AGA Weighs In On Wire Act Opinion, But NJ Online Gambling Remains In Limbo

Posted By Bill Gelman on January 22, 2019

The American Gaming Association responded to the new Wire Act opinion in a statement released last week.

It comes five days after the US Department of Justice’s Office of Legal Counsel (OLC) shared a memorandum reconsidering2011 opinion on the Wire Act.

Sara Slane, vice president of public affairs for the AGA, addressed the future of regulated gaming in the statement below:

“It is unfortunate that the Department of Justice departed from well-established practice in reversing its previous opinion without a compelling reason to do so.

“However, the 2018 OLC opinion does not impact the ability for states and Tribes to legalize and regulate gaming on a state-by-state and tribal basis, or for companies to provide the exciting products and entertainment experiences our customers want.

“With over 4,000 regulators and billions of dollars allocated to compliance, casino gaming is one of the most highly regulated industries in the country and for decades has provided its customers with cutting-edge products in a safe, regulated environment pursuant to state, Tribal and federal law. We will work with all stakeholders to preserve the ability of states and Tribes to regulate gaming, and we encourage DOJ to investigate and shut down illegal, unregulated gambling operators who prey on consumers.”

While it’s too soon to judge how this reinterpretation will impact NJ online casinos, as well as the state’s rapidly expanding online sports betting industry, the AGA’s statement does come with some clarity for legal gambling.

The AGA, the Wire Act and NJ online casinos

The key part of Slane’s statement revolves around what the OLC opinion does not impact:

“… the 2018 OLC opinion does not impact the ability for states and Tribes to legalize and regulate gaming on a state-by-state and tribal basis, or for companies to provide the exciting products and entertainment experiences our customers want.”

From the AGA’s perspective, the new Wire Act opinion is not about to freeze any gambling as it currently stands in the US. New products and experiences can still be introduced to customers. But does that include online gambling?

That remains the elephant in the room, leaving New Jersey’s booming industry with a bunch of questions.

Meanwhile, a memo from US Deputy Attorney General Rod Rosenstein surfaced in which he addresses how the new DOJ opinion will not take effect for 90 days as it creates prosecutorial guidelines.

For online gambling operators, that means there is now a compliance deadline to meet on top of all the other questions.

How will NJ regulators react?

The Pennsylvania Gaming Control Board released a statement to operators last week regarding the compliance deadline. While its online industry is still a work in progress, New Jersey’s online gambling market is five years old.

But as of today, the NJ Division of Gaming Enforcement has yet to release any statement or comment in reference to the new OLC opinion, which could shake things up for operators in the state.

NJ sports betting operators and online casinos have stayed mostly mum on this front, too, as they await clarity on the issue.

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NJ online gambling = billions

The bottom line is NJ online gambling and sports betting are big businesses.

According to the DGE, online gambling sites generated a record $29 million in revenue last month. It marks about a 40 percent uptick from the same period in 2017. Since 2013, when NJ online casinos first launched, the industry has generated $1 billion. And with only a few months under its belt, legal sports betting in the state is off to a rollicking start.

Without this additional revenue, it’s likely there would not be nine casinos in Atlantic City today. Remember, the town was once home to 12 casinos.

Looking closer at December’s revenue numbers, online casino and NJ sports betting revenue are a positive for the smaller casinos in AC such as Golden Nugget.

Golden Nugget’s December revenue

  • The land-based Golden Nugget casino earned $16,557,994 from gamblers in December (a 10.6 percent drop from December 2017).
  • Internet gaming win contributed an additional $10,178,563 (a 67.2 percent increase over the same period in the previous year).
  • Combined with the retail sports betting revenue of $82,532, Golden Nugget was up nine percent for the month.

This year is expected to be an even bigger year for NJ sports betting and online gambling. New online sports betting platforms and retail sportsbooks could be launching before Super Bowl LIII. And more online casinos are in the plan as well, including one from Churchill Downs.

It would seem highly unlikely that the industry doors will be slammed shut anytime soon. But there is a good chance New Jersey legislators will weigh in and/or put up a fight.

In other words, the Wire Act opinion aftermath is just getting started.

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Bill Gelman

Bill Gelman is a veteran sports writer based just outside of Philadelphia and not too far from the Jersey Shore. Bill spends time in Atlantic City writing about casino openings and expansions, special events and now NJ sports betting and online gambling.

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