New Jersey Governor Chris Christie gave conditional support to in-state Internet gambling, a market that many gaming companies hope will benefit their bottom line (or their stock price) as they look for potential new revenue sources. Governor Christie’s conditional veto to the proposed online gambling bill that awaited his signature on Thursday requests only minor alterations, and is expected to result in approved legislation that should see online poker legalized as early as next fall.
Several gaming stocks of online operators, suppliers and land based casinos saw double-digit growth to their stock price in trading today as a result of this news. Companies like 888, Zynga, bwin.party and Canada’s Amaya were among the gainers, but Caesars Entertainment saw its shares rise an amazing 38 percent, or $3.84 a share, to close at $13.91, despite the company being in the red.
Of particular importance to Christie’s “conditional approval” is that he has endorsed that he would permit a kind of reciprocity with other states where online gambling is legal. This is positive step towards achieving interstate shared poker liquidity, a move that would help make online poker viable for states with smaller populations.
In a statement, the Governor said “With these goals in mind, I have concluded that now is the time for our State to move forward, again leading the way for the nation, by becoming one of the first States to permit Internet gaming.”
Are gambling companies betting too much on internet gaming in the U.S.? Today’s stock movements have certainly enticed speculators in the market. With the barriers to entry in the online gaming space much less financially demanding than say a multi-billion dollar casino project, it is almost a no brainer and a certainty that it will attract a large influx of operators. It will represent a tax boon for individual State governments as they collect hundreds of thousands of dollars in license applications, recurring annual fees and ongoing gaming tax. However, on the flipside, if too many operators enter the market, it is very likely that internet gaming could become diluted at a state level, at least for online poker.