New Jersey Lawmakers Advance Ten Year Renewal Of Internet Gaming

June 23, 2023
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A bipartisan bill making its way through New Jersey’s Senate would allow online casino gambling to continue for another decade in the state, ensuring hundreds of millions of dollars in state revenue, according to state fiscal analysts.

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A bipartisan bill making its way through New Jersey’s Senate would allow online casino gambling to continue for another decade in the state, ensuring hundreds of millions of dollars in state revenue, according to state fiscal analysts.

Senate Bill 3075, and its companion measure Assembly Bill 2190, amends the existing authorization and extends it for an additional ten-year period to 2033. Lawmakers first legalized iGaming in New Jersey in 2013 but did so only on a temporary, 10-year basis.

The Senate Budget and Appropriations Committee voted 12-0 last week to approve S3075, which is sponsored by Republican Senator Vince Polistina, and now awaits a full Senate vote. The bill still needs to be approved by the Assembly, before heading to Democratic Governor Phil Murphy to be signed into law.

On Thursday (June 22), A2190 was also approved unanimously for a third time in committee — sending it to the Assembly floor for a vote. Lawmakers have until June 30 to pass a bill to extend legal iGaming.

“Internet gaming has kept New Jersey at the forefront of an evolving gambling industry,” Polistina said in a statement.

Polistina added that the extension of the current law would “ensure stability” in the industry.

In 2013, New Jersey became just the second U.S. state to regulate and tax online casino games, joining Delaware. Under the current law, the authorization for iGaming is set to expire in November.

In a two-page report, the state Office of Legislative Services (OLS) estimated that in fiscal year 2024, if the iGaming law is reauthorized, New Jersey will receive an additional seven months, or $170m, worth of tax revenues and various fees.

NJ Total annual GGR

The OLS report assumes a five percent growth rate in gross iGaming revenues over the next two years, resulting in an estimated $305m and then $320m in internet gaming tax revenues and various fees in fiscal years 2025 and 2026.

“While it started out slowly in the early years, internet gaming has become an increasingly important revenue stream for Atlantic City casinos generating $6.3bn in revenue since its inception in 2013,” said Jane Bokunewicz, faculty director with the Lloyd D. Levenson Institute of Gaming Hospitality & Tourism at Stockton University in Atlantic City.

“The growth in internet gaming was accelerated during the pandemic when in-person gaming was suspended for three months,” Bokunewicz said.

Through 2019, internet gaming generated less than $500m per year, but in 2020 revenue jumped to $970m, which was followed by $1.4bn in 2021 and $1.7bn in 2022. So far in 2023, iGaming has generated $781.5m in revenue.

On Thursday, the Assembly Appropriations Committee approved A2190 after the bill was unanimously approved on June 8 by the Assembly State and Local Government Committee. The bill was initially approved by the Assembly Tourism, Gaming and the Arts Committee on September 15, 2022.

Hilary Chebra, manager of government relations for the Chamber of Commerce for Southern New Jersey, stressed that as other states introduce iGaming, “we want to make sure New Jersey doesn’t fall behind.”

Currently, there are 31 lawful online gaming websites that are operated under the licenses of Atlantic City's land-based casinos. Since 2013, New Jersey has collected more than $1.06bn in taxes from iGaming.

“Although it is an important revenue stream, casino operators do not benefit as much from internet gaming as they do from in-person gaming,” Bokunewicz said.

Internet gaming is taxed at a higher rate – and effective rate of 17.5 percent compared to 9.2 percent for slot machines and table games at land-based properties – and the revenue must be shared with third-party internet gaming providers.

“Additionally, players betting online from home will not spend money in the hotels, bars, restaurants and night clubs that are part of the in-person casino resort experience,” she said.

So far in 2023, the state has collected $117m from iGaming revenue, compared to $70.6m from slots and tables.

When asked if it was possible if a new $2bn casino-resort could be built in Atlantic City amid the continued growth and popularity of iGaming, Bokunewicz acknowledged the industry had returned to pre-pandemic 2019 levels, but the growth rate for brick-and-mortar gaming has been much slower than that of internet gaming.

“Since the addition of two new casinos in 2018, citywide brick-and-mortar gross gaming revenue has increased by approximately 15 percent in 2022 compared to 2017, yet each of the casino properties have lost market share and have experienced decreases in casino revenue from in-person gaming.”

Bokunewicz said reinvestment in existing casino properties and new investments in non-gaming attractions aimed at bringing new visitors to Atlantic City seems to be the current strategy for improving revenue growth overall.

“It is too soon to know if these diversification and revitalization efforts will be sufficient to support further expansion of the local casino marketplace,” she said.

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