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New Jersey at a Glance

New Jersey – Internet and Mobile Gaming


On Tuesday, November 26, 2013, Internet gaming operators in New Jersey began accepting online wagers from the general public. New Jersey is the third state to begin accepting Internet wagers, in addition to Nevada and Delaware, and is the most populous jurisdiction to offer Internet wagering in the United States. As of December 2013, the New Jersey Division of Gaming Enforcement (“Division”) had issued seven Internet gaming permits to Atlantic City casinos that allow for the operation of wagering websites in the state.

Though the Division treats suppliers of Internet gaming equipment the same as those entities that supply gaming equipment to licensed brick-and-mortar casinos, it is important for potential suppliers to understand the statutory and regulatory policies governing Internet and mobile gaming in New Jersey.

For detailed information on the application and investigation process for gaming suppliers, including Internet gaming suppliers, please see the “New Jersey Commercial Gaming” entry in the Casino Vendors Licensing Guide. Information on the general application requirements are also included below.

Statutory and Regulatory Structure for Internet and Mobile Gaming

On February 26, 2013, the New Jersey legislature passed Assembly Bill 2578 which amended the New Jersey Casino Control Act to allow for Internet gambling in the state. In addition, the Division has established regulations that further define and regulate Internet gambling activity. Authorized games include both virtual slots and table games. Below is a brief overview of the general structure established for Internet gaming activity under the revised statute and regulations.

Location of Operators and Equipment

The law permits casinos located in Atlantic City to accept wagers placed over the Internet on games that are either run on a server located within the casino or via a simulcast of an existing game at the casino. In addition, the law allows an “Internet gaming affiliate” that is properly licensed to operate an online wagering system on behalf of a licensed casino in Atlantic City. Those seeking to become an Internet gaming affiliate must obtain a casino license and adhere to the same licensing standards as a casino licensee in New Jersey.1

In addition, all Internet gaming-related equipment, including but not limited to hardware, software, and any other equipment deemed necessary by the Division for the conduct of Internet gaming, must be located within a restricted area of a casino located in Atlantic City, New Jersey.2 Backup systems which would provide temporary access for patrons in the case of a primary system outage do not need to be located in Atlantic City, but must be at a location approved by the Division.3

Location of Patrons

In accordance with federal legal provisions and the 2013 amendments to the Casino Control Act, all Internet gaming activity must occur within the state of New Jersey.4 However, it should be noted that New Jersey casino operators may accept wagers from patrons outside the state if there is a change in federal law or the wager originates from a jurisdiction in which the state of New Jersey has entered into a reciprocal agreement for such activity.5

Licensed casino operators may also permit wagering through mobile devices. However, all mobile gaming activity must occur “within the property boundaries of an approved casino hotel facility,” which includes recreation and pool areas but does not include the parking structures and garages.6 As such, patrons must be “onsite” to participate in any mobile gaming activity.

Finally, the statute prohibits any “organization or commercial enterprise . . . [from making] its premises available for placing wagers at casinos using the Internet or advertis[ing] that its premises may be used for such purpose.”7 Those that violate this provision are subject to monetary penalties.

The location of the patron must be verified by the casino operator prior to allowing any wagering activity over the Internet or a mobile device.

Patron Accounts

Prior to placing wagers through the Internet, a patron must establish an Internet or mobile gaming account with the casino licensee operating the wagering system. The account requires the patron to submit basic identification information and for the operator to verify this information, along with the age and geographic location of the patron.8

Once an account is established, a patron may access information related to their individual gaming activity through the Internet gaming system.9 The account must also allow the patron to establish daily, weekly, or monthly spending or time limits for gaming activity, and the patron must be notified once he or she has met the Division’s lifetime deposit threshold of $2,500.10

Gaming-Related Casino Service Industry License

Those entities that provide Internet-related gaming equipment must be licensed as a Gaming-Related Casino Service Industry provider. 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 initial application fee, which covers the first 333 hours spent by Commission staff reviewing and investigating the applicant. After the first 333 hours, the applicant will be required to pay an additional $5,000 fee for each additional 333 hours up to 1,000 hours. Payment after 1,000 hours will be billed to the applicant at an hourly rate. Installment plans are available upon request.11

Duration

The initial term for a Gaming-Related Casino Service Industry Licensee is three years. If renewed, it will be for a period of five years.

