Online Casinos Become Dominant in New Jersey

Can online casinos become dominant in New Jersey?

Can online casinos become dominant in New Jersey?

There can be no doubt that New Jersey remains the home for online gambling and virtual casino gameplay in North America, with various establishments performing well in the ranking of

Make no mistake; the New Jersey market continues to see record revenues too, with the final month in 2019 seeing operators generate combined revenue of $49.3 million. This represented a 70% improvement in relation to the same month from 2018, while it also brought the market’s annual haul to nearly half-a-billion dollars.

Of course, these numbers have been boosted markedly by the legalisation of sports betting in the state, but there’s no doubt that the online casino vertical remains the key growth vertical in NJ. But can this growth be sustained, and will online casinos here ever rival the brick-and-mortar casinos established in Atlantic City?

The Wire Act and Other Market Challenges

Growth in NJ has undoubtedly been partially driven by the 2011 interpretation of the 1961 Wire Act, in which the Department of Justice (DoJ) confirmed that this regulatory law banning cross-state gambling activity should not apply to online casino gameplay.

This has enabled NJ operators to target players from a number of alternative states, while also forging lucrative liquidity pacts with brands in similarly progressive jurisdictions such as Delaware and Pennsylvania.

While this has helped to boost turnover and bottom line profits, however, the regulatory landscape shifted significantly in January 2019, when the DoJ suddenly reversed its 2011 opinion and instead interpreted the Wire Act as being applicable to any form of gambling that breaches state lines.

Almost immediately, this threw an almighty spanner into the burgeoning New Jersey gambling markets, although a cooling-off period was announced to allow for subsequent legal challenges and transition planning on behalf of operators.

Online casino revenue in New Jersey (2019 - 2020)
Monthly revenue of the online casino operators in New Jersey from 2019 to 2020

During this time, the New Hampshire Lottery Commission filed a lawsuit challenging the revised opinion, with this ultimately prevailing in the region’s District Court in June last year. This ruling saw Judge Paul Barbadoro reject the DoJ opinion fully, after lawyers had argued the legitimacy of the decision and the influence of anti-iGaming lobbyists in the states.

More recently, NJ Attorney General Gurbir Grewal has filed an amicus brief setting out his state’s opposition to the 2019 DoJ ruling, arguing the popular view that federal law does not actively prohibit online gambling or cross-state activity.

Ultimately, it’s likely that the District Court decision in New Hampshire will be upheld, while the NJ challenge is also expected to prove successful over time. This would effectively uphold the decision of the DoJ issued in 2011, helping operators to overcome a significant and potentially crippling hurdle going forward.

However, this is typical of the challenges facing iGaming in progressive states like New Jersey, as there remains a dwindling but staunch opposition to this market and its widespread growth throughout the U.S.

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Looking to the Future – Could the Upcoming Election Prove Influential?

When it comes to appraising the future of online gambling in New Jersey and the market’s capacity to fully supersede Atlantic City, it’s fair to say that the upcoming Presidential election may prove crucial.

After all, current incumbent Donald Trump and his administration has overseen the revision to the Wire Act, while it’s also believed that the property mogul has been successfully lobbied by prominent brick-and-mortar casino owners like Sheldon Anderson.

In contrast, leading Democrat candidate Joe Biden has confirmed that he doesn’t support introducing additional restrictions on the iGaming sector, while he has also rebuked the current administration for its handling of the Wire Act controversy.

“I would reverse the White House opinion that was then reversed and overruled by the court,” said Biden, in relation to the 2019 opinion on the Wire Act and the subsequent legal case in New Hampshire. “The court is correct – and that should be the prevailing position.”

Clearly, Biden supports the growth of iGaming in the states, while he believes that market regulations should be a matter for each individual state authority.

This offers considerable hope for the iGaming industry as a whole in America, and particularly the authorities in progressive gambling states such as New Jersey. More specifically, such an approach would enable NJ operators to optimise their annual revenues, while affording them an opportunity to breach new state lines and build more lucrative liquidity sharing pacts in the future.

This, coupled with the relentless rise of iGaming technology and the general marginalisation of offline gambling, could create a scenario where online casinos in NJ could ultimately become as big and as generative as those in Atlantic City.

While this is unlikely to happen overnight, there’s little doubt that it could well set the narrative in the long-term and over the course of the coming decade.

Author: Jeff Grant (info)

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