By John Mehaffey
New Jersey Governor Chris Christie signed A2578 into law on February 26, 2013. The new interactive law allows online poker and any casino game that is legal in Atlantic City to be spread over the Internet. Players will be allowed to play slots, video poker, blackjack, craps, roulette and any number of table games offered in Atlantic City casinos.
Only Atlantic City casino operators will be allowed to operate online poker rooms and online casinos in New Jersey. Most of the brands will be the ones used by casinos or otherwise recognizably related, including the World Series of Poker.
Software companies will be required to partner with existing Atlantic City casinos. They will require licensing through the New Jersey Division of Gaming Enforcement, just as any other company that shares in gaming revenue. Companies that provide support services will also require an interactive gaming license. These include database management, security, geolocation providers and marketing affiliate companies.
Key employees would be required to submit to thorough checks that include financial and criminal backgrounds. All employees would be required to undergo the same licensing requirements as their Atlantic City casino counterparts.
Peripheral companies would not be required to submit to similar licensing standards. This includes banks, payment processors and internet service providers.
Atlantic City Casino Operators
Atlantic Club was once the Golden Nugget, which was eventually branded into the former Trump Marina property. It later became the Atlantic City Hilton and then ACH. It became the Atlantic Club in February 2012. The property has been especially hard hit by the declining Atlantic City casino industry. It tentatively accepted a buyout offer from the Rational Group, which is the parent company of PokerStars. This offer fell through in April 2013. Atlantic Club closed in January 2014.
Borgata is a 50/50 joint venture between Boyd Gaming and MGM Resorts. It is by far the highest grossing casino in the Atlantic City market. MGM Resorts ran into licensing issues and placed its share into a trust pending a future sale. The company later decided to request reconsideration of its gaming license and ownership. MGM was allowed to keep its equity in Borgata.
The property accounts for about 20% of the entire market’s gaming revenue. It partnered with bwin.party. Both companies partnered with bwin.party in Nevada, but the interactive gaming giant has yet to receive a license there.
Caesars Entertainment owns three of the eight Atlantic City casinos. These properties are Bally’s, Caesars, and Harrah’s. All three of these properties partnered with 888, though Caesars Entertainment owns the exclusive rights to use Barriere Digital in the US regulated market. The World Series of Poker brand will be used in all U.S. markets. Caesars Entertainment is the largest casino company in the world. Its experience has been parlayed into success in the New Jersey market.
The Golden Nugget was originally the brand associated with the property now known as the Atlantic Club. After Steve Wynn sold his Atlantic City holdings, the Golden Nugget brand reentered the market. The Trump Castle eventually became the Golden Nugget after passing through the Trump Marina brand first. Golden Nugget has partnered with Bally Technologies to offer free play online poker to players throughout the U.S. Golden Nugget offers casino games in New Jersey but does not spread poker.
Resorts International may have taken the riskiest partnership in all of Atlantic City. The company partnered with PokerStars, which initially tried to acquire the Atlantic Club. That acquisition was not successful. Should the Resorts/PokerStars agreement receive a license then it may be the brand to beat in the New Jersey market. Online poker players are well acquainted with the PokerStars brand and high quality software associated with it.
PokerStars missed the initial launch of New Jersey online poker. It later merged with Amaya Gaming. This may help it get licensed in New Jersey as Amaya Gaming already holds a license there.
Tropicana partnered with Gamesys. While this brand may not be well known in the U.S. gaming market, Gamesys is an experienced real money social media company that is prominent in other markets. Tropicana and Virgin are the casino brands that operate under this license.
Trump Entertainment owns one casino in Atlantic City. Trump Taj Mahal entered into an agreement for its online poker and casino games with Ultimate Gaming, which is the parent company of Ultimate Poker. This company was the first to go live in the Nevada online poker industry. Ultimate Gaming was forced to leave the market after Trump Entertainment filed for bankruptcy in September 2014.
Trump Plaza decided to go a different route. It decided to contract with Betfair, which also operates TVG. Betfair’s TVG division runs part of New Jersey’s off track horse racing industry. TVG’s position in the market makes it seem that Betfair will become Trump Plaza’s partner. Trump Plaza closed on September 16, 2014. Betfair is operating until Trump Plaza surrenders its gaming license.
