Brett Smiley of talks about how New Jersey’s sports betting bill is likely to shape up.

New Jersey lawmakers have produced a bill addressing sports wagering in New Jersey as the state and the gaming world anticipate a decision in the Supreme Court sports betting case, Murphy v NCAA. At present New Jersey does not have regulations or an actual framework in place to manage sports betting. That’s because the 2014 bill by former state senator Raymond Lesniak only (partially) repealed the state’s laws prohibiting sports betting.The new bill under consideration is A3911, which “Authorises wagering at casinos and racetracks on results of certain professional or collegiate sports or athletic events.”  

First off, let’s make clear the intention of this bill, which is sponsored by Assembly members Eric Houghtaling, Joann Downey, as well as John Burzichelli, who is also the deputy speaker and appropriations chair. “When the Supreme Court finally speaks, it’s going to take a complete refreshment of the statute to allow gaming to function in New Jersey,”  said Burzichelli in April. “There’s some discussion that we could go tomorrow, if the Supreme Court ruled our way. But in the end, I personally feel the statute has got to be refreshed and properly structured once we understand the range the Supreme Court is going to grant us.”

Key Components of the Bill:

(1) Who can run a sportsbook? The bill would permit Atlantic City casinos and racetracks in the state (even dormant ones that could reboot) the opportunity to obtain a sports wagering permit;

(2) Taxes and fees:

  1. The tax rate for sports betting gross revenue produced from on-premises betting is eight per cent;
  2. The tax rate on mobile/online gross revenue is 12.5 per cent;
  3. The application/issuance fee for a permit shall be not less than $500,000;
  4. Also there’s an annual fee of $500,000 on all permit holders payable to the State General Fund, benefiting the Department of Human Services and Council on Compulsive Gambling of New Jersey.

(3) Mobile and online: Casinos and racetracks holding a sports wagering permit may conduct an online sports pool or may contract with a licensed operator to handle the online wagering/apps, and patrons have to be 21 years of age and up.

(4) “Integrity fees” and costs: Buried the lead here a little bit. A couple weeks ago we learned from and Politico that members of Governor Phil Murphy’s administration met with MLB and NBA officials, who have been feverishly lobbying for a “betting rights and integrity fee” paying them one per cent off-the-top on all wagers. Referencing the presentation as a whole, one official said that it was “laughable. According to sources, this bill is coming through the Governor’s office.

From the bill: The “integrity fee” here would go directly to the “Sports Wagering Integrity Fund,” which would be wholly managed by the Attorney General. The cost? All casinos and racetracks would pay equal to the lesser of $7.5m or 2.5 per cent of gross sports wagering revenue (it would take some tremendous volume for a single sportsbook to have $7.5m represent the lesser of these two possibilities).

Notably this keeps monitoring between the sportsbooks, the Division of Gaming Enforcement (DGE) and local law officials and gives them the ability to work with the leagues directly, but would eliminate paying the leagues directly to expend money as they see fit — or pocket it since the leagues view their preferred fees as a ‘royalty’ as much as an ‘integrity’ expense.

(5) This bill does make a concession to the leagues:

“A sports governing body whose sports events are wagered upon in New Jersey casinos or racetracks may seek reimbursement for expenses incurred relative to ensuring the integrity of its sports events with respect to sports wagering operations in New Jersey by submitting a claim for such compensation to the attorney general.”

If there’s no more funds to pay the leagues? Tough luck. But we’ll see about this portion of the integrity monitoring framework. I wouldn’t bet on the league-friendly language making it into the final version.

(6) Importantly: Sports wagering permit holders may not operate or accept wagers via an online sports pool unless a sports wagering lounge is established and has commenced operation in its facility;

(7) And as an extension of that, regarding online sportsbook offerings (emphasis added):

It shall be an express condition of operating an online sports pool by or on behalf of a casino licensee pursuant to an agreement with a casino licensee that the online sports pool shall be branded in a manner to emphasise the identity of the casino licensee and that online sports bettors shall be provided with promotional credits, incentives, bonuses, comps, or similar benefits designed to induce online sports bettors to appear in person at the premises of the casino licensee’s casino hotel in Atlantic City, New Jersey. The division shall establish by rule standards governing the provision of these measures.

Obviously the state is eager to drive patrons to the brick-and-mortar facilities, racetracks and their to-be constructed sportsbooks. Also indicated by this language is the wise recognition that allowing people to register for a sports betting account online would be a smart way to engage potential patrons currently betting in the black market. Rather than forcing them to register in person, which is the status quo in Nevada. Get people registered through branded apps and go from there.

The Garden State’s legislative session runs until December 31, so the only urgency here is setting the table for a possible post-PASPA world. The next possible date for a decision in the case is May 14. Stay tuned for that and progress on this bill.