New Jersey Senate Considers Regulated I-Gaming

1 March 2005

A hearing held Monday by the New Jersey's Senate Committee on Wagering, Tourism and Historic Preservation could be a positive step for advocates of regulated Internet gambling.

The discussion focused on whether the state should consider a regulatory approach toward I-gaming, and although the committee did not reach any notable conclusions, speakers provided relevant information that could be useful if regulation becomes a necessity.

The prospect of the World Trade Organization mandating a federal law change in the United States was a main topic of discussion; the entire first half of the hearing addressed the international scope of Internet gambling in world trade courts.

Professors Robert Stumberg and Sean Hewens, who traveled all the way from the Georgetown University Law Center in Washington, DC, focused primarily on the General Agreement on Trade in Services (GATS), which lies at the heart of Antigua's case against the United States in the WTO. A WTO dispute panel ruled last March that federal U.S. laws prohibiting I-gaming violate the United States' trade obligations under the GATS, so the panel therefore suggested that the United States conform to its trade obligations by changing federal policy to allow offshore gambling operators to access the U.S. market. Peter Riggs, director of the Forum on Democracy & Trade, was also on hand to lend his expertise to the global trade law discussion.

Following consideration of international law, Linda Kassekert, chairwoman of the New Jersey Casino Control Commission, and Thomas Auriemma, director of the New Jersey Division of Gaming Enforcement, provided information about the current legal status of online gambling in New Jersey and speculated about how a potential state regulatory law might function.

Ed Looney, executive director of the Council on Compulsive Gambling, explained the effects of readily available gambling over the Internet on problem gamblers. He expressed concern about the hundreds of calls he receives from online gamblers and also about the fact that poker has become so glamorized by the media that parents now simply accept that minors are exposed to the game and even playing it in many cases.

Meanwhile, Gary Selvy, executive vice president of state government affairs for MBNA Corporation, talked about 7995 coding for Internet gambling transactions and stated that credit card companies have been largely successful in preventing direct credit card transactions. He noted, however, that some online gaming operators try to push transactions through by labeling them as non-gambling-related.

The committee had planned to spend more time discussing online gambling but was cut short because an important vote on pay-to-play was taking place in the full Senate.

Keith Furlong, deputy director of the Interactive Gaming Council, attended the hearing and intends to follow up with the committee to provide information on why strict government regulation is a better solution than prohibition and to request that if a future hearing is scheduled presentations can include an industry-focused perspective.

"In my opinion, most of the information with regard to online gaming was one-sided in terms of favoring a ban on our industry," Furlong said. "The committee chairwoman, Senator Barbara Buono, however, did point out that online gaming already exists and is therefore an important policy consideration for legislators and policy makers."

Furlong also said committee members asked some important questions about the impact of online gaming on the land-based industry in Atlantic City.

The committee has not set a date to discuss the topic again, but the tentative plan is to wait until April 7, by which time the Appellate Body of the WTO should have reached a final ruling on the case of Antigua vs. the United States. It does at least seem likely that the committee will meet again to discuss the Appellate Body's decision and what it implies for I-gaming regulation in New Jersey.

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

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