Despite Veto, NJ Likely to Legalize Online Gambling

| by Reason Foundation

By Jacob Sullum

Last week New Jersey Gov. Chris Christie vetoed a bill that would have legalized online gambling within New Jersey. His main objection was that the bill violated the New Jersey Constitution, which limits casino gambling to Atlantic City. He expressed skepticism about "a legal fiction deeming all wagers to have 'originated' in Atlantic City" because the websites would be run by casinos there, from servers within the city limits. (The operators of gambling sites based in other countries make a similar argument about bets placed by Americans, which the U.S. Justice Department has always rejected.)

Gambling law expert I. Nelson Rose says Christie's constitutional argument is plausible but argues that the governor's real concern is political: He wants to run for the Republican presidential nomination at some point and is leery of alienating social conservatives. That may be true, although Rose seems off base in locating anti-gambling sentiment among "the extreme conservatives of the 'tea party,'" which focuses on fiscal policy and generally has avoided social issues. As Rose notes, "legal gambling has become more politically acceptable, even to right wingers."

In any event, The Wall Street Journal suggests that Christie, who proposed asking voters to approve online gambling in a referendum, is open to legalization:

Lawmakers supporting the bill said they were confident they could tweak the proposal to get it in shape for the governor's signature. "I know we're going to be able to get it done," said state Sen. Raymond Lesniak, a Union County Democrat.

Supporters said it was important to get moving before other states got their infrastructure up and running.

"We need to be in the forefront simply because it's going to be the wave of the future," said state Assemblyman John Amodeo, a Republican from Atlantic County. "If it went nationally and internationally, we could make a lot."

The bill is supported by most Atlantic City casinos and by the Interactive Media Entertainment & Gaming Association, a trade group that includes operators of foreign-based gambling sites who hope to break into the domestic market (in this case by supplying software to New Jersey casinos). It is opposed by Caesars Entertainment, which owns four casinos in Atlantic City. The Journal says the company is holding out for "a regulated nationwide system, which would be both more simple to manage and much more profitable for the company."

I discussed the federal crackdown on "unlawful Internet gambling" in a 2008 Reason article. Last fall I noted that brick-and-mortar casinos were warming to the idea of legalizing online gambling.