally vetoed a bill on Feb. 7 that would have allowed state residents to bet online in games run by Atlantic City casinos. He sent the measure back to lawmakers with recommended changes, including a time limit, a tax-rate increase, and more money for compulsive-gambling programs.
Online gambling in New Jersey could be a $1.5 billion annual business in five years, Dennis Farrell, a casino analyst at Wells Fargo Securities, said in an investor note Jan. 24.
“All New Jersey license holders will benefit, but properties with strong brands and gaming facilities will likely see the most upside,” Farrell said.
Borgata Hotel Casino & Spa, a joint venture between Boyd Gaming Corp. and MGM Resorts International, and Caesars Entertainment Corp. are the companies best positioned to capture online business in New Jersey, Farrell said.
New Jersey is looking to fend off competition as nearby states opening casinos and others pursue online gaming. Senator Raymond Lesniak, an Elizabeth Democrat who sponsored New Jersey’s bill, has said Internet gambling offers the best chance to do so. Last week Nevada Governor Brian Sandoval signed a measure legalizing such gaming in his state and opening the door for agreements with other states.
“The fact that Nevada had moved down this road made it more likely Governor Christie would be tipped over the edge,” said Simon Holliday, director of the U.K.-based gaming research firm H2 Gambling Capital. “Both of them have a vision of getting out there first, becoming some kind of hub for interstate pooling of liquidity.”
Borgata is the top-grossing single property in Atlantic City, while Caesars is the largest operator with four casinos, according to Bloomberg Industries data.
The Nevada legislation prompted a rally in the stock of Zynga Inc., the biggest maker of online social games. The shares climbed 7.5 percent Feb. 25 amid investor optimism that other U.S. states would follow suit and allow Internet gambling.
Christie’s recommended changes included raising the state’s share of bets to 15 percent from 10 percent and establishing a 10-year time limit, after which the legislature would have to reauthorize the bill. The first online bets should be taken by September, Lesniak has said.
In New Jersey, casino revenue fell 8 percent to $3 billion in 2012, the sixth straight annual decline, according to state’s Division of Gaming Enforcement. Nevada gaming revenue increased 1.5 percent to $10.86 billion last year, according to Bloomberg Industries data.
© Copyright 2014 Bloomberg News. All rights reserved.