New Jersey Supplier License Jurisdictional Analysis

Introduction

New Jersey was the first state outside of Nevada to legalize commercial casino gaming by passing the Casino Control Act in 1976 (“Act”). Currently, the state’s nine commercial casinos generate approximately $2.90 billion in gross gaming revenue annually and constitute the second largest casino gaming market in the country.¹ In 2018, Atlantic City experienced a visitor volume of nearly 22.9 million people.² In 2011, the Act was amended to remove many of the filing requirements for non-gaming suppliers, as well as change the filing process for gaming-related suppliers.

The New Jersey Casino Control Commission (“Commission”) was established to administer the Act and put forth administrative rules (“Rules”) regarding casino gaming within the state. In connection with administering the Act and Rules, the Commission has established several different business and individual licenses for manufacturers and suppliers of products and services to casino gaming facilities.

Casino Service Industry Enterprise License

Any business to be conducted with a casino licensee “by a vendor offering goods or services which directly relate to casino or gaming activity or Internet gaming activity,” require licensure as a Casino Service Industry Enterprise.³ In addition, any Casino Service Industry Enterprise intending to manufacture, sell, distribute, test, or repair slot machines within New Jersey must be licensed. ⁴

In order to complete the application process, the applicant must complete the Business Entity Disclosure Form – Gaming, Multi-Jurisdictional Personal History Disclosure and New Jersey Supplemental Form, and the Equal Opportunity and Affirmative Action Obligations Form. Each of these forms is discussed below.

Fees

Each applicant must submit a $5,000.00 initial application fee which covers the first 333 hours spent by Commission staff reviewing and investigating the applicant.⁵ After the first 333 hours, the applicant will be required to pay an additional $5,000.00 fee for each additional 333 hours, up to 1,000 hours. ⁶ Payment after 1,000 hours will be billed to the applicant at an hourly-rate. Installment plans are available upon request. ⁷

Duration

The license does not expire once it is granted, so a licensee does not have to file a renewal application. ⁸

Every five (5) years from the date of licensure, a licensee will have to file a “re-submission” showing that its business and qualifiers still meet licensure criteria.⁹

Application

Each applicant must complete a Business Entity Disclosure Form – Gaming. The following information is necessary to complete the application:

1. Basic identity information;
2. Past or other names and addresses used by the applicant;
3. Description of past and present business activity;
4. Description of stocks issued and authorized;
5. List of non-voting shareholders;
6. List of qualifiers;
7. Ownership chart;
8. List of former officers and directors;
9. List of the compensation of officers, directors, and partners;
10. List of all employees receiving $300,000 or more in compensation per year;
11. Description of bonus, profit sharing, retirement, and deferred compensation;
12. Descriptions of the ownership interests held by partners;
13. Description and identity of holders of debt;
14. List of securities options, if applicable;
15. List of financial institutions used;
16. List of contracts with suppliers, top 10 contracts by value;
17. Stock held by the applicant;
18. List of insider transactions, past 5 years;
19. Criminal history;
20. Regulatory and civil action history;
21. Bankruptcy history; and,
22. List of gaming and professional licenses.¹⁰

The following documents must be submitted in connection with the Business Entity Disclosure Form – Gaming:

1. Organization documents (charter, by-laws, etc.);
2. New Jersey business registration certificate;
3. Description of business presently conducted and business intended to be conducted;
4. Description of former business;
5. Ownership chart;
6. Description of all bonus, profit sharing, pension, retirement, deferred compensation plans;
7. Existing litigation;
8. Financial statements, past five (5) years;
9. Annual reports, past five (5) years;
10. Any quarterly or interim reports filed since the last annual report submitted;
11. Last proxy or information statement issued;
12. Registration statements, past five (5) years;
13. Organizational chart of the enterprise;
14. All reports and correspondence with independent accountants pertaining to financial reporting requirements, past five (5) years;
15. Tax returns, past five (5) years.¹¹

Additionally, each applicant should provide proof of valid business registration with the Division of Revenue in the Department of the Treasury.¹²

Each applicant must submit fingerprints and written consent for a criminal history record background check.¹³

Gaming-Related Qualifying Individuals

Certain individuals who are employed by Gaming-Related Casino Service Industry License applicants or licensees must file as qualifying individuals. These individuals include officers, directors, management employees, sales representatives, signatories on agreements, partners, sole proprietors, and direct or indirect beneficial interest holders holding five percent (5%) or more interest in the applicant.¹⁴

These individuals must complete a Multi-Jurisdictional Personal History Disclosure Form and New Jersey Supplement Form.

