Five-Year Cut Threatens to Destabilize Online Gaming In New Jersey

July 12, 2023
Back
Almost two weeks after the New Jersey legislature and Governor Phil Murphy slashed the extension of the state’s internet gaming operations from ten to five years, no one still seems to know why.

Body

Almost two weeks after the New Jersey legislature and Governor Phil Murphy slashed the extension of the state’s internet gaming operations from ten to five years, no one still seems to know why.

“I don’t understand it; I don’t think anybody does,” said Ralph Caputo, a primary sponsor of Assembly Bill 2190, which had initially called for a ten-year extension of internet gaming until at least 2033.

The New Jersey Assembly Budget Committee passed an amendment to Caputo’s bill on June 27 calling for just a two-year extension.

The extension was increased the next day to five years following pushback from lawmakers and lobbyists representing the internet gambling industry.

“The two [year extension] really would have been disastrous,” said Caputo, a former Atlantic City casino executive who served as chair of the Assembly’s gaming committee before he resigned in March to take a job in the health insurance industry.

“I think five [years] is a compromise that can be amended and I anticipate — without being there — that there will be a push to extend it another five,” Caputo told VIXIO GamblingCompliance.

Ray Lesniak, a former New Jersey state senator who co-authored the original internet gambling law in 2013, agreed that five years is much better than two.

“I’m not concerned with a five-year sunset, but two years sends a much different message,” Lesniak said.

Still, whoever proposed the cut “is playing with fire,” said a former New Jersey gaming official who requested anonymity.

“The reason the internet gambling industry has been such a success in New Jersey is because of its stability,” the gaming official said.

“This reduction destabilizes the market and discourages investment. It’s not inconceivable that internet gambling companies could leave New Jersey for other states.”

There is no sign yet, however, that online casino operators in New Jersey are reconsidering their investments.

“By every account, New Jersey iGaming has been incredibly successful in the state,” FanDuel spokesman Nathan Click told VIXIO in an email.

“As more states face uncertain economic headwinds, New Jersey has shown iGaming can help bring more funds into the state while combating unsafe and illegal offshore casinos,” Click said.

Caputo said he does not think the reduced extension of lawful online gaming until 2028 is laying the predicate for raising the current state tax rate of 15 percent in New Jersey.

Since the two-year amendment emerged, there have been persistent rumors that the reduction might be connected to the interest of legislative leaders in raising the tax rate to help fund a property tax reduction.

“The tax rate could be changed at any time,” and is not dependent on legislation to extend statutory approval, Caputo said.

But Caputo said he is concerned that the reduction of the internet gambling extension could result in less money for New Jersey’s Casino Revenue Fund, which provides aid for senior citizens.

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.