Lawmaker Looks to Fix New Jersey Liquidity Problem
New Jersey legalized online poker and casino games were legalized in February 2013, and the first sites launched in November of that year. The industry has grown in the four years since, as more sites like PokerStars joined the group of legal operators that are partnered with land-based casinos, and more than $100 million in tax revenue has been collected.
The market, however, is limited. Since only players located within the borders of New Jersey can play on the sites, the potential for growth is somewhat restrained by the state’s own boundaries. In addition, the law required that any participating operators must establish servers in Atlantic City. That restriction has thus far prevented the New Jersey Division of Gaming Enforcement from signing any agreements with other states or territories that would allow the sharing of player pools.
State Senator Raymond Lesniak wants to change that. The Associated Press reported this week that he is preparing a bill to allow gamblers in other regulated jurisdictions outside of New Jersey to play online poker and casino games on sites operating out of New Jersey.
More About the Upcoming Bill
Lesniak’s legislation is currently being written under consultation with online gambling operators and vendors in and outside of the New Jersey market. The goal of the bill will be to lessen the current restrictions to allow the online gambling market to grow and for New Jersey to be a hub of sorts.
The ability to sign interstate agreements is vital for the American online poker market. Poker garners more players when there are more players on the site, more tables and game options, and larger tournaments with more life-changing guaranteed prize money. In the pre-Black Friday era of poker, many sites operated globally and attracted players from around the world, enabling tournaments to offer millions of dollars, very lucrative promotions, and grow a generation of players who competed on the sites for a living. Since Black Friday, however, most sites have been unable to survive in the segregated markets.
The bill in progress will make it easier for New Jersey to combine player pools with sites in Nevada and Delaware, as well as other sites like Pennsylvania that are in the process of legalizing online poker. Further, it would open the doors to countries like the UK by removing the requirement that servers be based in Atlantic City. For the UK Gaming Commission, that may have been the deal breaker in recent liquidity talks, and Lesniak hopes to remove that barrier.
According to Lesniak, he is anxious to grow the market and build on the success of the last four years. “I’ve changed my mission from making New Jersey the Silicon Valley of internet gaming to the Mecca of internet gaming,” he told the AP. “Online gaming has helped Atlantic City revive its casino sector with a success that we can expand in ways that will generate more revenue, create jobs and fuel technological innovation in gaming.”
Lesniak is the One to Do It
The first person to sponsor a bill in New Jersey to legalize and regulate online gambling was Senator Lesniak. He took a bill through passage in January 2011, though that was vetoed by Governor Chris Christie due to concerns about federal law restrictions. However, after the US Department of Justice issued a new ruling on the wire act in November of 2011, which gave states the power to legalize online gambling and lotteries as they wished, Lesniak was prepared to try it again. He was a key supporter of the legislation that passed in 2013 and became a thriving new industry for the state.
Lesniak was also a proponent of PokerStars’ entry into the New Jersey market, which eventually allowed for more growth by bringing the globally-recognized name into the action. He has been an advocate of expanding the industry even further by allowing for interstate liquidity and making an effort to attract gambling operators to establish servers and business hubs in Atlantic City. He saw a possible opening for development and worked with entities like the UK Gaming Commission to make it happen.
The greatest obstacle, though, was the server requirement, as it proved to be a conversation ender with the UK and others. His announcement of the new bill is his way of remedying that and building on an already successful endeavor.
The move may also be a way of reaching out to Nevada. There are barriers to New Jersey and Nevada entering into an interstate compact as the latter has only legalized online poker – not casino games – and does not allow PokerStars into its market. If New Jersey can make the concession about the server location, it could prompt Nevada to make a long-discussed change of adding online casino games to its repertoire. While online poker is the primary avenue for liquidity sharing at the moment, sharing prizes and jackpots for online casino games is a long-term goal.
Further, it has become evident that neighboring Pennsylvania still has some reservations about legalizing online gambling. New Jersey has already shown the industry’s viability and safety, but another step in the direction of expanding the industry could entice more states to join. New York, Michigan, and Illinois seriously considered the issue in 2017 as well, and those states might have more incentive to pass that legislation in 2018 if they see more opportunities for partnerships and growth.