After years of talking about internet gambling, the US states of Nevada and New Jersey have both taken some definitive action within days of each other at the start of 2013, signing legislation that will permit internet gambling.

In New Jersey Governor Christie signed his state’s i-gaming bill into law after the Assembly and Senate approved it by 68-5 and 34-1 votes respectively. In Nevada Governor Sandoval hurriedly signed a similar bill as the two casino states vie to become the focal point for internet gambling in the US.
New Jersey permits existing licensed casinos to offer all games currently offered in New Jersey casinos, including poker. The new Nevada legislation permits only poker at the present time. 

New Jersey’s online gambling tax rate is 15% of gross profits and the law will be reassessed in the state senate after a period of 10 years. The actual operating conditions are still to be finalised but it seems likely that online gamblers will have to appear in person at a casino to undertake KYC checks before they can play. The bill allows gamblers in both other US states and even other countries to place bets in New Jersey as long as such gambling activity is not prohibited by any federal or other state’s law.
In Nevada the internet gambling licence fee is currently set at US$ 500,000 with a US$ 250,000 renewal fee but the amended AB114 bill sets a minimum of US$ 150,000 and a maximum of US$ 1 million for the licence fee. 
The tax rate is 6.75% on gross gaming revenues.
This is an historic day for the Great State of Nevada. Today I signed into law the framework that will usher in the next frontier of gaming in Nevada. This bill is critical to our state’s economy, and ensures that we will continue to be the gold standard for gaming regulation,” proclaimed Governor Brian Sandoval.
Licences to a number of companies have already been approved by the Nevada Gaming Commission including: IGT, WMS, SHFL Entertainment, and South Point Poker. Interestingly, AB114 also authorizes the state of Nevada to enter into compacts with other states to offer Internet poker.
Global Betting and Gaming Consultants has compiled some forecasts for internet gambling revenues in the two states based on what is known at present. 
The two states have small populations (8.8 million for New Jersey and 2.7 million for Nevada) and the real success for these states will come if they can secure agreements to combine populations from other US states – or further afield – to form larger poker networks. New Jersey permits a wider range of e-gaming activities with its new legislation than Nevada. Under the current regulatory set up GBGC anticipates combined e-gaming revenues of around US$ 330 million in the two states in 2015.
 

“Both jurisdictions have been through difficult times in recent years for a variety of reasons, with gambling revenues falling from their boom year peaks of 2006-2007. The need to diversify and find new sources of revenue for both gambling operators and the state governments is essential for both New Jersey and Nevada,” commented GBGC Director Lorien Pilling. 

New Jersey has been hit harder than Nevada by the financial crisis. New Jersey’s casino revenues peaked at US$ 5.22 billion in 2006 and have since fallen to US$ 3.05 billion in 2012, a drop of 42%. By contrast Nevada’s casino revenues peaked in 2007 at US$ 12.46 billion and fell to a low in 2010 of US$ 10.11 billion. In 2011 and 2012 Nevada has seen the beginnings of a recovery with gambling revenues rising from the 2010 low to US$ 10.49 billion in 2012.

The economic situation has undoubtedly played a large part in the casinos’ woes as customers cut back on non-essential spending and the financing of new projects and existing debts was withdrawn by financial backers.
But the problems in New Jersey appear to be more deep-rooted than just the current financial crisis. Attempts to reinvigorate Atlantic City have struggled and the much vaunted new Revel casino and resort has filed for bankruptcy just a year after it opened. Revel is looking to restructure its US$ 1.5 billion in debts so that it can continue operating. Atlantic City also had to contend with Hurricane Sandy in October 2012, which forced the closure of the casinos, and did nothing to help Revel’s first year of operations. 

The financial crisis in the US has also meant that both New Jersey and Nevada are facing increased competition because other state governments are turning to gambling regulation and expansion as a means of generating more revenues for the state coffers. All around New Jersey, the likes of New York, Pennsylvania, Maryland, and Delaware have been expanding gambling activities. The overall result is that Atlantic City becomes less of a draw as a ‘gambling destination’ for the surrounding population.
Against such a backdrop of economic and social factors the importance of the revenues and licensing fees that e-gaming could bring each state cannot be overstated. One measure of the importance was the speed with which Nevada acted when New Jersey announced its legislation. There is an opportunity for one state to become the focal point of regulated internet gambling the US, and it is one that neither can afford to miss.