Establishing Net Gambling in New Jersey

Updated on January 2, 2016

borgata-casinoFollowing a knock down, knock out battle, the state of New Jersey, like Delaware and Las Vegas before it, has dived head- first into online gambling. They’ve generated staggering profits even while the fight threatens to close it all down. In November 2013, six Atlantic City casinos launched online gambling websites, along with long-term public relation campaigns that included billboards, bus signs, television commercial,s and internet advertisements aimed at drawing both current and new players. Big name casinos like Caesars, Bally’s, Trump Plaza, Borgata, Tropicana, and Trump Taj Mahal are re-inventing themselves and their waning profits by offering their customers another option to play slots, pokers and other games online.

Historical Gambling in New Jersey

It is no wonder that the concept of gambling in New Jersey brings with the spirit of debate and battle. It has a gambling history which pre-dates the American Revolution. Games of chance were common in the state and used to help pay for the military during the French and Indian War and the American Revolution, in addition to helping in the construction of Queen’s College (now Rutgers University) and the College of New Jersey (now Princeton University). Gambling continued to be used as a funding source for the state until 1897, when residents voted on and approved a referendum which amended the state constitution and placed a ban on all gambling. It is because of this amendment that all new gambling in New Jersey requires voter approval.

The taste for gambling has never been far from the minds of the New Jersey residents who proved their interest by voting 81.5% in favor of creating the New Jersey Lottery in 1970 and the Pick It (later named the Pick 3) game which became the first legal lottery game in the United States where buyers picked their own numbers.

In 1974 the subject of gambling was once again presented to the voters. Once again they voted against legalizing gambling throughout the entire state, but did approve gambling only in Atlantic City.  Resorts Atlantic City opened its door in 1978 and New Jersey became the second state in the Union to allow legalized gambling. Other casinos quickly followed, and Atlantic City revenues began to generate income for the local community and the entire state.

Governor Chris Christie signed into legislation the legalization of sports betting in 2012, although it forbade betting on college events played in New Jersey and out-of-state games involving New Jersey college teams. Both collegiate and professional athletic associations quickly filed a lawsuit to ban sports betting, forcing the state to revoke sport betting licenses. Christie has promised to appeal the case to the United States Supreme Court.

The Fight for Internet Gambling

trump-taj-mahal-atlantic-city-casino-hotelRepresentative Raymond Lesniak sponsored a bill in January 2011 in the New Jersey Legislature to allow online gambling in New Jersey. The bill passed with the restriction that players must be over 21 years of age. Because the state constitution only allows casino gambling in Atlantic City, the legislation specified that the computer servers operating the online gambling websites must be located at licensed casinos in Atlantic City.  In an effort to prevent likely federal regulation, Lesniak included in the bill authorization for the Casino Control Commission to create regulations that would ensure all bets are placed from inside New Jersey. Governor Chris Christie still vetoed the bill, stating “allowing customers to bet through any computer terminal left open the chance of commercial businesses such as nightclubs and cafes becoming gambling hubs around the state,” and “the bill further created a legal fiction that a bet placed anywhere in New Jersey counted as an Atlantic City bet.”

The United States Justice Department cleared the internet trail for New Jersey when they clarified that the Federal Wire Act only prohibited online sports betting, and not online casino games.

Christie’s concerns with online gambling were eventually resolved with the drafting of new legislation that prohibited businesses other than Atlantic City casinos from advertising online gambling, or allowing their facilities to be used for online gambling. On February 26, 2013, a revised bill permitting Internet gambling was overwhelmingly approved by the New Jersey Legislature, and then signed into law by Christie. The law legalized online casino gambling for a 10-year trial period, restricted the operation of the websites to Atlantic City’s eleven casinos, and imposed a 15% tax on online gambling revenue, instead of the 8% currently imposed on casinos.

The legislation required that you had to be at least 21 years old to gamble and could only play from a computer located in the state. Global positioning systems (GPS) would be used to verify a gambler’s location. While comps could be rewarded to gamblers, they had to be redeemed by visiting the casino.

In October 2014, New Jersey state regulators reported revenue of over $100 million since regulation began in November 2013.

New Jersey: The Battle Continues

In October 2015, a joint effort by conservative groups that included Focus on the Family, Concerned Women for America, and other Christian based organizations joined the congressional effort to ban online gambling. In their fight, they want to include states like New Jersey and Las Vegas that currently allow it.  Rep. Jason Chaffetz (R-Utah), is backed by these groups and Las Vegas Sands chairman and chief executive officer Sheldon Adelson, and David Koch  of Koch Energy, who have both donated 3.5 million dollars to friends of the bill, sponsored the Restore America’s Wire Act. This bill, if passed, would overturn the 2011 Justice Department ruling that gave states the right to offer Internet gambling to their residents

The Poker Players Alliance and Caesars Entertainment are two of the groups fighting the banning of online gambling.  Poker Players Alliance spent $275,000, doubling their contribution from the previous year, while Caesars Entertainment supported the Coalition for Consumer and Online Protection with a hefty $1.9 million dollar contribution.

Clearly the battle over internet gambling in New Jersey is far from over. Ultimately, the decision may come down to who has the strongest lobbyists and spends the largest amount of dollars. In 2014, Internet gambling, virtually located in Atlantic City casinos, generated $120 million dollars for the state.  

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