Duration

A casino service employee registration is valid indefinitely unless revoked, suspended, or limited by the Commission. ¹⁵

Fee

Qualifying individual licensing fees are included in the $5,000 application fee for entities.

Application

The Multi-Jurisdictional Personal History Disclosure Form is a lengthy application requiring detailed personal information. Information required to be disclosed includes:

1. Basic identity information;
2. Citizenship and passport;
3. Residence information, past fifteen (15) years;
4. Family relationships;
5. Occupation information for family members, including spouses of family members;
6. Military service background;
7. Education;
8. Offices and positions held, including fiduciary, government, and trust relationships;
9. Offices and positions held by spouse, past one (1) year;
10. Employment history, past twenty (20) years;
11. Spouse employment history, past one (1) year;
12. Professional or regulatory licensing;
13. Gaming licenses applied for or held;
14. Business ownership information, five-percent (5%) threshold;
15. Civil suit and criminal history;
16. Vehicle operation permits and licenses;
17. Financial schedules and bankruptcy history;
18. Net worth statement and schedules including assets and liabilities; and,
19. Three references over 18 years-old who are not related to the applicant.¹⁶

In addition to the information requested in the application, the following documents need to be attached in order to complete the application.

1. Fingerprint card;
2. Photo;
3. Military records, if applicable; and
4. Notarized Statement of Truth. ¹⁷

The New Jersey Supplement Form requires the applicant to disclose the following information:

1. Basic identity information;
2. Enterprise applicant identity information;
3. Citizenship information;
4. Civil or criminal records that have been expunged;
5. Ownership interest in certain business enterprises; and
6. Tax return information¹⁸

The following documents must be submitted in connection with the New Jersey Supplement Form:

1. IRS 1040 forms, past five (5) years;
2. Tax returns, if applicable;
3. Immigration documents, if applicable; and,
4. Photograph. ¹⁹

Additionally, some qualifiers may request to waive their obligation to qualify as part of a Casino Service Industry Enterprise License.²⁰ An officer may request a waiver in writing, and must establish that he is not significantly involved in and has no authority over the conduct of business with a casino licensee. A request for waiver must include:

1. A description of his title, duties, and responsibilities with the applicant;
2. The terms of his compensation; and
3. A certification by the officer stating that the officer is not significantly involved in and has no authority over the conduct of business with any casino licensee or applicant.²¹

An owner of the applicant may also request a waiver as an institutional investor by demonstrating compliance with both: 1) the standards for an institutional investor, and 2) the standards for waiver.²² An owner may also be granted a waiver if he can demonstrate his inability to control the applicant.²³ In a publicly traded corporation, any person who owns 5% or more of the equity securities is presumed to have the ability to control the corporation, unless the presumption is rebutted by clear and convincing evidence. ²⁴

Non-Gaming Vendor Registration

A non-gaming vendor offering goods or services is required to complete a two-step vendor registration process. This process requires action on the part of the Vendor as well as the Casino transacting business. Each Vendor must contact the casino it is doing business with before completing and submitting a Vendor Registration Form (VRF) to the casino. The casino is then required to submit the VRF to the State of New Jersey Division of Gaming Enforcement, on the vendor’s behalf.

Within 30 days of the filing of a Vendor Registration Form, the Vendor must complete and file a Vendor Registration Supplemental Disclosure Form directly to the State of New Jersey Division of Gaming Enforcement. These forms provide basic information to the Commission regarding the nature and structure of the vendor’s business and a brief background regarding the business. Once the Commission takes favorable action on both forms, the vendor may conduct business with other casino licensees. ²⁵

1. Duration
A Vendor Registration is effective upon issuance, and will remain in effect unless revoked, suspended, limited or otherwise restricted by the Division of Gaming Enforcement.

2. Fee
There is no fee associated with the filing of a Vendor Registration Form or Vendor Registration Supplemental Disclosure Form.

