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It took more than four months, but a bill to make it easier for NJ sports betting operators to feature wagering on eSports finally was signed into law by recently reelected Gov. Phil Murphy on Monday. The bill was passed by the state Legislature in late June, just before the end of the legislative session, so it languished along with nearly 100 others until Monday’s deadline.
Previously, only a handful of eSports events had been approved for betting, and only after a review by the state Division of Gaming Enforcement. But a bill sponsored by Assemblyman Ralph Caputo, D-Essex, and three other lawmakers now allows operators to post lines on eSports competitions as long as a majority of participants are age 18 or older — similar to state rules on sporting events like the Olympics.
“E-sports have exploded in recent years, and we need to allow the casinos and racetracks in New Jersey to participate in this revenue-generating business,” co-sponsoring Assemblyman Ronald Dancer, R-Ocean, said in a statement.
Competitive eating contests — especially the annual Nathan’s July 4 hot dog eating event — and the Academy Awards and similar shows are also now cleared for wagers without special review by DGE, although with limits of $100 bets or $500 potential winnings. The first version of the bill — initially introduced by Caputo and Dancer in late 2019 — languished on the Senate side until June 21, when it passed by a unanimous 40-0 vote.
Another bill, A4002, was designed to allow for sportsbooks to deduct “promotional gaming credits” — think deposit-matching bonuses or risk-free wagers — from a book’s taxable income. But Murphy decided to give the bill a conditional veto.
“The tax benefits afforded by this legislation would hopefully incentivize casinos and racetracks to offer promotions that will attract patrons to Atlantic City, the state’s racetracks, and surrounding communities,” Murphy wrote. “However, I am concerned that the bill’s parallel tax break for online sports wagering undermines the bill’s laudable goal of ushering in a resurgence of visitors to Atlantic City and our racetracks. While operational closures resulting from the coronavirus (COVID-19) pandemic harmed the state’s tourism economy generally and the brick-and-mortar casino and racing industries in particular, online casino gambling and online sports wagering operations have thrived.
“Given the record performance of online sports wagering operations and the tenuous connection between online wagering and tourism and local economic growth, I am suggesting revisions to the bill to apply the PGC deduction only to the gross revenue tax on non-Internet sports pool operations with the hope that the expansion of PGCs will attract new visitors.
“Moreover, I am suggesting the elimination of a provision from this bill that reverses a longstanding policy that requires PGCs to be returned to winning bettors in order to qualify for a deduction. As written, the bill provides that any free bet amounts or promotional wagering amounts qualify for a deduction regardless of any play-through requirements. This provision provides an additional windfall for sports pool operators, as they would be permitted to deduct promotional gaming credits that the bettor had little to no chance of winning.”
A third gambling-related bill of sorts, A4297, was intended to allow charitable organizations to continue to conduct bingo and raffle games remotely. But Murphy elected to veto the measure unconditionally.
“The legislation fails to address the myriad practical regulatory and resource concerns attendant to the expansion of the conduct of charitable bingo, lotto, and raffle games using remote communication technology,” Murphy wrote. “While it is unquestionably commendable to seek to afford charities enhanced tools to raise funds to support the worthy causes they serve, it is also important to ensure that such tools are subject to a requisite level of regulatory oversight to prevent fraud, ensure integrity, and avoid other improper or undesirable results such as security breaches, identity theft, and similar abuses.
“In removing the practical limitations imposed by the requirement that such fundraising be conducted live in local communities (rather than through virtual means), bingo, lotto, and raffle games theoretically will be able to be conducted at such frequency and at all times for an expansive number of organizations, and will involve a whole new type of technology that is beyond the regulatory oversight capacity and expertise of the [state games-of-chance regulators] as currently staffed and resourced … This legislation, though well-intended, does not provide solutions to these difficult practical issues.”
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