News analysis: Presidential politics could affect New Jersey's online gambling legislation

11 January 2011
New Jersey made history Monday when its legislature became the first American legislative body to approve licensed and regulated online gambling in the United States. If Gov. Chris Christie signs the bill into law, New Jersey will become the first state to license and regulate online gambling in the U.S.

Christie has 45 days to either sign the bill into law or veto it. If Christie vetoes the bill, the New Jersey Legislature can overturn the veto. But it requires a two-thirds vote of the Assembly and a two-thirds vote of the Senate, and the politics of overturning vetoes is tricky. Republicans that voted for the online gambling legislation might not vote to overturn their governor's decision. And because the Democrats don't have a veto-proof majority in the Legislature, it is entirely possible that a veto will stand.

So will Christie veto the online gambling bill? That depends on his political ambitions.

Christie is a rising star in the Republican Party, and is being mentioned as a possible presidential candidate in 2012. If Christie is considering a presidential run, or even a vice-presidential slot on a future Republican ticket, the online legislation poses serious problems for him. Christie knows that signing online gambling legislation into law won't sit well with the conservative Republican base. In fact, it could keep him from even being considered for a position. So if Christie harbors national ambitions, a veto could be very likely.

If Christie isn't worried about the national political implications, he'll likely sign the online gambling bill into law. He has been very active in trying to improve Atlantic City and the gambling industry in New Jersey, so he's not anti-gambling. Plus, this legislation was passed with broad bipartisan support and the legislatures tend to get upset when their work is vetoed.

But if Christie chooses to veto the bill, he can seek political cover in the general legal ignorance surrounding online gambling. Even though the UIGEA specifically allows the intrastate online gambling authorized by the New Jersey legislation, Christie will be able to claim "he doesn't want potentially violate federal law" and get away with it. Most legislators have no idea what is and isn't illegal under federal law. It's not their area of expertise. And if Christie says his lawyers think it is illegal, many legislators will accept this is a legally murky area and go along with it. Combine that with the fact that the Justice Department, which could provide such a legal opinion, tends to view all forms of online gambling as illegal, regardless of what the UIGEA says, and you get the political protection you need for a veto.

Christie hasn't said publicly what he plans on doing. But whatever he decides, the New Jersey Legislature succeeded in doing what many other have tried -- passing online gambling legislation.

California tried to pass online gambling legislation last year, and it went nowhere. It didn't even get a full vote in either the Senate or the House. Florida and Iowa have considered the issue, but haven't made any progress. Rep. Barney Frank managed to shepherd online gambling legislation through his House Financial Services Committee last year, but it was never voted on by the full House. And Senate Majority Leader Harry Reid failed in his efforts to attach an online poker bill to must-pass legislation, the same way the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed in 2006.

So why did the New Jersey Legislature succeed while the California and federal efforts failed? It's simple really. There were fewer obstacles to success in New Jersey than there were -- and are -- in other places.

At the federal level, gambling is still a significant moral issue. Politicians in Congress are not where their colleagues at the state level are -- which is morals be damned, we need the revenue to balance our budgets. Instead, the federal debate is more ideologically driven. On the ideological right, you have politicians who are against gambling because gambling is wrong -- it's sin that breaks up families and destroys households. And although they've lost the battle over the expansion of gambling throughout the U.S., they're still going to try and block online gambling. On the ideological left, you have those that will support gambling legislation only if it can be regulated to their satisfaction, and even then only if the revenue it generates is worth the expected social cost. There are some lawmakers, from the right and the left, that take the libertarian approach -- the federal government has no business telling adults how to spend their entertainment dollars. But they currently represent the minority.

In California and New Jersey though, the morality ship sailed a long time ago. Democrats and Republicans alike have embraced gambling, and the revenue gambling generates for the state coffers. The New Jersey online gambling bill passed their Assembly 63-11. And the original November vote in the Senate was 29-5 -- and 34-2 yesterday for the same version that passed the Assembly. With 16 Republicans in state Senate and 33 in the Assembly, that's an amazing show of bipartisanship.

But in California, and other states with Indian gaming interests, online gambling legislation hasn't happened because stakeholders in the gambling industry can't agree on how to proceed regarding online gambling.

Some commercial casinos and card rooms want to offer online gaming. But many Native American tribes don't want any online gambling to be allowed at all. They believe online gambling will keep customers out of their casinos (a canard that has been debunked many times). Some of the California tribes also believe they have the exclusive right to offer online gambling to Californians based on the compacts they signed with the state, and the state can't authorize anyone else to offer it. Most legal experts disagree with that assessment, but the courts will have the last word on that issue. And other tribes, like the Morongo in California, want to start offering online poker to their customers now.

With such an array of opinions, state legislators have decided to play it safe and not do anything, despite how much they need the revenue. In states with Indian casinos, Native American tribes are a powerful political force that legislators count for campaign contributions, so crossing them is a bad idea. Big commercial casino companies are also serious political forces that need to be respected as well. So until Native American tribes and the commercial casino companies reach some sort of agreement that everyone can live with, online gambling won't be happening in state with Indian gaming interests.

And that brings us to New Jersey. There were no Indian gaming interests to work around. And Atlantic City is so broken that the state was ready to take any action that could possibly improve the situation, including online gambling.

It didn't matter that Caesars made it abundantly clear it preferred regulation at the federal level. It didn't matter that the Atlantic City casinos were not pushing this hard. New Jersey's gambling economy needed to be fixed.

The Interactive Media Entertainment & Gaming Association (iMEGA) recognized the perfect storm that was brewing in New Jersey early and worked with Sen. Raymond Lesniak (D) and the New Jersey Legislature to get an online gambling bill passed. And history was made.

Vin Narayanan

Articles by Vin Narayanan is the former managing editor at Casino City and has been involved in the gaming industry for over a decade Vin is currently based in Hong Kong, where he runs his own consultant group and works as head of gaming and public relations for Mega Digital Entertainment Group.

Before joining Casino City, Vin covered (not all at the same time) sports, politics and elections, wars, technology, celebrities and the Census for, USA WEEKEND and CNN.