Thursday, March 3, 2011

Christie vetoes NJ internet gambling bill — my summary and thoughts

It's been a long time since the New Jersey internet gambling bill S490 passed with a 85% majority through its final legislative committee. In fact, it's been the maximum amount of time. Governor Chris Christie had 45 days to act on the bill by signing or vetoing it, which meant he had until February 24th to decide... or so we thought. After what felt like an eternity of waiting, shortly before February 24th, we all learned that some weird exception surrounding the congressional calendar actually gave him until March 3rd to make his move on the bill.

Earlier today, Christie vetoed the bill. His press release, linking to his official statement to the NJ Senate on this matter, is available here.

Originally, the veto was reported as a conditional veto, and is still recorded as such on the website of the NJ legislature, but the more recent reports are saying that it was upgraded to an absolute veto. This article captures the drama surrounding the nature of this veto.

Christie's decision

It's hard to blame Christie for running his time bank all the way down on this decision. He had many factors to consider, all of which were the topic of much speculation and discussion while we waited for his decision.

Reasons for Christie to sign:
  • The tax and job creation of internet gambling would generate revenue for the state, and quite a bit of it (a BIG reason for NJ right now).
  • Internet gambling would lead to additional revitalization of Atlantic City in general.
  • Domestic licenses on internet gambling would provide repatriation of revenues currently going to perceived "evil offshore operators".
  • Winning the "race" by getting NJ's internet gambling network established before a future federal internet gambling bill could work out better for the state's coffers than simply waiting to opt into a federal scheme.

Reasons for Christie to veto:
  • Caesar's Entertainment lobbied heavily against this bill, presumably believing that its own interests are better-served by an eventual federal bill.
  • Many citizens oppose internet gambling, perhaps as many as 67% of them, according to a recent poll, which I thought was rather surprising. While other polls show overall support for internet gambling, I think it's fair to say that even those people who support gambling in general may not always support internet gambling, especially when concerned with a potential proliferation of gambling in public areas, such as non-casino businesses using internet cafes as effective gambling devices.
  • There are various complex legal concerns over whether or not the intrastate framework of S490 would be acceptable under federal gambling laws. In particular, Christie has ties to the federal Department of Justice, the entity which goes against court rulings by insisting that online poker is covered by the ancient anti-sports-betting Wire Act and attacking payment processors accordingly. If the DOJ doesn't want there to be any internet gambling anywhere, for whatever reason, Christie might side with them.
  • The NFL doesn't want it to pass and Christie may have owed them a favor... a little conspiratorial, but it is definitely the case that the NFL is inconceivably powerful and that the NFL is inconceivably opposed to all internet gambling, even poker-only initiatives.
  • "Competition" from online gambling could reduce the business of brick-and-mortar Atlantic City casinos. I would be shocked if the net effect of AC-based internet gambling wasn't positive for all of Atlantic City, but I think this idea was out there.
  • There are rumors that Christie may want to run for president soon. The official Republican Party platform opposes internet gambling in all of its forms, so it might hurt his chances at the nomination to be known as the first U.S. political figure to "legalize" internet gambling.
  • Finally, the reason that I didn't consider until Christie gave it as a reason in his veto: there is a potential legal conflict between this bill and the state constitution. The NJ Constitution allows for casino gambling to take place only in Atlantic City. The internet gambling bill treated this by defining that play between a player anywhere and a business with servers in Atlantic City was play that "took place in Atlantic City". Christie found this to be dubious and suggests that a public referendum might be necessary to modify the state constitution to allow for statewide internet gambling.

Reasons which were, at best, taking a backseat to all of the above, and at worst, not even under consideration:
  • Whether or not adults should have the right to be able to use the internet to engage in the same financial activities and/or gambling games that they can legally partake in through brick-and-mortar establishments
  • Effects on competitive poker players, that silly little bunch... don't they realize that their activity is "just gambling" and exists only for producing corporate and government revenue?

What's next?

A conditional veto of this bill was expected to likely be only a temporary setback, perhaps enough to make NJ lose the race to be the first state to license internet gambling, but still only a short delay of the inevitable. The most recent news surrounding this absolute veto, however, makes it seem probable that there might be nothing happening with this bill for a while.