3. Application
Each Vendor must submit a Vendor Registration Form and Vendor Registration Supplemental Disclosure Form. Information required to be disclosed includes:

1. Basic enterprise information;
2. Type of business conducted with the casino license or applicant; and
3. Names, addresses, dates of birth and percentage of ownership held by each entity or person directly owning more than five percent of the enterprise. ²⁶

Licensing Process

After submission of the necessary materials and fees, the licensing division will begin an investigation into the applicant. The investigation may require additional materials and interviews.²⁷

After the investigation is complete, the Commission will either grant or deny the application. If the application is denied, then the Commission will issue a statement in writing regarding the reasons for the denial. ²⁸

Applications may be granted subject to limitations or restrictions in order to protect the public interest. ²⁹

Final action on an application must be taken by the Commission within ninety (90) days after the completion of the licensing division’s investigation. ³⁰

At all times during the licensing process, the burden is on the applicant/licensee to provide the necessary information to maintain compliance with the Act or Rules. ³¹

Disclosure and Reporting Requirements

Before Licensure

All applicants must honestly and fully disclose any information requested on application forms or from the Commission.

After Licensure

Prior to the transportation of any slot machine, the licensee must notify the Commission of the following:

1. The name and address of the person transporting the machines;
2. The name and address of the person who owns the machines;
3. The method of transport;
4. The name and address of the person to whom the machine is sent;
5. The number of machines and manufacturer and serial number of each;
6. The expected date and time of delivery;
7. The port of entry or exit if the origin or destination is outside the continental United States; and
8. The reason for transporting the machines. ³²

The following records must be kept by licensees and made available to the Commission upon request:

1. All correspondence with the Commission and with casino licensees;
2. Copies of all advertising and promotional materials;
3. Personnel files on each employee; and,
4. Financial records of all gaming-related transactions. ³³

All records must be kept for at least five years.

Gaming Technology Standards

All gaming equipment must first be inspected and approved, or be identical to a previously approved prototype, before being placed for use at a licensed facility.³⁴ Prototypes of any device may be requested by the Commission and must be accompanied by a written description in accordance with Commission Rules. ³⁵

Slot machines cabinets may be required to be sealed by the Commission when on the casino floor.³⁶ Slot machines are also required to display certain identifying features and lighting in accordance with regulations promulgated by the Commission.³⁷ The payout of a single slot machine must have a theoretical return to player of at least 83%. ³⁸

Certain software and hardware are required to maintain specific failure rates and be able to notify casino licensees of any failure in the system.³⁹ Any change to the software or hardware of a gaming device must receive prior approval of the Commission. ⁴⁰

The Commission has put forth several rules regarding the characteristics of physical gaming equipment, such as chips, tables and dice. ⁴¹

Exemptions

Corporate officers of a non-gaming casino service industry applicant or licensee may request a waiver of the qualifier disclosure requirements. In order to qualify for the waiver, the officer must certify that he or she is not significantly involved in and has no authority over the company’s conduct of business with any casino licensee and must list his/her title, duties and responsibilities, and terms of compensation. ⁴²

Institutional investors connected with license applicants may qualify for a waiver of the licensing requirements by completing the Institutional Investor Certification, Casino Service Industry form.⁴³ The waiver request requires the institutional investor to certify that its interest in the license applicant is merely for investment purposes and that the institutional investor will not attempt to exercise control over the applicant. ⁴⁴

