New Jersey Assemblyman Vincent Mazzeo, a Democrat who’s served in District 2 on the State Legislature since January 2014, is sponsoring New Jersey Assembly Joint Resolution 137 (AJR 137), a bill that “urges United States President Trump, members of his administration, and Congress to oppose measures and actions to prohibit states from authorizing and conducting Internet gaming.” The bill was referred to the Assembly Tourism, Gaming and the Arts Committee on Monday, January 23rd.
AJR137 is unquestionably a preemptive strike by the state of New Jersey against the possibility of a new Republican-led Congress enacting any bill that would resemble the Restoration of America’s Wire Act (RAWA). The original Federal Wire Act of 1961 prohibited the operation of certain types of sports betting businesses in the United States as a way to combat the Mafia.
RAWA, or any similar legislation, would seek to effectively bring the Federal Wire Act into the Internet Age and “prohibit the transmission by wire communication of any bet or wager or of information assisting in the placement of any bet or wager, including Internet gaming.”
RAWA is the brainchild of Republican mega-donor and casino tycoon Sheldon Adelson, who has waged a personal vendetta against the iGaming industry and promised to spend “whatever it takes” to stop it. South Carolina Sen. Lindsey Graham originally introduced the legislation in 2014 in the Senate, with Utah Congressman Jason Chaffetz introducing its companion in the House.
Internet gaming has been authorized in New Jersey since 2013 and is regulated by the state’s Division of Gaming Enforcement. As per figures cited in the text of AJR137, the Garden State generated approximately $198 million in casino winnings during 2016 alone, which led to an approximate windfall of $29.5 million in corresponding tax revenue.
Naturally, any federal prohibition on internet gaming would not only eliminate the possibility of the state receiving those types of proceeds, but would also result in a significant loss for the multiple New Jersey casinos that have invested heavily in getting their online operations up and running over the past four years.
AJR137 also emphasizes the collateral damage that any prohibitions would trigger in the areas of “high-tech software jobs” and business ventures that the state’s casinos are already involved in, as well as potential future partnerships.
The rather rapid advancement of AJR137 appears to have been prompted in no small way by the testimony of prospective Trump administration Attorney General Jeff Sessions during recent Senate confirmation hearings, when he indicated a desire to revisit the December 2011 Justice Department memo that essentially cleared the path for the states to consider Internet gaming within their jurisdictions. That memo put forth the legal opinion that the Wire Act’s restrictions did not apply to online casinos or poker.
Lindsey Graham made it a point to bring up the topic of online gambling during the hearing, as he had done once before during the confirmation of current Atty. Gen. Loretta Lynch in 2015.
Although Sessions’ confirmation as U.S. Attorney General is at least somewhat short of certain, the New Jersey State Legislature clearly intends to stay a step ahead in attempting to inhibit any legislation that would be tantamount to significant financial losses for the state.
The proactive approach appears to be justified, given both Sessions’ testimony and the uncertainty that is always inherent when a new majority takes power at the federal level. While the incoming administration has paid a certain amount of lip service to empowering the states to a greater degree in many aspects, it’s presently unknown to what extent they’d apply this approach with an issue as potentially polarizing as online gaming.
Update:
Read more from NJ Online Gambling about the potential impact of Jeff Sessions on our industry.