Democrats in New Jersey back Governor’s conditions on to internet gambling

Approval of online gambling in New Jersey – due to come to a vote by month’s end – is expected to be linked to increased funding to help residents with gambling addictions.

Democratic leaders of both houses in Trenton announced Monday they support that change and other stipulations Gov. Chris Christie made in his conditional veto of the bill, A2578/S1565, which would make New Jersey the third state to allow Internet wagering.

Under the legislation, Atlantic City casinos or companies working in conjunction with a casino could set up a restricted area on site to house computers, servers and other equipment needed to operate online games. People would set up an account using a credit or debit card and place bets using the money from this account. Those licensed to operate online gambling would have to verify that the bets are being placed from within New Jersey. Revenues from online gambling would be taxed like other casino revenues.

The lawmakers are taking this unusual step of agreeing to the governor’s conditions – in 2011, the Legislature did not concur with any of Christie’s vetoes – to get additional revenue for the state, which has, by some reports, a shortfall of some $500 million in the current budget, as well as to help Atlantic City.

Both houses of the state Legislature have scheduled votes on the bill for Feb. 26, the same day on which Christie is to deliver his budget address. 

“It cannot be stressed enough how important it was that New Jersey be ahead of the curve on internet gaming,” said Senate President Steve Sweeney, D-Gloucester, in a statement. “I appreciate the governor’s having agreed to allow it to move forward … The sooner we bring internet gaming to New Jersey, the better off Atlantic City is going to be.”

While seven Democrats from both houses extolled the economic boost online gaming would bring to the economy of Atlantic City and to the state, none mentioned the potential impact it could have on people with a gambling problem.

Donald Weinbaum, executive director of the Council on Compulsive Gambling of New Jersey, said the number of people in the state with a gambling addiction – estimated at 350,000 — “would certainly increase with Internet gambling.” Weinbaum has been arguing before the Assembly Budget Committee for additional funding for the council and for gambling counseling and treatment services. He seemed to have found sympathetic ears among the committee’s Democrats, who vowed to examine the issue as part of the upcoming budget process.

But Christie’s conditional veto made that funding mandatory if the legislation is to become law.The bill, which would allow any casino game offered in Atlantic City to be played online by New Jerseyans and possibly also by those from outside the state, requires each licensee providing online games to pay $150,000 a year to fund compulsive gambling-counseling services. In his veto, Christie increased that amount to $250,000 per licensee, with $110,000 allotted specifically for treatment and the rest going to the council.

It is unclear exactly how much more funding will be provided for gambling-addiction programs because it will depend on how many casinos apply for licenses to offer Internet wagering and whether they apply individually or as a group, according to Weinbaum. If each of the dozen Atlantic City casinos were to individually offer online gaming, the council would get a tremendous boost – an additional $3 million for its programs and treatment. That’s more than four times its current state allocation of $860,000, which includes a total of $215,000 statewide for treatment.

“Our providers are reporting that they would need twice that (the current $215,000) to keep up with current demand,” Weinbaum said. “More than half of the state’s counties lack any treatment services, so there also is a substantial unmet need.”

Still, it would be a paltry sum compared to the amount the state could take in. While the nonpartisan Office of Legislative Services was unable to provide an accurate fiscal estimate, due to a lack of reliable data, it noted that other sources estimated the state could take in between $46 million and $472 million in tax revenues from Internet gambling.

Weinbaum said he was grateful Christie proposed the additional funding and was taking the issue of gambling addiction seriously. Citing the state’s budget problems, the governor cut $120,000 in funding to the council on taking office three years ago.

Christie vetoed a similar bill in March 2011, citing legal and constitutional concerns. In his conditional veto last Thursday, the governor said his proposed changes would balance “the benefits of job creation, economic development, and the continued revitalization of Atlantic City against the risks of addiction, corruption and improper influence.”

Calling for an annual analysis of the potential harm of online gaming to be funded by the licensees, Christie added: “Our State cannot carelessly create a new generation of addicted gamers, sitting in their homes, using laptops or iPads, gambling their salaries and their futures.”

He also called for periodic reviews of the societal impact of internet gambling. New Jersey has not funded a gambling prevalence study since 1990, according to the Alberta Gambling Research Institute.The Poker Players Alliance, which backs the bill and had been urging members to lobby Christie to sign it, released a report stating that “Extensive research conducted in recent years proves that online gaming does not increase the social risks and damage of problem gambling.”

It cited two European studies and one by the Harvard Medical School to back up this claim. The most recent American study, released by the Iowa Department of Public Health 17 months ago, speculated that legalized Internet gambling “could exacerbate problems” for Iowans with or at-risk of developing a gambling problem but ultimately said there was not enough information to determine “the size and scope of potential social and public health impacts.”

Weinbaum said emerging evidence in the field indicates that the greatest potential problem for New Jerseyans is that “the broad array of casino games proposed to be offered in New Jersey increases the risk for addiction.”

The state is scrambling to be among the first offering legal online gambling in the United States since the U.S. Department of Justice issued an opinion in late 2011 that Internet lottery ticket sales and gaming are legal provided the actual betting occurs within the state’s boundaries.

Delaware is looking for bids from vendors to operate a centralized internet gaming system that it hopes to be in play by September 30. Like New Jersey, Delaware is looking to operate a broad array of games and offer them only to those located within the state’s borders. Nevada has issued online poker licenses but none of the sites are up and running yet. According to the National Conference of State Legislatures, California, Hawaii and Mississippi also have legislation pending to authorize online gambling.

But the practice is proliferating elsewhere. A visitor to the website Online Casino City on Monday found it boasting its ranking of 2,875 online casino and gambling sites and an assertion that 667 English-language sites “accept play from New Jersey.”

“New Jersey’s gaming industry must, like just about everything else in today’s economy, offer an internet option if it’s to remain competitive,” said Assemblyman Vincent Prieto (D-Hudson), one of the bill’s sponsors.

But Weinbaum says more people, and perhaps more young people, will get into trouble with excessive gambling. “For many at-risk and problem gamblers, legal Internet gambling could be the straw that breaks the camel’s back, the thing that pushes them over the edge into a full-blown addiction,” he said. “Some players are going to be caught up in it. I worry about the moms, the grandparents, the working people who now won’t have to make a trip to Atlantic City … How many of them are going to lose their savings, their houses, and their livelihoods in order to feed their gambling addiction?

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NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.