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NJ State Sen. Lesniak Introduces International Liquidity Sharing Bill

New Jersey State Senator Raymond Lesniak has a month left as a lawmaker until he retires, but he is not coasting to the finish line. Late last week, he introduced Senate Bill 3536, a piece of legislation which, in its words, “allows Internet gaming equipment to be located outside Atlantic City for certain international gaming purposes.”

Raymond Lesniak
New Jersey State Senator Raymond Lesniak
(c) @SenatorLesniak

Put another way, Lesniak wants New Jersey to be able to pool its online gambling customers with those in international jurisdictions, greatly expanding the potential internet gaming market.

Lesniak has been one of the biggest political champions of online poker in the country for a number of years. He fought to get online gambling legalized and regulated in New Jersey, he fought to have New Jersey share liquidity with Nevada and Delaware (which has been announced), and in August, he announced his intention to introduce a bill just like SB3536.

At the time, Lesniak told the Associated Press, “I’ve changed my mission from making New Jersey the Silicon Valley of Internet gaming to the Mecca of Internet gaming. Online gaming has helped Atlantic City to revive its casino sector with a success that we can expand in ways that will generate more revenue, create jobs and fuel technological innovation in gaming.”

Lesniak’s bill really amends New Jersey’s current online gambling law (both online poker and online casino games are legal in the Garden State), so much of SB3536 just goes through the history of gambling and online gambling in the state and sets forth the why’s and how’s of it all. The key part of the law that Lesniak aims to change dictates that online gambling servers must be located in Atlantic City, the only city in the state where even brick-and-mortar gambling is permitted:

….all hardware, software, and other equipment that is involved with Internet gaming will be located in casino facilities in Atlantic City or in other facilities in Atlantic City owned or leased by a casino licensee and thereby considered to be part of a casino hotel facility that are secure, inaccessible to the public, and specifically designed to house that equipment, and where the equipment will be under the complete control of a casino licensee or its Internet gaming affiliate.

Lesniak’s bill first adds quick reasoning of why expanding internationally is a good idea for New Jersey.

“In the coming years,” the bill states, “the global online gambling market is expected to see a compound annual growth rate, and the largest share of online gambling revenue comes from Europe totaling nearly $15 billion a year and growing at a faster rate than the rest of the world.”

It then details some numbers on how online gambling has benefited New Jersey financial to date before getting to the key sentence in this entire deal:

The division may permit Internet gaming equipment to be located outside of the territorial boundaries of Atlantic City if the division deems it necessary to facilitate the conduct of international wagering permitted under this section.

And while right now, only people physically located in New Jersey are permitted to play on New Jersey-based gambling sites, the law – as it is currently written – actually keeps the door open for international players to join in, “… if the Division of Gaming Enforcement in the Department of Law and Public Safety determines that such wagering is not inconsistent with federal law or the law of the jurisdiction, including any foreign nation, in which any such person is located, or such wagering is conducted pursuant to a reciprocal agreement to which this State is a party that is not inconsistent with federal law.”

Add it all up and Senator Lesniak is making a strong push in his final month in office to get New Jersey to share player liquidity with other countries. As we know, this is extremely important for online poker, as the larger the potential player pool, the great the player traffic at a site, which results in more active tables, more happy patrons, and more rake for the poker rooms. This can snowball, as a busy, vibrant online poker room can have an easier time attracting new players, increasing player traffic further.

As mentioned, New Jersey has entered into an agreement to share liquidity with Nevada and Delaware, but those markets are so small relative to New Jersey’s that New Jersey may not see that much of an impact from the additions. It is Nevada and Delaware that need New Jersey much more than the other way around. Once Pennsylvania gets its online poker industry going, a merger there would benefit New Jersey, but the best deal – as long as online poker isn’t legal throughout the United States – would be to share liquidity with international markets.

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