On February 26, 2013, the New Jersey Legislature legalized online gambling within its borders through the passage of bill A2578. The legislation was the brainchild of Sen. Ray Lesniak, who pushed the bill as a way to stimulate Atlantic City’s ailing economy.
The final version of the bill, sponsored by John J Burzichelli, Vincent Prieto and Ruben J Ramos, passed the Assembly by a margin of 68-5, and the Senate by a vote of 35-1. Chris Christie signed the bill into law later that day, calling it a “responsible yet exciting option that will make Atlantic City more competitive while also bringing financial benefits” to the state.
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Licensing, Fees and Taxes
A2578 gives New Jersey’s land-based casinos the opportunity to apply for an online gaming permit and to partner with an iGaming software provider (e.g. GameSys, Betfair, 888). Casino applicants are required to pay a nonrefundable deposit of $100,000 to fund the application process. If approved, that money is applied towards the $400,000 cost of the actual gaming license.
Approved casinos are also obligated to pay a $250,000 renewal fee along with an additional $250,000 annual fee, which goes towards the state’s compulsive gambling treatment programs. In addition, iGaming operators pay a tax rate of 15% of their gross gaming revenue.
Aside from casino permits, there are three types of iGaming licenses available:
- Casino Service Industry Enterprise License: pertains to the software partners of brick-and-mortar casinos, and to those who provide customer lists of players who have previously gambled online.
- Vendor Registrants: companies that provide services which are not specifically meant for online gambling, such as telecommunications.
- Ancillary Casino Service Industry Enterprise License: includes marketing affiliates, junket operators, and companies who provide payment processing, age verification, geolocation verification and customer identity services.
Online gambling falls under the purview of the Division of Gaming Enforcement (DGE), which is responsible for the following:
- Vetting license applicants
- Assuring the “honesty, good character and integrity of casino owners, operators, employees and vendors”
- Making sure that casino games are fair
- Monitoring for exclusion list violations
- Information systems integrity
Path from License to Final Approval
Before a casino can open up its online gaming operation to the public unrestricted, it must first obtain a “transactional waiver” from the DGE. This temporary permit allows the site to essentially hold a practice run called a “soft launch,” during which time the site is opened to a limited number of players for a limited number of hours per day. During this phase, regulators further scrutinize the site, ensuring that it is safe for consumers and that it follows all applicable laws. Once the DGE is satisfied, the site receives its final authorization and is free to open its doors to the public.
Who Can Play
New Jersey regulators tightly restrict and monitor who can gamble at New Jersey online casinos. Here’s what you need to know about who is eligible to play:
- Only users 21 years of age and above can gamble for real money
- Players must be physically inside the state of New Jersey
- Users not required to be a New Jersey resident to play
- Players can create and fund an account from anywhere in the world, but can’t play until inside the state
Operators are tasked with enforcing the above requirements and are serious about verifying the age and location of each user before allowing them to gamble. These critical details are established through geolocation software, which can pinpoint exactly where a user is playing from, and by crosschecking users’ details with public databases and credit reporting agencies.
Which Games are Allowed
Roulette, baccarat, blackjack, craps, big six wheel, slot machines, mini baccarat, red dog, pai gow and sic bo; any variations or composites of such games, provided that such variations or composites are found by the [DGE] suitable for use after an appropriate [test period]; and any other game which is determined… to be compatible with the public interest.
Problem Gambling Measures
To combat compulsive gambling, all licensees must prominently display the contact information of an organization where players can turn to seek help. The DGE is tasked with submitting a yearly report to the governor which includes an investigation of the impact that the iGaming industry is having on problem gambling. Furthermore, the state collects a $250,000 annual fee from operators that is allocated to the Counsel on Compulsive Gambling of New Jersey and other addiction programs.