New Jersey lawmakers have granted online casinos licensed in the state a new lease on life, allowing them to continue operating for at least 5 more years. Gov. Phil Murphy signed Assembly Bill 2190 into law on Friday, June 30, essentially extending the state’s iGaming laws by five years through November 2028.
The 5-year extension of New Jersey’s online casino legislation marks a heated compromise between lawmakers on budget and appropriations committees in the Assembly and Senate.
An original bill by the Senate Budget and Appropriations Committee proposed a longer, ten-year extension, but their counterparts in the Assembly committee drastically cut it down to only two years on Tuesday, June 27. They abandoned their dramatic move a day later after a widespread outcry from business groups, casinos, and their political allies, and instead settled for a five-year reauthorization of iGaming in the Garden State.
While the industry was originally hoping for a full 10-year extension, the compromise of five additional years is better than nothing. There were concerns that without an extension, online gambling laws would expire this November, potentially disrupting the thriving New Jersey iGaming industry.
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iGaming extension bill went through a legislative roller coaster
New Jersey became the first state to authorize online casinos with interactive table games and slots in 2013. Then Republican Governor Chris Christie signed off on the iGaming statute in February 2013 and gambling sites went live seven months later, on November 26, as reported by New York Times.
The amendment of the Casino Control Act’s Article 6C allowed the original batch of casinos operating in Atlantic City to tie their land-based licenses to iGaming. However, the statute was to run for just ten years unless re-authorized through an act of legislation.
Plans to extend the iGaming authorization have been in the works in Trenton for quite some time, with lawmakers hammering out the final touches in the past few weeks.
The original bill S3075 from the state Senate proposed a ten-year extension to New Jersey’s online casino laws which have been in effect for close to a decade now. However, to the surprise of most stakeholders, the Assembly Budget Committee secretly slashed the extension term to only two years, sending a wave of concern and confusion through the gambling industry.
Pushback from business organizations in southern New Jersey, along with casinos and their political friends, forced lawmakers in Trenton to settle for a middle-ground and amend bill A2190 once again to reauthorize iGaming for five more years.
After coming out of the Budget and Appropriations panel, the bill sailed through the Assembly with a 76-2 vote in favor of a five-year extension. Two lawmakers didn’t cast their ballots during the Friday, June 30th Assembly vote.
State senators also embraced the five-year term, voting unanimously (37-0) for bill A2190 to pass. The approved bill was rushed to Gov. Phil Murphy, who signed it into law on the same day.
Bill discussions shrouded in secrecy
Much of the discussions around the online casino gambling extension were shrouded in secrecy. No Assembly member has come out to publicly give the reasoning behind slicing the extension term from the proposed ten to just two years in the first place.
The rationale for the Assembly panel’s change of heart in favor of a five-year extension on Wednesday, June 28, also remains a mystery to many casinos and business groups in Atlantic City. Committee members didn’t give an explanation for both changes, either.
Don Guardian, a former mayor of the seaside gambling resort city and republican Assemblyman, said that his party members were trying to understand what went on behind closed doors.
Some insiders speculate that the Assembly committee’s move may be a strategic bid to gain the upper hand over the seaside gambling resort. This is especially plausible with rumors that New Jersey lawmakers might be planning to hike gambling taxes.
The current tax rate for in-person winnings at brick-and-mortar casinos in New Jersey stands at 8 percent while iGaming and sports betting are taxed at 15 and 13 percent, respectively. These numbers are reasonable, given that cities like Chicago include a city tax on top of the standard state tax on sports betting.
Longer extension key to NJ iGaming leadership
Atlantic City casinos and their political allies believe the 2-year time frame that the Assembly panel has broached earlier in the discussions would have devastated New Jersey’s iGaming industry. They vouched for a longer, possibly ten-year extension, saying it would ensure that the Garden State can maintain its position as the leader in the fast-growing U.S. online gambling market.
According to the American Gaming Association (AGA), New Jersey’s online casinos and their land-based partners have won a little shy of $6.3 billion in gaming revenue since the state kicked off online gambling in late 2013, and the figure doesn’t include money from online sportsbooks. Much of that money has helped keep casinos in Atlantic City afloat, especially during and in the aftermath of the three-and-half-month pandemic shutdowns in 2020.
Atlantic City casinos like Resorts, Harrah’s, and Borgata can tie their brick-and-mortar licenses to multiple online casino skins. The Borgata Atlantic City, for example, has tethered its license to close to a dozen online casino partners, including BetMGM, Pala Casino, and Party Casino. Each brick-and-mortar license cost $400,000 and can be renewed at $250,000 on an annual basis.
When all’s said and done, a longer iGaming authorization appeals more to online casino operators than their land-based partners because a bigger chunk of internet gambling money goes to them —and not Atlantic City casinos.
Internet gambling has been lucrative for Garden State, which takes a 15% cut of the iGaming pot. New Jersey’s online casinos and sportsbooks paid more than half a billion in combined gaming tax revenue to the state coffers last year, according to Fortune.
Critics argue shorter extension sends the wrong message
Atlantic City casino trade group, the Casino Association of New Jersey, has strongly expressed its support for the original plan, saying a full, 10-year extension is critical to the sustained success of casinos in the seaside gambling resort.
Some critics — especially online casino operators like FanDuel and their political lobbyists — argue that a shorter extension sends the wrong message and could discourage investment from potential operators. iGaming industry consultant Daniel Heneghan, a gambling industry consultant, said that a five-year window “leaves a lot of doubt” for operators looking to enter the New Jersey market.
Gov. Murphy and industry leaders celebrate the extension
Still, Governor Murphy, industry leaders, and business groups, including the Chamber of Commerce of Southern New Jersey, are celebrating the extension, saying it will allow the online casino industry to continue innovating and thriving for years to come.
Wrap-Up
With this five-year extension now in place, New Jersey’s online casinos can breathe a sigh of relief and get back to business as usual – for the time being at least. The compromise deal avoids potential disruption and gives the industry a chance to build on its early success. The tax revenue and jobs provided by online gambling remain an important economic driver for New Jersey.
