Nevada and New Jersey are exploring gambling compacts; other states may follow

It could be the biggest alliance since America and Britain made up: Nevada and New Jersey – the first two American states to legalize and regulate online gaming – could be forming a marketing alliance to create a larger Internet gambling audience.

“I think it’s likely that in 2014 we’ll see a compact between New Jersey and Nevada,” said MGM Resorts International CEO Jim Murren, who says his company and others like it are coming together to figure out how everyone can work to create a joint online gambling arena between the two states. As of now, only Nevada and New Jersey are actively online or about to go online with poker and casino gambling (New Jersey only), so it would certainly broaden the player net until more states come on board.

Expanding the Market

Without New Jersey in the mix, some casino operators feel that the potential online player population for Nevada is just too small.

“We’ve really been focusing on Nevada’s ability to compact with other states, create more liquidity,” said Murren.

In order to make it happen, all the regulatory bodies need to spearhead the union as well, as Nevada State Gaming Control Board Chairman A.G. Burnett explained in an interview: “Nevada is striving to do what it can in regards to compacts. We do not jump into the fire without having done a lot of cautious research and study into the particulars of such agreements, and that phase is nearing completion.”

David Rebuck, who heads Nevada’s division of gaming enforcement, concurs. “New Jersey is currently focused on working with its existing casinos to attain successful Internet gaming opportunities in this state,” Rebuck said.  There are also “future opportunities for growth and development with other jurisdictions”, according to the regulator.

With MGM Resorts, as well as Caesars and the Golden Nugget, all having brick-and-mortar casinos in both cities, it seems even more likely that an intrastate compact would just make practical business sense. And Murren is telling gaming analysts that the NV-NJ compact could just be the beginning of this tangled web.

“We have a big team that is preparing us on a state-by-state basis and on the states that we believe will be the most productive for us. And we’ve been working with the state of Nevada on their efforts to compact with other states,” Murren told them.

“I think at least 40 of the 50 states are in some stage of debating this [online gambling] internally, he added. “The ones most visible are New Jersey, New York State, Illinois and California. We’re providing all the support they ask of us. We’ve provided Nevada with our government affairs [expertise] and a framework.”

Huge Revenues At Stake

Although Nevada’s new online poker allows anyone who is within the state’s borders, even visitors, to play online, the state’s overall population is relatively sparse outside of Las Vegas proper. New Jersey’s denser population – combined with the fact that it will be offering a full array of casino games online come November, not just poker – has analysts predicting a $500 million to $1 billion annual revenue take just from Internet play, versus Nevada’s predicted $50 million to $250 million. Delaware is also poised to present online gambling in the not-too-distant future.

Besides expanding gambling markets, intrastate compacts would do to a great degree what much proposed federal legislation is aimed at doing: create a more consistent regulatory framework and help states share important information, such as gamblers’ ages, identities, locations and credit card verification (or fraud).