Though the NJ legislature is able to override a governor's veto with a 2/3 majority, Senator Raymond Lesniak, the sponsor of the bill, has said that he will not attempt to do so. Despite its original passage with a sufficiently-large majority, in light of Christie's veto, New Jersey Republicans are no longer expected to support the bill. Lesniak also seems pessimistic about the chances of any new "fixed" legislation for NJ internet gambling, given the Governor's attitude. His quotes in this article make it seem like any second attempt at getting this bill into law is not likely to come to fruition anytime soon.

Though the conflicting reports of today seem to be settling on the above, I can't help but observe that all of the incentives which compelled this bill in the first place are still there. New Jersey badly needs revenue, and it does not seem that Christie is fundamentally opposed to the notion of licensed internet gambling in NJ. If the positive incentives for such a bill were able to economically overcome the opposing forces of Caesar's and the NFL, it seems that a compromise could be reached and a few legal tweaks could be quickly made to the bill to make it palatable to the governor.

Most likely, though, we're looking at no action for a while. If a public referendum is indeed needed, I believe that can't occur until November at the earliest.

My Thoughts

As all of the information surrounding the bill developed, I was pretty close to indifferent between the bill's passage or failure, which is sad for what would have let my own state create the first explicitly legal online poker in the country. If the bill didn't criminalize unlicensed operators in a manner that might have forced international poker-only sites to stop serving NJ residents, I would have been a strong supporter of this bill. As it was, where passage of the bill would possibly mean that I'd have to move out of state to play online poker with a reasonably-sized pool of players, I had to personally lean towards opposing the bill.

S490 would have been a great bill for gamblers, but potentially a bad-to-terrible bill for serious poker players. I feel that the considerations of poker players were dwarfed by the considerations of gambling, and I can't help but feel disregarded in the wake of the political mess surrounding its veto.

The bill impeded on the rights of competitive strategy gamers by explicitly including poker in the scope of its protectionist regulations at the expense of global competition. No gambling game is negatively impacted by only being able to serve residents of a small region, but limiting poker to only New Jerseyans would possibly mean the end of the availability of sufficiently liquid online games for competitive players. This is the cost of using the public's perception of poker as "gambling" as a vehicle to attempt to secure rights for our game. Granted, the poker-only federal Reid bill also limited the player pool to U.S. players only, but it at least had ambitions to expand to global markets within several years, which is a relatively short amount of time in the world of government.

Also discouraging to me was that the discourse and incentives surrounding Christie's decision on the bill included so many different political factors that the rights of poker players likely held little to no value in his decision. This is the cost of selling legislatures on licensing and regulating internet poker through arguments primarily focused on tax revenues. Poker does not have nearly enough political allies who legitimately care about the rights of adults to participate in competitive games.

I'm also worried about the result if an eventual NJ internet gambling bill were to go to a public referendum.

Even if the bill were poker-only, I would worry that the majority of the public would vote against poker based on misguided moral beliefs or misinformation/ignorance about the game of poker. For example, to be generous, if 10% of citizens play poker at least semi-seriously, and another 20% are close enough to such people to even partially understand why poker is good, that leaves 70% of people whose perception of poker may be based off of indoctrinations that "gambling" is an unbeatable, degenerate, or sinful. Each person in this 70% gets a vote worth just as much as those in the 10%, regardless of how incorrect their beliefs are or, more unfortunately, how irrelevant the outcome of the vote is to their personal lives. I guess this might be a failure of the democratic process in general, but it seems particularly dangerous with something as widely and fiercely misunderstood as the game of poker.

Add in the fact that any future NJ internet gambling bill is still likely to treat all "gambling" instead of only poker and it becomes a lot easier to lose that vote.

I would be passionate in lobbying the public for voting for a good poker-only bill, but I honestly might not even bother asking my friends and family to support a broader bill. While I personally side with the rights of well-minded adults to annihilate their wealth through the methods of their choosing, I don't feel strongly enough about this to try to change the mind of somebody who wants to limit the existence of any form of slot machines at all costs, and I would not be comfortable conflating these issues with the game of poker.

So while I'm glad that I get to continue enjoying the long-term-unstable status quo of online poker for the time being, the stress of this long wait and its overly-politicized result makes me even more eager and desperate for the time when internet poker will be treated in a logical and rational manner by the U.S.

Might be a while.

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