New Jersey Online Gambling Bill Details

John Mehaffey December 5, 2012 1145 Reads

New Jersey Assemblymen Burzichelli, Prieto and Ramos have sponsored a bill that would legalize virtually all forms of online gambling in New Jersey.  The bill requires all servers to be located within the boundaries of Atlantic City.  This is due to the state’s constitutional requirement that all forms of casino gambling be located within Atlantic City.  Gamblers would be required to be physically located within the state when placing a wager.

The bill allows all forms of gambling allowed in brick and mortar casinos to be offered over the internet.  This includes poker, house table games, video poker and slot machines.  It would also include sports betting should the state prevail in its court battle with major sport leagues over its legalization in the state earlier this year.

Licensing Requirements

The only companies that will be allowed to operate the actual gambling websites in New Jersey are casino companies that already operate in Atlantic City.  Software companies, data collection companies and payment processors could all provide services but only the casinos can accept wagers.

Casino operators, software providers and data collection agencies would all be required to receive a license.  Any company involved in the transmission, processing or offering of a wager would need to apply for a license as well.  Data centers that store gambler’s profiles and information would also be required to hold a license.  Any company that receives a commission on a bet for their services would be required to hold a license.  While the bill does not specifically mention marketing affiliates they would likely fall into this category if affiliates were allowed.  Employees that work within the industry for these companies would be required to hold a personal gaming license as well, just as Atlantic City gaming employees are required to do.

Banks, payment processors, geolocation services, internet service providers, computer supply companies and other companies not directly connected to accepting the wager would not be required to obtain a license.

Licenses would be good for one year and would require a renewal each year.  License applicants would be required to pay a $100,000 fee for a required background check.  This fee would be applied to the $200,000 licensing fee that is required for the first year of licensing.  Renewal years carry a fee of $150,000 each year.  In addition to these fees, licensees will be required to pay the Department of Human Resources $85,000 and problem gambling services $65,000.

Taxes

Online gambling would be subject to a 10% tax on gross revenues.  In other words, the total win by casinos before expenses would carry a 10% tax.  The standard 8% tax on Atlantic City gross receipts would not apply to internet revenue.

Unlicensed Operators

Unlicensed operators would be subject to fines of up to $200,000 and a fine of $1000 per day per player.  Unlicensed casinos that advertise their services in New Jersey would be subject to a fine of $10,000 per day.  While not specifically mentioned, this would likely apply to offshore companies that currently accept players from New Jersey.

Federal Law Would Still be Recognized

One important addition to this bill is language that would apply if a bill such as the currently proposed Internet Gambling Prohibition, Poker Consumer Protection, and Strengthening UIGEA Act of 2012, commonly referred to in the online poker community as the Reid/Kyl bill, were to pass.  This language would mean that a passage by the Reid/Kyl bill would strike down the parts of this bill that do not apply to online poker.  It is possible that New Jersey could fight a federal bill in court that banned other games but the law is clear that non poker games would shut down in case of a federal restriction.  The following is taken directly from the bill:

Internet gaming in this State shall be subject to the provisions of, and preempted and superseded by, any applicable federal law.

Cross Marketing

Casinos would be allowed and encouraged to cross market their brick and mortar casinos to their internet customers.  This includes connecting player’s clubs and offering free play.  Brick and mortar player lists could be used to market online gambling as well.

Player Requirements

Players would be required to be at least 21 years of age to gamble online.  This is the same age requirement that Atlantic City casinos have.  Players could deposit by cash, checks, money orders, credit card and a variety of electronic methods.  Checks must be made out directly to the casino.  In other words, players could not sign over their paycheck to the casino.

Winning players would be required to complete a withdrawal form to receive their winnings.  They would also need to provide ID.  There is no mention of a Social Security Number requirement although that may be included in the withdrawal form as this is required in all other forms of online gambling legislation that has been proposed.

Excluded Players

Casinos would be allowed to ban players they have excluded from their properties.  Casinos would be allowed to ban any player at their sole discretion.  Players that have been convicted of a gaming crime or otherwise banned from Atlantic City casinos would also be banned from New Jersey online casinos.

Problem Gambling

There are several problem gambling requirements in this bill.  One is that a problem gambling message would appear at login and logout with every player connection.  Players would also be able to see their lifetime wins and losses, session wins and losses and search past sessions for their total wins and losses.  Casinos would not be allowed to extend credit to online players.  Players would be able to set loss and deposit limits.  Players would be able to opt out for any set period from just an hour up until a time they feel they need to cool down.  If a player opts out for more than 72 hours the casino may not contact them with any gambling related messages.  Players may also permanently self exclude themselves from online gambling.

Tampering with Games

Cheating at online poker is not directly mentioned but several forms of fraud are addressed and collusion and other poker cheating may fall under these terms.  Any person who tampers or alters an outcome of a game is guilty of a 4th degree felony with a potential fine of up to $25,000.  If a company or group commits the same offense there is a fine of up to $100,000.

Advertising of New Law

The Division of Gaming Enforcement will be required to advertise the legalization of online gambling within New Jersey.  This advertising would include underage and problem gambling warnings as well as the dangers of playing on unlicensed and offshore online gambling websites.  This advertising would be required for 18 months or until the state felt that the message was still needed.

Racetracks to Receive Revenue

Even though New Jersey racetracks get left out of this bill they stand to benefit from it anyway.  The state would pay the horse racing industry $15 million in the first year of regulated online gambling, $10 million the second year and $5 million the third year.  The state will be required to make these payments even if the revenue falls short.

Governor Previously Vetoes Similar Bill

Governor Christie vetoed a similar bill in March 2011.  He cited constitutional issues as he felt at the time that simply placing the servers in Atlantic City would not satisfy the state constitution’s requirement for containing all casino style gambling within Atlantic City.  Governor Christie is expected to sign this bill should it pass.  The bill will be heard in both chambers of the New Jersey Legislature in the next two weeks.

The full text of the bill is here.

Special thanks to @ijiLaw for locating the text of the bill.

 

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