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New Jersey Allows Online Gambling Tied to Its Casinos 01/03/2013
Police say masked man apparently carrying imitation pistol when he was disarmed and pinned down by Ladbrokes customers

Gov. Chris Christie signed a bill on 26th Feb making New Jersey the third state in the nation to legalize Internet gambling, hours after the Legislature passed a revised bill that made the changes he wanted..

The changes included setting a 10-year trial period for online betting, and raising the taxes on the Atlantic City casinos’ online winnings to 15 percent, from 10 percent. Gamblers would have to set up online accounts with a particular casino.

The bill is expected to bring about the largest expansion of legalized gambling in New Jersey since the first casino began operating in Atlantic City in 1978. Delaware and Nevada have passed laws legalizing Internet betting, which also occurs offshore, untaxed and unregulated. .

“This was a critical decision, and one that I did not make lightly,” Mr. Christie said. “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.”

The idea is to help the struggling casinos by attracting new gamblers who are not now visiting the casinos. “Comps,” like free hotel rooms, show tickets and meals, would be accrued from online play, but would have to be redeemed in person at a casino. The bill will not take effect until the State Division of Gaming Enforcement sets a start date, from three to nine months from now.

Until a year ago, the federal government considered such gambling illegal and targeted online-gambling companies and their partners with criminal and civil lawsuits. But in 2011 the Justice Department reversed itself, prompting many states to consider legalizing online gambling and lottery directors to start selling tickets online.

That process has picked up steam in statehouses and executives' offices this year since an effort stalled in Congress to pass a law allowing online poker. The first regulated online-gambling networks in the U.S. are expected to be up and running this year in Nevada and Delaware.

Their road is likely to be a bumpy one, given the controversial nature of gambling and the variety of competing interests involved, say people involved in the process. In recent years states including California, Iowa and Mississippi have considered legalizing online poker or other forms of online gambling, but those efforts have been stalled by critics' concerns about an uptick in gambling addiction or other social ills, as well as infighting among gambling interests.

Though industry forecasts vary widely, H2 Gambling Capital, which tracks online-gambling markets, estimates that online gambling in New Jersey will generate revenue of $410 million the first year, growing to $590 million after a few years. Of the total, the state of New Jersey will collect a 15% tax.

The bigger opportunity could come from interstate gambling if more states legalize online wagering, but a variety of business and legal complications make that prospect hazy.

In Nevada, where companies are about to set up in-state poker networks, Gov. Brian Sandoval last week rushed to sign a bill allowing the state to enter agreements with other states to pool poker networks.

Such agreements, modeled after lottery compacts that create pooled drawings for games such as Powerball or Mega Millions, could be particularly useful for smaller states operating online poker by giving them access to more players.

Many other uncertainties remain as a regulated industry takes shape, such as how much legal online-gambling might cut into the conventional casino business, whether there will be a significant spike in gambling addiction as Internet gambling becomes more accessible, and whether geo-location, age-verification, antimoney-laundering and other monitoring systems will prove adequate.

Another key question will be whether companies with the most expertise and, in many cases, brand recognition in online gambling will participate in the newly legal market.

The most controversial company is PokerStars, which recently disclosed that it had agreed to purchase a casino in Atlantic City and had applied for a gambling license with New Jersey regulators. The company took poker bets in the U.S. until 2011 and built up an enormous following of eager poker players, contending that its actions were legal.

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