Christie vetoes New Jersey egaming bill
Governor vetoes S490 bill scuppering New Jersey's chance of becoming first US state to regulate online gambling.
Republican Governor Chris Christie has vetoed the egaming bill, despite agreeing an earlier deal this morning with sponsor Senator Lesniak to attach conditions and fast track it into law next week, scuppering New Jersey’s chances of becoming the first US state to regulate online gambling.
In an official press release Christie called the bill “inconsistent” with his administration’s commitment of revitalising Atlantic City’s tourism and gaming industries”
Christie, who is said to have Presidential ambitions, praised “the intent” of the bill to make New Jersey a more competitive gaming jurisdiction, but also cited numerous concerns (see box below) “as it relates to the New Jersey State Constitution”, including potential allowance of gambling outside of Atlantic City’s borders and the continuation of a public subsidy for horseracing.
“I wholeheartedly support the intentions of the legislature to make New Jersey a more competitive gaming jurisdiction. However, I do not believe that internet gambling as contemplated in S490 is a viable option for continuing the progress that we have made so far in reversing the fortunes of the casino industry in New Jersey.”
Lobby group Interactive Media Entertainment & Gaming Association (iMEGA) and Democratic Senator Raymond Lesniak were assured this morning by Christie’s office that the Governor would conditionally veto the bill on the proviso that both Christie and Lesniak decide on a plan to prevent illegal gambling agents from setting up near the state’s borders. Christie was said to have been concerned illegal operators, fronted by a New Jersey resident in a single account, would set up near state lines and operate as residents. It was then agreed Christie would partner with Lesniak and add his name to the bill with the Senator re-introducing the bill to both houses next week.
“Earlier today it was our understanding that Governor Christie’s office wanted to conditionally veto the bill so they could work on ensuring internet gambling would not be set up in places such as internet cafes, bars and restaurants to create de facto gaming halls outside of Atlantic City,” Joe Brennan Jr, iMEGA president said.
“I think the eventual addition of that legislation here or in other states, [would have been a] good a contribution from the Governor. The negotiations that he [Christie] had with Senator Lesniak didn’t include sending the bill to a referendum.
However, sources close to the matter told eGaming Review Christie had changed his mind at the last minute due to possible pressure from opposing lobbyists working for one US land-based operator and one offshore operator.
Brennan added the veto was not a constitutional issue. “We claim there is not. He [Christie] is claiming it is a constitutional question, but he contradicts himself, because three weeks ago, he endorsed the exchange wagering bill.
“The [exchange wagering] bill expanded an internet gambling franchise that was not authorised by referendum, it was an expansion of gaming that was authorised by the legislature. The language and the philosophy behind S490 was the same, but a couple of weeks ago, the Governor was saying that was fine, he endorsed that kind of expansion.
“Then today, for some reason, he is saying in his veto statement that now, for some reason, it has to go to the voters of the state. So you have to ask the governor and his counsel, why the inconsistency?”
Christie’s reasons for the veto (see below) echoed those stated by PartyGaming CEO Jim Ryan in his company’s results presentation this morning as to why such an outcome was likely. Ryan said that: “Consistent with our conservative forecasting, we have indicated that he will not likely sign the bill as there are constitutional issues. The specific issue is the location of servers in Atlantic County, while the actual consumer will mainly be located outside of AC. The constitution of the state requires that all gaming take place in Atlantic County.” Ryan also suggested that the possible processing of financial transactions outside NJ could require coordination with the federal Department of Justice.
According to the New Jersey legislature, this now means the vetoed bill will have to once again be proposed and debated in committee, pass through both the Senate and the Assembly by a two-thirds majority followed by a public referendum in November for it to become law.
Earlier this year Christie signed bills to legalise exchange wagering and single-pool wagering. Christie (pictured) said in a statement after applying his signature to bills S-2229 and A-2926 on 1 February: “These measures represent the next steps in following through on my administration’s commitment to securing a strong, independent, self-sufficient horse-racing industry in New Jersey.” It is unclear, however where the veto of the egaming bill leaves the Garden State’s ailing horse racing industry. The bill, according to its backers, would have generated millions of dollars in taxes, subsidies for New Jersey’s tracks and created thousands of jobs.
S490 – Absolute veto: Christie’s key concerns
“The state Constitution explicity requires casino gambling to be restricted to the territorial limits of Atlantic City. S490 seeks to avoid this requirement by deeming all internet wagers as being placed in Atlantic City, even if the person placing the bet is outside of the boundaries of the city. In my view, the creation of legal fiction deeming all wagers to have ‘orginated’ in Atlantic City cannot overcome the clear and unambiguous language of the state Constitution.”
“The bill will lead to expanding casino gambling outside of the territorial limits of Atlantic City.”
“The bill requires that the revenue be used to subsidise horseracing purses. My administration is committed to making horseracing a self-sustaining industry without state subsidy.”
“There are several significant legal obstacles that pose major impediments to the implementation of internet gambling in New Jersey as contemplated by this bill.”
“Nothing contained in the legislation would prohibit commercial establishments outside of Atlantic City such as bars, nightclubs and restaurants from offering internet gambling potentuially leading to the creation of commercial gambling locations outside of Atlantic City.”