Lawmakers in New Jersey have expressed doubts over whether the US state can reach tax revenue figures forecast after its full launch of online gambling.
According to the PressofAtlanticCity.com website, Governor Chris Christie predicted that online gambling would result in $160 million (€117.1 million) of tax revenue by July 2014, just seven months after the full launch of internet gambling in New Jersey.
At a tax rate of 15%, the state had originally forecast $180 million in taxes, but this was later reduced in the approved budget.
However, New Jersey Senator Jim Whelan said, “From the get-go, we thought the number was, frankly, absurd. I never thought the state was going to hit the mark, even the revised mark. Both of those numbers are unrealistically optimistic.”
Whelan acknowledged that the launch of online gambling would be beneficial, but estimated that the tax revenue figure would be “well under $100 million given the time constraints” by July.
There are contrasting estimates of the tax income to be generated by introducing online gambling in New Jersey.
Last week, the Moody’s Investors service released a report that indicated that online casino gambling revenues would be between $250 million and $500 million in the first year.
However, a report by Fitch Ratings forecast tax income of between $200 million and $300 million in the first year.
“Although some market participants will benefit, New Jersey online gambling is not going to be the saviour of the (Atlantic City) casino market,” the Fitch report said. “In some ways, it will be detrimental because it has kept brick-and-mortar supply in the market when the level of demand dictates that some supply should be removed.”
Despite the concerns, lawmakers have noted that there is a significant opportunity for growth in the New Jersey online gambling market, with just six of the state’s 12 casinos current engaged in internet gambling.
An application from Resorts Casino Hotel and partner online gaming operator PokerStars is also currently pending before the New Jersey Division of Gaming Enforcement (DGE) after an earlier licence hold-up.
In addition, the DGE also confirmed that as of Tuesday this week, 54,852 online gambling accounts had been created, outpacing Nevada after its launch of online poker earlier this year.