Saturday April 20, 2013 : ONLINE GAMBLING SHOULD PROVIDE SOLID TAX REVENUES FOR NEW JERSEY (Update)
The plan is to launch "…sometime between late May and late November," says state treasurer.
Answering an enquiry from New Jersey legislative budget chief David Rosen this week, the state treasurer reiterated his assessment that the legalization of online gambling will generate $225 million in state taxes, and that the New Jersey Division of Gaming Enforcement is tasked with delivering and implementing online gambling regulations sometime between late May and late November 2013.
New Jersey treasurer Andrew Sidamon-Eristoff responded this week to the enquiry, writing that his estimates were based on a report from a Wells Fargo analyst who projected New Jersey’s Internet gambling potential could grow to $1.5 billion over the next five years. The Treasurer had opted for a more conservative estimate of $1.2 million in overall revenues.
“At a 15 percent tax rate, this would yield $225 million in revenue to the state,” Sidamon-Eristoff explained, adding that he expected $180 million in tax revenues would be generated during the first fiscal year of implementation in Atlantic City.
The budget boss had asked for clarity on the issue, expressing some scepticism on the state government's budgeting projections,
New Jersey has legalised online gambling, which is to be licensed to existing New Jersey land gambling licence holders and strictly controlled.
The publication Press of Atlantic City reports that Sidamon-Eristoff feels the Wells Fargo study may have underestimated the potential of Atlantic City-based online gambling, commenting in his response to Rosen:
“Wells Fargo estimated an initial impact, which did not benefit from a specific knowledge of the final legalization or our ultimate plans governing how quickly we would be able to roll out a fully functional system.
“We also feel that Wells Fargo’s analysis underestimated the level of excitement, novelty and publicity that such a rare opportunity would create.”
Dennis Farrell Jr., the Wells Fargo senior analyst who issued the original estimates, told the Press of Atlantic City that it was possible Internet gambling could gross $1.2 billion in the first year, but that there were many unknowns, including when the regulations would be published and when companies are ready to go online.
“Maybe they have an aggressive timeline,” he said. “The sooner, the better.”
Meanwhile, the UK-based consultancy GamblingData has published its own estimate on New Jersey's potential for online gambling, projecting gross gambling revenues of $262 million in the first year .
Gambling Data says it bases its forecast on data from the Italian market – a country chosen because its tax rate also is 15 percent, and that it shares other comparable factors.