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¹ American Gaming Association, State of Play: New Jersey https://www.americangaming.org/state/new-jersey/
² David Danzis. 2017 Atlantic City Visitors Lowest in 30 Years, Report Says, Press of Atlantic City, (Apr. 4, 2018)https://www.pressofatlanticcity.com/news/casinos_tourism/atlantic-city-visitors-lowest-in-years-report-says/article_ab5988c5-e461-5223-9ad8-c39d7355702e.html
³'NJ Statutes 5:12-92(a)(1)'
⁴'NJ Statutes 5:12-92(a)(2) '
⁵'N.J.A.C. 13:69A-9.8(b) (Lexis).'
⁶'N.J.A.C. 13:69A-9.8(b) (Lexis). '
⁷'N.J.A.C. 13:69A-9.8(b) (Lexis).'
⁸ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Vendor Registration/Casino Service Industry Licensing & Reports, https://www.nj.gov/oag/ge/sils_licensing.htm
⁹ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Vendor Registration/Casino Service Industry Licensing & Reports,https://www.nj.gov/oag/ge/sils_licensing.htm
¹⁰ State of New Jersey Division of Gaming Enforcement, “Business Entity Disclosure Form – Casino Service Industry Enterprise License,” https://www.nj.gov/oag/ge/docs/Forms/31-Business%20Entity%20Disclosure%20Form-Casino%20Service%20Industry%20Enterprise%20License.pdf
¹¹ State of New Jersey Division of Gaming Enforcement, “Business Entity Disclosure Form – Casino Service Industry Enterprise License,https://www.nj.gov/oag/ge/docs/Forms/31-Business%20Entity%20Disclosure%20Form-Casino%20Service%20Industry%20Enterprise%20License.pdf
¹² NJ Statutes 5:12-92(e) https://lis.njleg.state.nj.us/nxt/gateway.dll?f=templates&fn=default.htm&vid=Publish:10.1048/Enu
¹³'N.J.S.A. 5:12-92(g).'
¹⁴N.J.A.C. 13:69J-1.14(a)(1)(iii).
¹⁵ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Vendor Registration/Casino Service Industry Licensing & Reports, https://www.nj.gov/oag/ge/sils_licensing.htm
¹⁶ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Multi Jurisdictional Personal History Disclosure Form, https://www.nj.gov/oag/ge/docs/Forms/20.32-Multi-JurisdictionalPHD.pdf
¹⁷ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Multi Jurisdictional Personal History Disclosure Form, https://www.nj.gov/oag/ge/docs/Forms/20.32-Multi-JurisdictionalPHD.pdf
¹⁸ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, New Jersey Supplemental Form to the Multi-Jurisdictional Personal History Disclosure Form – Casino Service Industry Enterprise Qualifiers, https://www.nj.gov/oag/ge/docs/Forms/33-New%20Jersey%20Supplemental%20Form%20to%20the%20Multi-Jurisdictional%20Personal%20History%20Disclosure%20Form-Casino%20Service%20Industry%20Enterprise%20Qualifiers.pdf
¹⁹ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, New Jersey Supplemental Form to the Multi-Jurisdictional Personal History Disclosure Form – Casino Service Industry Enterprise Qualifiers,, https://www.nj.gov/oag/ge/docs/Forms/33-New%20Jersey%20Supplemental%20Form%20to%20the%20Multi-Jurisdictional%20Personal%20History%20Disclosure%20Form-Casino%20Service%20Industry%20Enterprise%20Qualifiers.pdf
²⁰'N.J.A.C. 13:69-1.14(b).'
²¹'N.J.A.C. 13:69-1.14(b)(2).'
²²'N.J.A.C. 13:69-1.14(b)(2).'
²³'N.J.A.C. 13:69-1.14(b)(3).'
²⁴'N.J.A.C. 13:69-1.14(b)(3)'
²⁵ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Vendor Registration Supplemental Disclosure Form https://www.nj.gov/oag/ge/docs/Forms/41-Vendor%20Registration%20Supplemental%20Disclosure%20Form.pdf
²⁶ New Jersey Department of Law & Public Safety: Office of the Attorney General Division of Gaming Enforcement, Vendor Registration Supplemental Disclosure Formhttps://www.nj.gov/oag/ge/docs/Forms/41-Vendor%20Registration%20Supplemental%20Disclosure%20Form.pdf
²⁷NJ Statutes 5:12-94
²⁸'NJ Statutes 5:12-94(c)'
²⁹NJ Statutes 5:12-94(d)
³⁰NJ Statutes 5:12-94(g)
³¹ NJ Statutes 5:12-80(a) https://lis.njleg.state.nj.us/nxt/gateway.dll?f=templates&fn=default.htm&vid=Publish:10.1048/Enu
³²N.J.A.C. 13:69E-1.23.
³³N.J.A.C. 13:69J-1.9.
³⁴NJ Statutes 5:12-100(h)(1).
³⁵N.J.A.C. 13:69E-1.28R
³⁶N.J.A.C. 13:69E-1.24.
³⁷N.J.A.C. 13:69E-1.26; N.J.A.C. 13:69E-1.28K.
³⁸N.J.A.C. 13:69E-1.28A.
³⁹N.J.A.C. 13:69E-1.28B.
⁴⁰NJ Statutes 5:12-100(h)(6).
⁴¹NJ Statutes 5:12-100.
⁴²N.J.A.C. 13:69J-1.14(b)(1).
⁴³N.J.A.C. 13:69J-1.14(b)(2).
⁴⁴NJ Statutes 5:12-85.1(g).