Internet Gambling Begins November 26

This past February, New Jersey governor Chris Christie signed a bill legalizing online gambling in the state of New Jersey.  The bill permits the online playing, for money, of any game currently offered at Atlantic City’s twelve casinos, including poker.  The bill includes a 10-year “probationary period”, after which the online gambling program will be reviewed to gauge its impact on problem gambling and a tax hike on casinos’ online winnings from 10 to 15 percent.  The bill also permits New Jersey casinos to accept bets from persons not physically present in the State if the New Jersey Division of Gaming Enforcement determines that doing so will not violate federal law or such betting is conducted pursuant to a reciprocal agreement that does not violate federal law.  Under the current law, only casinos with a physical presence in Atlantic City (or their “internet gaming affiliates”) are eligible for internet gaming licenses, however, should that restriction be lifted, online gaming could pose a serious threat to brick-and-mortar casinos given, among other factors, the relative differences in overhead.

In October, Borgata Hotel Casino & Spa became the first casino in New Jersey’s history to receive an Internet Gaming permit.  Since then, six other casinos have received permits (the Golden Nugget Atlantic City, Trump Plaza, the Trump Taj Mahal, the Tropicana, Caesars, and Bally’s).  By contrast, PokerStars, the largest online poker cardroom in the world and in partnership with Resorts Casino in Atlantic City, was recently denied a license.  According to reports, the New Jersey Division of Gaming Enforcement has become increasingly concerned about the open criminal case against PokerStars founder Isai Scheinberg, who has yet to face charges arising from his indictment of April 15, 2011, brought by the U.S. Department of Justice.

In late November, casino mogul Sheldon Adelson announced his plans to lobby Congress to ban internet gaming.  New Jersey state senator Raymond Lesniak criticized Adelson’s remarks, and later that week unveiled proposed legislation that would expand the current online gaming regime by allowing international online gambling companies to set up operations in New Jersey while taking bets from foreign gamblers.  According to reports, Senator Lesniak plans to introduce his bill in December.

New Jersey casinos and casino affiliates that obtain Internet Gaming permits from the Division of Gaming Enforcement will be able to offer full Internet gambling at 9:00 a.m. on November 26, 2013.

Sports Betting Remains Illegal in New Jersey

Despite legislative efforts to legalize sports betting in New Jersey, the practice remains illegal following a recent decision from the Third Circuit Court of Appeals.  In August 2012, the NCAA, NFL, MLB, NBA and NHL sued New Jersey in NCAA v. Christie, alleging that the plan to allow gambling violates the Professional and Amateur Sports Protection Act (“PAPSA”) and threatens the “character and integrity” of sporting events.  In a motion to dismiss filed September 7, 2012 New Jersey asserted that the leagues have no standing to sue because they failed to allege an injury in fact.  The District Court concluded that the leagues had suffered an injury and could, therefore, sue.  The State appealed to the Third Circuit Court of Appeals, which, in September 2013, affirmed the District Court, determining that the sports leagues have standing to challenge New Jersey’s efforts to implement sports wagering.  The Court concluded that the leagues “are harmed by their unwanted association with an activity they (and large portions of the public) disapprove of – gambling” and so had suffered an “injury in fact.”  The Court relied on, among other things, the Supremacy Clause of the Constitution to hold that PASPA is constitutional.  Under PASPA, according to the Court, a state may entirely repeal any ban on sports wagering - but the state may not authorize sports wagering by law.

New Jersey can seek rehearing by the full Third Circuit, or can petition the Supreme Court of the United States for review of the panel’s decision.  For now, sports betting remains legal only in Nevada, Delaware, Oregon, and Montana.