New Jersey Could Be First American State to Legalize Online Gambling

In 1976, New Jersey became one of the first American states to permit casinos under American gambling laws. These, however, had been limited to Atlantic City. This city has been hard hit by the global economic crisis and increased competition enabled by liberalization of gambling laws throughout the nation; casinos in A.C. have just reported a 24% decline in profits for the third quarter of 2010. With this loss of profit, there has also been a decline in tax revenue.

Now State Senator Ray Lesniak has been pushing to legalize internet gambling to aid New Jersey’s failing gambling industry. A new bill, labeled LS490, is being positioned as the solution to New Jersey’s economic troubles. This new bill will enable online gambling in the USA. But there is a catch. Only New Jersey state residents and foreigners will be able to play.

Americans in other states will be excluded to avoid conflict with the Unlawful Internet Gambling Enforcement Act (UIGEA), a federal law which prohibits financial transactions between American consumers and online gambling sites. As long as the online gambling does not cross state borders, the federal government should be unable to prosecute participants.

It is noteworthy that this bill, in its current form, will also allow foreigners to enjoy these online gambling sites. On the one hand, this suggests it is possible to cross a national border without crossing a state border. On the other hand, it suggests that foreigners should have more rights than Americans within the United States, or at least in New Jersey.

Regardless of this peculiarity, the New Jersey Senate Budget Committee passed LS490 with a vote of ten in favor and only one opposed. The bill will now face scrutiny by the Assembly and the State Senate. The bill is expected to receive its final required approval early in 2011. This would make New Jersey the first state to permit American internet casinos.

Upon passing, LS490 is expected to create thousands of new jobs while securing 13,000 endangered jobs at the state’s failing race tracks. Moreover, it is expected that money and jobs which currently goes to foreign casinos will remain within the Atlantic City and its augmented economy. Should the law pass, the state of New Jersey will collect 20% of all revenue from the licensed online gambling companies. Analysts forecast a contribution of $50 million to the state each year.