Gov. Chris Christie vetoed a bill Thursday that would have made New Jersey the third state to legalize gambling over the Internet, but said he would sign it if it had a 10-year trial period and a higher tax rate on casinos.
It was the second time since 2011 that the Republican governor has vetoed an Internet-betting bill passed by the New Jersey Legislature. But the path Christie laid out toward winning his approval heartened supporters of online gambling, including Atlantic City's 12 casinos, numerous online betting companies and state lawmakers who hope to make the seaside resort a nationwide hub for Internet gambling.
Nevada and Delaware have passed laws legalizing Internet betting, which also is going on offshore, untaxed and unregulated.
In a statement that read more like an endorsement than a veto, Christie said he supports online gambling, with some minor changes, including bumping up the tax rate on casinos' online winnings from 10 percent to 15 percent.
"Now is the time for our state to move forward, again leading the way for the nation, by becoming one of the first states to permit Internet gaming," Christie wrote. "While Atlantic City's reputation and stature as one of the premier resort destinations on the East Coast are well-chronicled, it is no secret that revenue from the region's most important industries, gaming and tourism, has been in decline.
"Since the beginning of my administration, I have stressed the importance of reversing the trend of economic contraction in Atlantic City and have made the revitalization of the region's gaming and tourism industries a key priority," Christie said.
Had Christie signed the bill, it would have represented the largest expansion of legalized gambling in New Jersey since the first casino opened there in 1978.
State Sen. Raymond Lesniak, one of the state's staunchest supporters of Internet gambling, said he was encouraged by Christie's comments and predicted the changes the governor wants could be quickly accomplished in a new bill. Assemblyman John Amodeo predicted a new bill could be passed by the end of March, saying, "the governor's expressed concerns can easily be addressed."
Internet gambling based in Atlantic City would "pump hundreds of millions of dollars into its ailing revenues, and will prevent the closing of at least one casino and save thousands of jobs," Lesniak said. "New Jersey will now have an opportunity to be the Silicon Valley of Internet gaming and reap the huge economic benefits that will flow into the state."
The extra money is needed as Atlantic City continues to lose market share, revenue and jobs to casinos in neighboring states. Since 2006, New Jersey's casino revenue has fallen from $5.2 billion to just over $3 billion last year.
In his comments to the Legislature, Christie, a former federal prosecutor, gave insight into the issues he'd been wrestling with regarding Internet gambling. He acknowledged that some experts "caution that this type of convenience gaming will lead to declines in tourism, and a loss of visitors to the region."
He said he also considered social impacts and recommended more funding for compulsive gambling treatment programs and "an annual analysis of the potential problems and harms associated with these new games" to be paid for by Internet gambling licensees.
"Our state cannot carelessly create a new generation of addicted gamers, sitting in their homes, using laptops or iPads, gambling away their salaries and their futures," the governor said.
The governor also recommended a series of ethical and legal protections to make sure Internet gambling is done transparently, including having lawmakers disclose any past or present representation of companies seeking online gambling licenses.
Christie vetoed New Jersey's first attempt at Internet gambling in March 2011, citing concerns about its constitutionality and worrying about the proliferation of illegal back-room Internet betting parlors that would be difficult to find and prosecute.
The latest bill tried to address those concerns by providing hefty fines for anyone who runs or even advertises such a back-room betting parlor.
Another of Christie's previous criticisms was that the state constitution mandates that all casino gambling take place in Atlantic City. Supporters elicited testimony from leading legal experts that because the computer servers where the bets would be accepted are in Atlantic City, that would satisfy the constitutional requirement.
The bill would have legalized the online playing, for money, of any game currently offered at Atlantic City's casinos, including poker. It would have taxed Internet gambling revenues at 10 percent, up from the 8 percent that the casinos pay for money won on their premises.
Donald Weinbaum, executive director of the Council On Compulsive Gambling of New Jersey, said the state currently has about 350,000 problem gamblers, a number that would surely grow if the ease of online gambling was offered.
Weinbaum said existing treatment and prevention programs for compulsive gambling are woefully underfunded. The bill would have required each Internet gambling licensee to pay $150,000 toward compulsive gambling treatment and prevention programs.