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 present and former business operations;
4. Tax identification number;
5. Stock description, if applicable;
6. Identity of qualified individuals within the enterprise;
7. Identity of former officers and directors, past 10 years;
8. Compensation of all officers and directors;
9. Identity of employees earning over $100,000 per year;
10. Bonus and profit-sharing plans;
11. Identity of entities or persons holding interest in the partnership (partnership only);
12. Description of debt, including the holders of long-term debt;
13. Securities options (corporations only);
14. Financial institutions where the applicant has had an account, past 10 years;
15. Contracts and agreements over $100,000;
16. Identity of enterprises that hold stock in the applicant;
17. Insider trading activity of 10 percent or more holders in the company, past five years;
18. Criminal history;
19. Antitrust and regulatory action history;
20. Bankruptcy history;
21. Existing litigation;
22. Past and present licenses held, past 10 years; and
23. Past distributions.

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. Ownership chart;
4. Financial statements, past five years;
5. Annual reports, past five years;
6. Any quarterly or interim reports filed since the last annual report submitted;
7. Last proxy statement issued;
8. Registration statements, past five years;
9. All reports and correspondence with independent accountants pertaining to financial reporting requirements, past five years; and
10. Tax returns, past five years.

Each applicant is required by law to be photographed and fingerprinted.12

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, sales representatives, signatories on agreements, partners, sole proprietors, and direct or indirect beneficial interest holders holding 5 percent or more interest in the applicant.13

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.14

Fee

A onetime $60 fee is required for licensure as a casino service industry employee.15

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 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 year;
10. Employment history, past 20 years;
11. Spouse employment history, past one year;
12. Professional or regulatory licensing;
13. Gaming licenses applied for or held;
14. Business ownership information, 5 percent 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; and
3. Military records, if applicable.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 information.

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

1. IRS 1040 forms, past five years;
2. Immigration documents, if applicable; and
3. Photograph.18

Interactive Gaming – General Resources

As the interactive gaming market is still developing, another resource for suppliers of equipment related to interactive gaming is the Gaming Standards Association (“GSA”). The GSA is an organization that is in the forefront of interactive gaming developments and assists in identifying unique issues for the industry and regulators alike related to new technology and operations practices.

Those interested in learning more about the GSA, including its model standards for gaming technology, should visit the association’s website.19
1See N.J.S.A. 5:12-82.
2See N.J.S.A. 5:12-95:22; N.J.A.C. 13:69O-1.1.
3N.J.S.A. 5:12-95:22.
4N.J.A.C. 13:69O-1.2(e)(2).
5See Id.; see also N.J.S.A. 5:12-95:31.
6N.J.A.C. 13:69O-1.2(e)(1).
7N.J.S.A. 5:12-95:30.
8N.J.A.C. 13:69O-1.3(b).
9N.J.A.C. 13:69O-1.3(i).
10N.J.A.C. 13:69O-1.3(n), (s).
11'Instructions for Filing an Application for a Gaming Related Casino Service Industry License.'
12N.J.S.A. 5:12-80(f).
13See 'Business Entity Disclosure Form – Gaming,' p. 7.
14N.J.A.C. 19:41-9.15.
15N.J.A.C. 19:41-9.15.
16'Multi-Jurisdictional Personal History Disclosure Form.'
17Id.
18'Gaming Enterprise New Jersey Supplemental Form to Multi-Jurisdictional Personal History Disclosure Form.'
19See www.gamingstandards.com/.

This article is provided by Regulatory Management Counselors, P.C. For information about the services they provide please visit our information on gaming licensing and compliance advisors.