Monday, January 10, 2011

NJ internet gambling bill passes Assembly, awaits governor's signature

I would have liked to have been able to dedicate the first few entries of this blog to some of the ideas I've been working on, but the timing didn't quite work out for that.  Major events moving towards the potential annihilation of the global online poker environment come first.

I will be the first to admit I don't have a great knowledge of politics or of how various legislative processes work.  So I settled in to live-blog the all-but-certain passage of the NJ internet gambling bill from its final committee, not sure whether or not the bill would be debated or just voted on.  Turns out, just voted on.  Also, as it turns out, not the most entertaining session to watch.

January 10, 2011, NJ Assembly Session
2:55 — The session, scheduled to begin at 1:00, actually begins.
3:28 — Voting begins on "consent bills", those which have been agreed to by both majority and minority sides of the aisles.  There is no debate on consent bills." ... [then they vote on debate bills]
3:56 — Voting begins on nonconsent bills
4:13 — What was supposed to be a brief "time out" break is taken
6:00ish — brief "time out" ends
6:42 — A2570/S490, the NJ internet gambling bill, is brought up as a nonconsent bill, but voted on with no debate.  Passes 63-11-3.

All that remains now is for Governor Christie to sign it, which could happen tomorrow or within up to 45 days.  The general vibe seems to be that he is very likely to sign it.

In the meantime, no newer or final version of the bill has been uploaded to the bill's page.  So either it hasn't been released yet, or this draft is the final version.  edit: The very knowledgeable PokerXanadu on 2+2 seems confident that this means that the above draft is indeed the final version.

In summary, the bill:
  • authorizes casino games and poker to be offered to NJ residents only, and only by companies in Atlantic City.
  • establishes that the wagers are deemed to take place in Atlantic City, regardless of where in NJ the player is located.
  • sets the minimum age for having an account with one of these businesses to 21, despite the fact that the internet gambling sites will presumably not serve alcohol, and despite the fact that NJ's minimum gambling age is 18.
  • makes it a crime for "any person [to offer] games into play or [display] such games through Internet wagering without approval of the commission to do".
  • makes no distinctions between poker and casino gambling other than special provisions for dealer tips, which historically are not very common in online poker.

Potential Implications

The signing of this bill into law will be a historic moment in the history of the online gambling industry.  That's super for everyone who cares about online gambling.

For competitive poker players, however, there are a number of potential issues.  If NJ players have the option of playing on NJ-only poker sites with NJ-only player pools as well as existing trusted international poker sites against global player pools, then everything should be great.  If, however, PokerStars and Full Tilt decide that this law makes it illegal for them to serve NJ, then I have a big problem with this law.  

It's also unclear from the current language of the bill which New Jerseyans would be affected here.  If international poker sites are compelled to stop serving NJ residents, will they cease service to those whose permanent residence is in NJ?  What if they have a secondary address in another state?  What if they reside in NJ but log on and play from another state?  What about the converse?  The current language of the bill requires that a customer of an NJ-licensed internet gambling site must have a principal residence in NJ, but the criminal provision makes no mention of residency versus location, so it's not clear to me how international sites might react.

However, at least the current draft of the bill does not put any penalty on players for playing on international sites.  There should also be several potentially-valid legal arguments as to why the criminal provision in this law does not apply to the operations of PokerStars and Full Tilt Poker.  

What will PokerStars and Full Tilt Poker do?

While these international sites did pull out of WA after their state supreme court ruling, the nature of the NJ law is entirely different; WA criminalized ANY online poker play in their state and made it a felony for the player, so PokerStars and Full Tilt would have been facilitating crime by serving Washingtonians.  On the other hand, there is no such provision in the NJ law, and indeed, since the NJ law makes it legal to play online poker with the intended Atlantic City monopoly, I believe there are international trade arguments as to why it HAS to be legal to do the same with international operators.  And if the NJ bill defines that play on NJ sites takes place "in" Atlantic City, then wouldn't play with an international poker site take place "in" that country?

That all assumes that this law even applies to poker sites which do not offer casino games.  Saying nothing about the rest of its merits, the failed federal Reid bill last month at least made an attempt to treat poker properly, while this NJ bill literally treats it the same as casino gambling.  Regardless of whether or not a NJ-only site is able to draw in enough players and sustain enough games to be fun or profitable, the effective-prohibition against NJ players participating in international competition is a tremendous blow to poker as a strategy game.

I sincerely hope that this misguided law will not eliminate international poker sites from the NJ marketplace.  Whatever happens, other states will inevitably follow NJ's lead, and while state-only poker sites should eventually find federally-legal ways to pool their player pools, that could be several years away.  The very integrity of poker as a modern global competition could be at stake.

I can't help but wonder what this law would look like if anybody involved in it actually understood why poker should be treated differently than mindless, nonstrategic gambling "games" against a house.  In a world that routinely mistreats poker by ignorantly classifying it as "gambling", it is perhaps not too much of a twisted surprise that the historic first legal effort by a US state to license and expressly legalize internet gambling is one that could end up really harming the game of poker.

All of the details and implications should fall together over the coming weeks.  In the meantime, I have included a scientific diagram as to why it is bad if NJ residents cannot play with the rest of the world:

Note that the player in NJ is sad and lonely.  His faceless opponents in the rest of the world seem to express no sympathy or concern, but it might be only a matter of time before they are alone as well.


  1. Is it possible, however remotely, that this could be the beginning of a plan by the NJ government (however infantile it might be) to try to entice future poker sites to incorporate in NJ and have it be the new center of online poker?

  2. Interesting idea. I don't think there's any way the timeline could work out that way, though. Other states should be mimicking NJ's model or developing similar bills within the year. However, it will take at least several years before the states find a way to pool their online poker players a la Powerball, and then probably several more years after that before the feds let this poker network take international players. At this point, there will be nothing favorable about NJ compared to the other states on the network for major sites to locate their operations in.

    That being said, an earlier draft of the bill did let the NJ gambling sites accept non-US customers (but not US customers outside of NJ). It was allegedly dropped for WTO issues, though the US never cares about the WTO so there may have been issues with the federal government as well. Anyway, the NJ casino interests would certainly like to be able to accept as many potential customers as possible, so anything could happen if they have enough power.

    It's all an interesting struggle between state and federal government, and the battlefield is an antiquated and embarrassing framework of "gambling"-related laws that make it pretty darn tough to have gambling that doesn't occur entirely within one state. Doing it through a federal bill (as the Reid bill made a good attempt at) would have been a much faster track towards licensed multi-state/national poker networks and eventually international poker networks.

    That would make sense if the NJ-located poker sites were able to serve the entire world. They will only be able to serve NJ.

    After other states follow NJ's model and create their own interstate online poker networks, there might eventually be cross-state pooling


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