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USA: New Jersey moves closer to iGaming launch

On Friday, May 17, New Jersey’s Division of Gaming Enforcement (“DGE”) posted its proposed regulations for Internet and mobile gaming just 3 months after Governor Chris Christie’s approval of the enabling legislation. The release of the proposed regulations is welcome news for the industry, after the recent release of April’s gaming revenue reports that show a 12% decline for Atlantic City’s casinos compared to the same four-month period in 2012.

Potential vendors who may provide casinos with necessary software for the new gaming offerings, or who may be engaged to offer Internet gaming on behalf of a licensed casino, will need to submit an Internet Gaming Permit Application (“IGPA”) in order to secure a gaming-related casino service industry enterprise license. An initial permit fee starts at $400,000, with a “Responsible Internet Gaming Fee” due annually in the amount of $250,000. While mobile gaming may only take place within the property boundaries of an approved casino hotel facility, Internet gaming may occur throughout the entire State. Among other provisions, the proposed regulations prescribe system standards and operational controls for Internet or mobile gaming offerings. These controls include: (1) limitation of access to the offerings to those who have established an Internet or mobile gaming account, (2) design specifications for Internet and mobile gaming systems capable of detecting fraudulent activity (e.g., cheating or money laundering) or use by excluded or prohibited persons, (3) data storage and encryption requirements for patron account information, (4) protocol for managing suspended or deactivated patron accounts, and (5) limitations on the dollar amount a patron can fund their Internet or mobile gaming account with on a daily basis, to be set by the patron. In addition, the regulations will have an impact on the organizational structure of a traditional bricks-and-mortar casino – if a casino wants to offer Internet or mobile gaming, they will have to employ both an IT security officer and an Internet and mobile games manager, depending on the offering.

With an eye to potential future expansion of internet gaming across jurisdictions, the regulations also provide that account holders within New Jersey may engage in Internet gaming with residents of other states, should the DGE enter into a reciprocal agreement with such jurisdictions that does not violate federal law, or the laws of the other participating states.

The proposed regulations, which will be published in the New Jersey Register on June 3, may be viewed at http://www.nj.gov/oag/ge/proposed_rules.htm. Pursuant to regulations, there will be a 60-day window for public comment, with final adoption to follow after the close of the comment period on August 2, 2013.