The Associated Press July 25, 2011, 4:44PM ET

NJ lawmaker: States can offer instate online bets

A New Jersey lawmaker is asserting that individual states have the legal right to offer in-state Internet gambling within their own borders.

State Sen. Raymond Lesniak, D-Union, wrote late last week to U.S. Attorney General Eric Holder asserting that New Jersey and all other states can legally offer online betting within their own borders.

He said he will introduce legislation in November to address the main concerns expressed by Gov. Chris Christie in March when he vetoed a bill that would have made New Jersey the first state in the nation to legalize in-state Internet gambling.

"Christie had two main problems with it: one was the concern that so-called Internet gambling cafes could pop up anywhere around the state, and that some of the revenue would be used to support horse racing," Lesniak said. "We will take care of both those concerns."

Lesniak said his bill would explicitly spell out penalties for illegal Internet betting operations and could include a ban on advertising them.

Despite Christie's veto in New Jersey, many other states are considering passing similar laws. That prompted U.S. Sens. Harry Reid of Nevada and Jon Kyl of Arizona two weeks ago to write to Holder expressing concern that a dozen states appear to be gearing up to offer in-state Internet gambling and asking for a federal crackdown on such measures.

"In many cases," the senators wrote, "Internet gambling advocates in those states cite the silence of the Department of Justice in the face of these efforts as acquiescence."

If the Justice Department is changing its position, the senators asked Holder to consult with Congress "before finalizing a new position that would open the floodgates to Internet gambling."

Lesniak said the two U.S. senators have it wrong. If they were legally correct, he wrote, the Justice Department "would have to prosecute the Nevada Gaming Board, which this year approved sports betting via mobile Internet within the confines of the state of Nevada."

"For that matter," he added, "New Jersey and 37 other states would also have to be prosecuted for permitting online wagering on horse races, which has existed for years."

The Justice Department did not immediately respond to a request for comment Monday.

The New Jersey Legislature already has approved a referendum for the November ballot asking voters whether they want to amend New Jersey's constitution by legalizing sports betting in the state. But even if voters say yes to that question, a federal ban on sports betting in all but four states would have to be repealed or overturned.

An online industry group asserts that approval of Internet gambling in New Jersey could create between $210 million and $250 million in new revenues for Atlantic City casinos during its first full year of operation. It also could create 1,586 to 1,903 jobs and $47 million to $55 million in New Jersey tax revenue, the group estimated.

New Jersey would have taxed Internet betting revenue at 23 percent, nearly three times the rate the casinos pay on their winnings. In order to comply with a law mandating that all legalized casino gambling be conducted in Atlantic City, the law would have required the online computer servers to be located in the seaside resort and owned and operated by the 11 casinos.

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Wayne Parry can be reached at http://twitter.com/WayneParryAC


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