Legalized Gambling on the Internet: New Jersey's Got it ?

The New Jersey Assembly is currently considering 2012 New Jersey Assembly Bill No. 2578, a bill that would authorize Internet gaming in Atlantic City casinos under certain circumstances. The bill was introduced on February 16th and was reported out of committee with various amendments on May 10th. The text of the bill can be found here. The New Jersey Senate is concurrently considering a nearly identical bill, 2012 New Jersey Senate Bill No. 1565. In light of the Department of Justice's Office of Legal Counsel's September 20, 2011 Memorandum Opinion conclusion that the Interstate Wire Act (18 USC §1804) applies only to prohibit "the transmission of communications related to bets or wagers on sporting events or contests," if passed, the New Jersey bill would permit legalized Internet gambling within the state.

A brief summary of the bill is as follows: Section 1 of the Assembly's bill explains the background behind the bill, recognizing the importance of Atlantic City gambling to the state's economy. "The State and New Jersey's general public possess a vital interest in the success of tourism and casino gaming in Atlantic City...The tourist, resort, and convention industry in Atlantic City constitutes a critical component of our State's economic infrastructure..." Moreover, "an important component of the State's historical and ongoing commitment to Atlantic City involves creating and maintaining a robust casino gaming industry that is capable of competing regionally, nationally, and internationally at the highest levels of quality while, at the same time, fully retaining strict State regulatory oversight to ensure the integrity of all casino gaming operations conducted in this State."

Section 1 also identifies the place of this bill within the overall legislative structure that surrounds Internet gambling. In October 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. 5361. That act essentially prohibits online gambling by United States citizens. However, it also includes exceptions that permit individual states to create a regulatory framework to enable intrastate Internet gambling. The purpose of this bill would be to create such a regulatory structure by providing regulators and law enforcement with the tools to restrict and stop illegal Internet gambling that takes place in foreign jurisdictions, while simultaneously creating strict controls over how Atlantic City casinos may accept wagers placed over the Internet.

Before being permitted to provide Internet gaming services, the casino must first obtain a permit. In most respects, Internet gaming is treated the same as other gambling permitted in Atlantic City. Section 5 defines the term "Internet gaming" as "the placing of wagers with a casino licensee at a casino located in Atlantic City using a computer network...through which the casino licensee may offer authorized games to individuals who have established a wagering account with the casino licensee and who are physically present in this State when placing a wager."

Take Away: Because of the Unlawful Internet Gambling Enforcement Act and the Department of Justice's September 20, 2011 Memorandum Opinion, New Jersey could permit only intrastate Internet gambling. The bill does provide, however, that wagers may be accepted from persons outside New Jersey if the Division of Gaming Enforcement in the Department of Law and Public Safety determines that such wagering is not inconsistent with federal law or the law of the jurisdiction, including any foreign nation, in which any such person is located.

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