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New Bill Would Legalize NJ Esports Betting

As sports betting continues to grow as an industry in New Jersey, state lawmakers are looking at ways to adapt it to video-game competitions known as “esports” that have also been rapidly expanding.

A bipartisan bill put up for discussion for the first time in the State House on Monday would make it legal to bet on esports in New Jersey under the 2018 sports-gaming law — if certain standards set by the state’s Division of Gaming Enforcement are met.

The bill also mandates that no bets could be taken on esports tournaments organized by high schools, or when the majority of the players are underage.

While no formal votes on the proposal were taken, sponsors and other supporters said during a legislative committee hearing that it’s important for New Jersey to remain on the leading edge of the sports-betting industry by keeping up with the latest trends. In fact, Assemblyman Ralph Caputo, a primary sponsor of the bill, called esports “the next big thing” as he led a discussion of the issue on during a meeting of the Assembly Tourism, Gaming and the Arts Committee.

“The time is right for New Jersey to expand legal wagering beyond traditional sports,” said Caputo (D-Essex).

Legalized gambling in the Garden State

New Jersey legalized both in-person and online sports betting in 2018, just weeks after a major U.S. Supreme Court decision overturned a long-standing federal law that only allowed such gambling to occur in Nevada and a handful of other states.

The New Jersey sports-betting law enacted by Gov. Phil Murphy gives casinos in Atlantic City and licensed horserace tracks in other parts of the state the ability to offer in-person gaming and to also operate online sports-wagering sites. Bets can be placed on all professional sporting events, not just those in New Jersey, as well as on collegiate sporting events as long as they don’t involve New Jersey schools or take place in New Jersey.

The latest statistics on sports betting released by the Division of Gaming Enforcement indicated a total of $4.58 billion was wagered on sporting events under the state’s sports-betting law in 2019, the first full year under the law. Much of that total, $3.8 billion, was wagered online, according to the DGE.

(New Jersey levies a tax rate of 8.5% on in-person gambling, and a 1.25% surcharge that raises revenue for Atlantic City and the host communities of the racetracks. The tax rate is 13% for online bets, plus the 1.25% surcharge.)

Staying ahead of the esports curve

But even as New Jersey’s sports-betting industry has gotten off to a strong start, Caputo and other lawmakers said it’s important for the state to stay on top of the latest industry trends and to update the law whenever necessary, such as in response to the growing popularity of esports competitions.

“As we did with sports betting, we try to bring it into the sunlight,” Caputo said.

David Rebuck, director of the Division of Gaming Enforcement, said competitions based on videogames like Fortnite and League of Legends have become especially popular with younger people who participate in what can be international events. He described such events as in-person tournaments that people attend at sports arenas or concert venues that are also often broadcast online. In fact, Rebuck said his agency allowed bets to be placed last year for an esports event held in November in Paris, since it met the conditions that would be codified under the bill sponsored by Caputo and Assemblyman Ron Dancer (R-Ocean).

“The Division of Gaming Enforcement fully supports the proposed bill,” Rebuck said during Monday’s committee meeting.

According to an official statement prepared for the bill, the list of sporting events at which betting would be legal in New Jersey would include any “skill-based attraction,” a definition that would cover esports, but also “awards competitions and competitive eating contests.”

The bill also says it will be up to the DGE, which is an agency within the state attorney general’s office, to “certify that any sporting event approved for wagering has the appropriate policies and procedures in place to monitor the integrity of the sporting event.”

“In the absence of such policies and procedures, the director will impose a wager limit not more than $100 or a win limit of $500, whichever is greater,” according to the bill statement.

To address concerns about underage players, the bill would define events at which sports betting would not be allowed in New Jersey, including “electronic sports competitions sponsored by or affiliated with high schools or competitions in which the majority of competitors are under the age of 18.”

Also testifying before the committee Monday was Anthony Gaud, CEO of Atlantic City-based Gaud-Hammer Gaming Group and President of INGAME Esports. He repeated the point that esports are growing in popularity, particularly with younger players, and suggested they present a growth opportunity for both sports betting and the ongoing revival of Atlantic City.

“We have to adapt,” Gaud said. “This is where they are and it’s not going to change.”

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