02/26/2013 5:25PM

Online gambling becomes legal in New Jersey

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The New Jersey legislature swiftly passed a bill on Tuesday legalizing online gambling, becoming the third state to authorize internet gambling by its residents.

Gov. Chris Christie signed the bill shortly after both chambers of the legislature passed it. Christie had vetoed an earlier version of the bill, saying that he felt that internet gambling operators should face a higher tax rate and that the law should sunset after 10 years.

The new bill passed Tuesday taxes the operations at 15 percent, rather than the 10 percent rate in the earlier version. It also contains the 10-year sunset provision advocated by Christie.

The law will allow the owners of Atlantic City casinos to operate the sites, which will be restricted to New Jersey residents. However, operators of the sites are expected to cut deals with international companies and seek compacts with states to allow for interstate gambling through the sites.

Last year, Nevada and Delaware passed similar bills. The two states are expected to begin awarding licenses later this year. Churchill Downs Inc. is one of approximately three dozen companies that have applied for Nevada licenses.

The legalization of online gambling will create competition for internet betting on horseracing, which is the only type of gambling to enjoy an exemption to a federal ban on the practice.