The Effects of the Banning Online Gambling
During 2008-2010, the state of New Jersey passed a ban on online gambling. This article will provide an overview of the state gaming board's findings in 2012 and beyond, including a brief summary of their impact on Atlantic City casinos and players.
New Jersey Governor Chris Christie has long opposed online gambling due to its potential for influencing professionals and college students to gamble at home as opposed to going out socially. His support for shutting down internet gaming began under his tenure as United States Attorney General in 2006 when he ordered then-U.S. Attorney Chris Christie to investigate and prosecute suspicious online gambling sites.
In June 2010, the state of New Jersey enacted a series of measures intended to stop the spread of online gambling. Under New Jersey's new law in 2010, individuals were now legally prohibited from conducting or participating in "gambling business" altogether. Additionally, it was now illegal for a person to place bets through any remote gambling site. For the first time in American history, internet access was required by a federal statute for players of any kind to make their wagers.
The law was signed by then-Governor of New Jersey, Jon Corzine, on June 18, 2010. The statute's full text is available here.
In 2012 and 2013, the New Jersey Division of Gaming Enforcement reviewed 329,891 internet sports betting wagers that were placed from September 2011 to July 2012. The report concluded that there was no link between online gambling and an increase in problem gamblers. Results indicated that 1% of the individuals surveyed were at risk for problem gambling – 0.00004% higher than the national average. Further research showed that there were 22 internet gamblers for every 100 regular gamblers – a ratio 2 times lower than the national average of 50:100.
The report concluded that no causal effect could be established between online gambling and increase of problem gambling. The report's author also concluded that the results proved that the risks of becoming a problem gambler were very low for individuals who play casino games online.
Since 1999, the state of New Jersey has been especially concerned with the effects on Atlantic City casinos from do-it-yourself (DIY) internet betting. Atlantic City has relied on remote gaming such as free online poker, which is unregulated in the United States. According to a study by Dr. Mark Griffiths at Nottingham Trent University, approximately 50,000 people gamble remotely at New Jersey casinos each year through free internet video poker games.
New Jersey Assemblyman Ralph Caputo, who represents the 24th district in the New Jersey General Assembly, asked then-Governor Jon Corzine to investigate DIY online gambling's effects on the Atlantic City casinos. Corzine, with members of his cabinet, subsequently requested all major casinos to provide information on how much money was being lost as a result of DIY gaming.
In 2010, Governor Christie ordered the New Jersey Division of Gaming Enforcement (DGE) to investigate internet gambling's effects on Atlantic City casinos as well as its economic impact. The investigation resulted in an 18-month study that cost New Jersey $881,442 dollars. The results were published in May 2012.
In April 2012, the New Jersey Division of Gaming Enforcement (DGE) published a report on the economic impact of Internet gambling in Atlantic City casinos and whether it contributed to a decline in gaming revenues. The report included a number of findings, some indicating that Internet gambling had negatively impacted Atlantic City's gaming revenue and others indicating that it did not. The report concluded that "current evidence is insufficient to establish an overall causal effect" on Atlantic City's casinos regarding the relation between internet gambling and their gaming revenues.
The report's findings are presented below. The report's findings that Internet gaming had not impacted Atlantic City's casinos were:
· Atlantic City's gaming revenue increased each year from 2002 to 2007. The report concluded that the growth in gaming revenue was due to a number of factors including the strength of New Jersey's economy, improvements in Atlantic City's casino facilities, and the impact of other demographics in Atlantic City. The majority of this growth occurred during a period when there was a significant increase in online gambling for both mobile and land-based games.
· During 2007-2008, $242 million more than ever came into Atlantic City casinos from online gaming – an increase from $125 million to $410 million. Additionally, the state's internet gambling revenue more than doubled from 2007 to 2008.
· In October 2008, there was a noticeable decline in the amount of money being wagered online. According to the report, this occurred during the same period that New Jersey's economy entered a recession. The report concluded that this decrease could not be directly linked to internet gambling because New Jersey experienced similar declines in revenue during other recessions. In other words, there was no correlation between internet gaming revenue and Atlantic City's gaming revenue as they both declined together.
· The report found that internet gambling revenue is only a very small part of the overall income of Atlantic City casinos. In 2009, Internet gambling was less than 10 percent of total casino profits. By comparison, the operations at the Borgata in Atlantic City were responsible for over 23 percent of its overall profits.
The report's findings that Internet gaming had contributed to a decline in Atlantic City's casinos were:
· According to the report, approximately 50,000 people gamble online at New Jersey casinos each year. The casinos and the state lost $1.5 million directly as a result of these individuals not staying at or visiting casinos within New Jersey.
· The report claims that there is a statistical correlation between players who gamble online and the number of Atlantic City casino patrons. In other words, the more Internet gamblers, the fewer people in Atlantic City casinos. This finding was based on a study by Dr. Mark Griffiths at Nottingham Trent University in which approximately 50,000 people were observed gambling remotely at New Jersey casinos each year; these individuals are referred to as "remote gamers." The study concluded that those who gamble online are more likely to be low-income and play online because it is convenient. According to Griffiths, remote gamers do not sleep in hotels and do not eat at restaurants while they visit their home or vacation spots.
· According to the report, New Jersey casinos receive approximately 6 percent of their total revenue from internet gaming. By comparison, all Atlantic City casinos receive about 20 percent of their total revenue from internet gaming.
The report concluded that the results indicated that there was a "lack of direct evidence" to support the claim that online gambling had significantly impacted Atlantic City's economy, but stated that its results were "indicative" of such a relationship. The report also stated these findings should be interpreted cautiously and cautiously considered by those who are interested in future policy decisions regarding online gaming.
In July 2011, the Massachusetts voted 2-1 in favor of legalizing casino and slot gambling for one year under an emergency bill.
Conclusion
As of July 2011, there was no significant data to support the claims that casinos are in danger from online gaming. The analysis of the economic impact of internet gambling on Atlantic City casinos and New Jersey's economy by the New Jersey Division of Gaming Enforcement (DGE) found that there was not enough evidence to conclude whether or not internet gambling had contributed to a decline in Atlantic City's casino revenue. Furthermore, no other statistical studies have been performed that would confirm the findings contained in this report. For this reason, it is impossible to make a definitive statement regarding whether or not Internet gaming has negatively impacted the Atlantic City casino industry.