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NJ Lawmakers Discuss Extending iGaming Deadline by a Decade to 2033
By Jeff Osienya Sep 25, 2022 LegalityLegislators in New Jersey are mauling over the extension of the iGaming sunset date by another 10 years. In 2013, the state set a decade-long operation window for legal iGaming in case there was a negative impact on land-based casinos.Last Thursday, the New Jersey Assembly Committee met to discuss the extension of online gambling for another ten years. Lawmakers Ralph R. Caputo and Annette Chaparro are co-sponsoring a bill that will extend iGaming activities in the Garden State to 2033.
The bill was bound to expire in October 2023 if it did not receive further legislation meaning the lawmakers’ hearing was timely. Although the bill is yet to have a counterpart in the Senate, Caputo intends to get a like-minded lawmaker from the upper chambers now that it has advanced to the next phase in the legal process. However, it has a few more rounds of approval before Gov. Phil Murphy signs it.
In 2013, when online casino gambling was legalized, New Jersey took pride in being one of the pioneers of the nation’s iGaming. However, due to the uncertainty of the impact of iGaming on NJ’s land-based casinos, the state legislators came up with a sunset date. Once again, Caputo’s bill will not make online casino gambling permanent. Instead, the lawmakers will maintain the sunset date strategy to enable them to make amendments if online casino gambling starts hurting the performance of brick and motor casinos.
iGaming Has Been Pulling in Large Numbers
Online casino gambling generated crucial revenue for Garden State’s casino sector in the thick of the pandemic in 2020. So, it is no surprise that the bill extension talks have received support from New Jersey casinos and gambling companies such as Bally’s, DraftKings, FanDuel, and BetMGM.
In support of the extension bill, Caputo said:
Quote“The casino industry was subsiding. It was collapsing at the time. It’s been very helpful in terms of keeping the lights on in Atlantic City. We can’t do without that. Internet gambling ‘kept those casinos afloat through a very difficult time.”
Since its launch in 2013, New Jersey’s iGaming industry has become a major hit and ranks second in revenue after slot machine play. In 2021, casinos in the Garden state grossed around $1.4 billion from online gambling, a 41% growth compared to the $970 million recorded in 2020. In addition, from 2015, the iGaming revenue has increased by roughly 20%, and it is expected to break its record this year.
Furthermore, in the first months of 2022, ending July, the iGaming wins recorded $951.2 million, an increase of around 26% from the same period in 2021. In addition, data from the New Jersey Division of Gaming Enforcement show casinos recorded $136.7 million in July, a 15.2 % increase from the $118.7 million recorded in the previous month.
These iGaming revenue numbers are indeed impressive. However, executives from Atlantic City casino say the money the house wins through the activity is not all kept by the casinos. Instead, the revenue is shared with other parties, such as tech platforms, which accounts for about 70% of the revenue. Nonetheless, the figures are still something to behold.
Extension Will Help NJ Keep up With the Competition
The online gambling extension will come in handy since New Jersey faces stiff competition from the neighboring states. New York launched sports betting at the beginning of the year and has since ousted New Jersey to claim the lead. New York is also deliberating on broadening the iGaming industry; however, the idea has not passed the state’s Assembly committee since March. Meanwhile, Pennsylvania’s sports and online casino betting is also catching up fast.
Jane Bokunewicz, the faculty director at Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism, said:
Quote“As New Jersey’s neighbors expand their gaming operations and add experiences like online wagering, New Jersey will need to continue to innovate and deliver new and engaging gaming products to compete. Internet gaming would seem to be an important and lasting part of Atlantic City’s gaming portfolio moving forward.”
In another bid to boost the casino business, the State’s Assembly committee has floated another bill. The bill, once passed, will require casinos running online gambling activities to advertise on their online wagering sites the names of their Atlantic City land-based casinos.
Garden State Lawmakers Should Just Make iGaming Permanent
The concerns around making online casino gambling permanent are valid. Atlantic City casinos feed the New Jersey ecosystem by employing thousands and working hand in hand with different businesses. However, basing our argument on the bill passed in 2013, the iGaming platforms do not act as an independent entity but are rather an extension of the Atlantic City casinos. Therefore, game wins collected at the online gaming entities were another revenue source for the land-based casinos.
Additionally, the sunset date may end hurting Atlantic city casinos’ future projects because lenders may categorize revenue from online casino gambling as short-term income. It is also a problem for online game operators since they cannot make a long-term investment because of the time cap. That’s because they aren’t 100% sure whether their investments will materialize or their revenue streams will be nixed.
Suppose players were to stop visiting Atlantic City casinos. In that case, it might not necessarily be because of online casino gambling but rather other forms of entertainment away from gambling, such as movies, boardwalk, and sports activities. However, what measures would the state take if online gambling overtook land-based casinos? And would making iGaming activities illegal in the state get the bettors back to the physical casinos?
With such questions looming, land-based operators should adapt to the everchanging industry trends like any other business to stop viewing iGaming as a threat. That said, it would be better to permanently legalize iGaming in NJ as time has already proven that the two gaming verticals can co-exist.
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