New Jersey has become the third U.S. state to allow its residents to bet on games and sporting events online, a key step towads legitimacy for a shadow industry that experts believe is worth tens of billions of dollars annually.

Late Tuesday, Republican governor Chris Christie signed the state's Internet Gaming Bill into law, after the state legislature had amended the original proposal to include more safeguards he had requested.

"This was a critical decision, and one that I did not make lightly," Christie said in a statement. "But with the proper regulatory framework and safeguards that I insisted on including in the bill, I am confident that we are offering a responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits to New Jersey as a whole."

The move follow a similar one in Nevada last month, and opens the door even further to allow U.S. residents to openly and legally bet on games of chance such as poker, or even sporting events. Delaware also allows the practice under a longstanding law.

Online gambling is something that's already happening in large numbers, but U.S. residents and businesses have been forced to move offshore to websites hosted in Europe, Asia or on Caribbean islands or risk running afoul of America's nebulous anti-gambling laws.

Residents of other states will likely still have bureaucratic problems trying to get any winnings into their home states, but it is a symbolic move for the state home to Atlantic City and its casinos.

To be sure, the bill does not open the floodgates to all kinds of online betting. The only form that New Jersey has okayed in the bill is that which happens via the online versions of the state's existing casinos. Bettors will have to open accounts with existing bricks and mortar casinos where it's hoped there can be more oversight.

The tax rate on winnings is set at 15 per cent, and the bill includes a built-in "trial period" while the state surveys the effects. Also, participating casinos had to pledge to contribute even more money to anti-gambling support programs.

But despite the red tape, it is a significant move. "New Jersey has effectively legalized online casino and poker," Citibank analysts said in a research note Tuesday.

Official data from the state's Division of Gaming Enforcement shows revenue in New Jersey casinos was $3.3 billion in 2011. That's an almost 25 per cent decline from the $4.3 billion the casinos took in a decade ago.

The state hopes the move to allow online gambling could be a shot in the arm to the state's finances, and possibly double New Jersey's casino-related income to $400 million next year, state budget estimates show.