Proposed UK And NJ Online Gambling Liquidity Agreement Raises Questions

Posted By Steve Ruddock on July 28, 2016

[toc]Earlier this month, Global Gaming Business (GGB) broke the news that New Jersey and the United Kingdom are actively pursuing an international online gambling agreement that would facilitate some form of liquidity sharing between the two locales.

According to GGB, the Division of Gaming Enforcement (DGE) has sent letters to common operators in both jurisdictions to gauge their level of interest and gather feedback on how such an agreement could be implemented.

DGE has long sought interstate and international compacts

Even though the DGE has been intimating it was interested in an international agreement, the announcement that it was in the preliminary planning stage came as quite a surprise. The budding deal generated a lot of optimistic conjecture inside the industry, as this would be the first international agreement of its kind.

But as quickly as it arrived, it seems to have fallen by the wayside.

Since it launched NJ online gambling in late 2013, the New Jersey Division of Gaming Enforcement has been exploring interstate and international options, but nothing has materialized thus far.

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For one, these agreements are more complicated than most people realize, particularly for New Jersey, where laws seem to require all online gaming servers to be located in Atlantic City.

As Chris Grove noted in his analysis for Online Poker Report:

“Part of the legal rationale for allowing online gambling in New Jersey involved mandating that all game servers be located in Atlantic City.”

“The New Jersey constitution effectively forbids casino-style gambling taking place anywhere in the state except Atlantic City.”

“It’s long been unclear how much flexibility there is in the server requirement. But if there’s little-to-no flexibility, then true player pooling with the U.K. wouldn’t be possible.”

This problematic requirement is just one of many logistical issues that could derail the player-pooling effort for New Jersey online casinos, be it interstate or international. These issues include, but are not limited to:

  • The market superiority of certain global operators.
  • Regulatory differences such as age requirements.
  • Different rake rates.
  • Different tax rates.

Lack of details leads to more questions than answers

Ambiguity and an absence of information surround the latent arrangement. This lack of specifics makes it extremely difficult to analyze the deal, from how it would be implemented, to what implications it would have for either market.

In his comments to GGB, DGE Director David Rebuck was hopeful, but vague and noncommittal, when it came to what the agreement would entail. Rebuck also made it clear that the talks between New Jersey and the United Kingdom are still in the preliminary stage.

“We’d still have to figure out lots of issues: specific regulations, how the tax rate from each jurisdiction would be applied, player ID and geolocation issues, and other things we probably haven’t even considered yet,” Rebuck told GGB.

So, while it sounds good in theory, the devil is in the details. And in this case, the details are unclear.

For instance, the announcement doesn’t explain if the liquidity sharing between the UK and New Jersey would be a one-way street, or if traffic would flow both ways as it does in traditional player-pooling models.

This is an important question that stems from New Jersey’s laws and regulations.

A one-way street

An overly strict reading of New Jersey’s “all gambling must take place in Atlantic City” requirement would prohibit New Jersey residents from playing against UK players whose online presence doesn’t originate from a New Jersey-based online poker site.

If this is the case, the only way player pooling between the two locales works is if UK players are allowed to register at, and play on, New Jersey online poker sites. This seems like it would be a far less appealing proposition than a traditional player-pooling model for the players and the operators. In fact, the only beneficiary is New Jersey.

Traditional player-pooling

If New Jersey could find a way around Atlantic City’s exclusivity, a more traditional player-pooling system could emerge, with common operators in both jurisdictions allowed to combine their player pools.

This would open the Pandora’s box of possible issues listed above, not to mention divide the current New Jersey operators into two camps, as some operators would benefit greatly from player pooling, while others would see little or no advantage.

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Steve Ruddock

Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus is the developing legal and legislative picture for regulated US online poker and gambling.

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