New Jersey's dicey launch of Internet gambling

On Nov. 26, New Jersey will become the third – and by far the most populous – state to allow online gambling for money within its borders. Before more states follow suit, the US must rethink this dubious race to make gambling so easy.

AP Photo
The Tropicana Casino and Resort in Atlantic City, New Jersey, is using a kiosk to register customers for a trial period of its internet gambling website.

New Jersey is about to initiate the largest gambling surge in the United States since 1978, the year it allowed casinos to open in Atlantic City. On Nov. 26, almost all of the state’s 9 million adult residents will be able to wager at virtual table games and digital slots – simply by using a desktop computer, smart phone, or tablet. 

Instead of driving to a bricks-and-mortar casino, adults in New Jersey will be able to gamble 24/7 at home in their pajamas, in a car, or at work on a mobile device. The easy access means many more people will throw away their money on the false promise of easy winnings and a misguided belief in luck. If past is precedent, many of them will be poor or addictive gamblers. And any minor with astute computer skills might be able to bypass a website’s system for checking an online gambler’s age.

The size of New Jersey’s market gives it a head start in a budding competition among a few states to become the center for online gambling in the US. Last April, Nevada launched poker-only gambling on the Internet for people in that state while Delaware began casino-like e-gambling last month. Both states, however, have small populations. The gambling industry is looking to New Jersey – because of its proximity to other big states – to blast open the American market for online wagering.

A race for full-scale Internet gambling in the US began with a 2011 legal ruling by the Obama administration that alleged each state could allow such gambling for people physically within its borders without violating a federal ban. At least eight other states may follow Nevada, Delaware, and New Jersey. Eventually, some or all of these states hope to form a “compact” with each other to pool their online customers – similar to the multistate mega-lotteries – thus creating a large, almost nationwide market.

Such a move, however, may not pass a constitutional test. In addition, it is still not clear whether online gambling companies will be able to really bar people from outside a state from their websites. While today’s location technology is getting better at tracking the whereabouts of electronic devices, criminals who seek to use gambling sites to launder money might be able to fool these systems by using alias devices within a state.

These states also face other big hurdles. Many big banks, along with PayPal, are refusing to process credit-card transactions for online gambling, perhaps out of concern that gamblers will be taking on too much debt. And Las Vegas billionaire casino owner Sheldon Adelson is launching a major lobby campaign in Washington to make sure Internet gambling does not expand even further.

Whatever the potential tax revenues that might come to these states – and the amount remains unclear – they are not worth the social costs, especially to some 9 million habitual gamblers. The current forms of land-based gambling cause an estimated $7 billion in yearly damage through crime, addiction, or bankruptcy, according to the National Council on Problem Gambling.

The empty dream of gambling already results in Americans losing nearly $130 billion each year in casinos or to state lotteries. Why add to those losses – and perpetuate the notion that chance determines one’s future – by permitting gambling on the Internet?

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