Licensed Software Companies
888 provides the software for WSOP.com. It also uses that poker software for its own player pool. 888 has a separate casino platform that spreads its proprietary slot titles. 888 is also licensed in Nevada and Delaware. It operates an international online poker network that specializes in attracting players through social media.
– Read our 888 Online Casino Review
Bally Technologies merged with SHFL to create one of the largest gaming device companies in the world. It is the U.S. licensee for the Ongame Network software, which was acquired by Amaya Gaming in 2012. It has partnered with Golden Nugget.
Betfair operates the off track betting system in New Jersey through its TVG division. It is a well known sports betting exchange that accepts players from many European countries. It partnered with Trump Plaza.
– Read our Betfair Online Casino Review
bwin.party was created through the merger of bwin and Party Gaming. The company has partnered with Borgata, which is owned jointly by Boyd Gaming and MGM Resorts. Borgata and bwin.party are the most successful New Jersey partnership in terms of gaming revenue generated.
Gamesys specializes in Facebook and other social media apps. Jackpot Joy launched as the first real money Facebook app in 2012. Gamesys provides some of the games available at Tropicana and Virgin in New Jersey.
PokerStars is the largest online poker room in the world. It has partnered with Resort International after a failed attempt at acquiring the Atlantic Club. PokerStars was approved for a New Jersey license on September 30, 2015. Its launch date is not yet known. Full Tilt, its sister site, is also expected to enter the New Jersey market alongside PokerStars.
Ultimate Gaming launched the first regulated online poker room in the United States on April 30, 2013. It launched under the Ultimate Poker brand in Nevada, where only online poker is legal. Ultimate Gaming operated in New Jersey between November 21, 2013 and September 21, 2014. It left the market after Trump Entertainment filed for bankruptcy.
Wynn Resorts has applied for an interactive gaming license. It partnered with 888 and planned to lease one of Caesars Entertainment’s licenses. The company changed its mind and will not participate in the New Jersey interactive market at this time.
Steve Wynn once owned the Golden Nugget, which is now named the Atlantic Club. The current Golden Nugget property sits on the former Trump Marina property.
NJ Online Casino Licensing and Regulations
Taxes and Licensing Fees
Casino companies that wish to receive a New Jersey interactive gaming license will be required to post a $100,000 fee that goes towards a company background check. If approved, this fee would be applied to the $200,000 initial licensing requirement. Renewals run $150,000 per year. There is also a $150,000 annual fee that goes towards problem gambling and the Department of Human Resources.
The tax rate for online gambling revenue is 15%, The original rate was 10%, but it was a part of Governor Christie’s conditional veto.
Detailed report of New Jersey Online Gaming Revenue.
Companies that operate without a license in New Jersey are subject to substantial fines. Unlicensed companies that accept New Jersey players may face fines of up to $200,000 plus $1,000 per player per day. This would appear to be aimed at offshore operators that accept action from New Jersey players.
Federal Law Preempts New Jersey Law
If the federal government should adopt online gambling regulations then New Jersey law would accept them. This may include entering a US online poker system.
All players must be 21 years of age or older. Atlantic City also requires their patrons to be at least 21 years old. Deposits would be accepted by cash, check, money order, credit card, debit card and electronic wallet. The New Jersey Division of Gaming Enforcement may include any payment method it deems suitable. Withdrawal options would be similar.
Players would be required to submit their Social Security Number. A full document check would be required as well.
Players that are excluded from Atlantic City casinos will also be barred from playing at regulated sites. This includes those that self excluded through problem gambling features and those banned by casino management. Players could also set daily and lifetime loss limits and self exclude for a period of time of they were going to be away or wished to have a cool off period.
Racetracks Cannot Operate Online Casinos
One of the goals of this bill is to protect New Jersey’s ailing horseracing industry. While tracks cannot operate online poker rooms or casinos, they still stand to gain $30 million in revenue during the first three years. Tracks will receive $15 million the first year, $10 million the second year and $5 million the third year of online gambling operations.