NJ officials dispute chilling effect of Trump DOJ online gaming rule

The state’s top gaming officials disputed the notion of a “chilling effect” stemming from the U.S. Department of Justice’s ruling against online gambling, which opponents worried would jeopardize the New Jersey’s gaming industry.

A federal judge ultimately struck down the DOJ’s strict interpretation of the federal Wire Act on June 3, ruling it only applied to sports betting and not in-state online gambling and lotteries.

“The future of New Jersey’s online gaming industry is at stake because of DOJ’s unlawful about-face regarding internet gaming – an activity that DOJ promised us was perfectly legal just eight years ago,” Attorney General Gurbir Grewal said in March when signing onto New Hampshire’s lawsuit against the federal rule.

It did not slow, it didn’t slow down the work coming to me.

– David Rebuck, director of the state Division of Gaming Enforcement

“The threat of prosecution will be sufficient to chill participation in New Jersey’s iGaming industry by many of the necessary partners to this enterprise, with resulting losses to the government and people of New Jersey,” reads a brief Grewal signed in March supporting the New Hampshire suit.

“We weren’t in limbo… I couldn’t have said that the first quarter or second quarter of this year, with the amount of interest that is in Atlantic City to have sports wagering, online and in the casinos and [to] have online wagering, was chilling,” David Rebuck, director of the state Division of Gaming Enforcement – which regulates New Jersey’s gambling industry – told NJBIZ on Thursday.

Last year, the DOJ proposed expanding the Wire Act in such a way that would ban any online gambling that crosses state lines. That was ultimately struck down Monday by U.S. District Judge Paul Barbadoro.

Opponents worried the move would heavily weaken the state’s online gambling and sports betting markets because aspects of online gaming, such as internet connection and payment processes, cross state lines, which alone would violate the newly defined Wire Act.

“It did not slow, it didn’t slow down the work coming to me,” Rebuck added.

“What the [sports wagering] industry is looking at more than anything else right now … is looking to expand to other states, getting operating in other states and growing in the market to get ready for Sept. 1,” Rebuck said, which is the start of the 2019 football season.

At worst, some of the gambling industry might have paused some of its business expansion, according to Casino Control Commission Chair Jim Plousis.

“People paused to see the end result of that action,” Plousis told NJBIZ. “I think we’ll be fine.”

Rebuck and Plousis presented a glimpse yesterday to lawmakers on the Senate State Government, Wagering, Tourism and Historic Preservation on the state of New Jersey’s gambling industry, which focused on Atlantic City where the majority of casinos are located.

They painted an optimistic picture of the industry.

In 2018, total gaming revenue increased $200 million, gaming tax increased by $24.9 million and regional sales tax increased by $16 million, according to presented to lawmakers. Business revenue for Atlantic County businesses went up $270 million while employment count increased by 5,749, according to the same data.

And numbers from the DGE paint a similarly optimistic picture. The total sports-betting handle – or the total amount bet – in the past year was over $2.5 billion, most of that via online mobile apps.

“I think the industry will tell you, they haven’t see any slowdown in interest to get into this market,” Rebuck said.