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    EXPLAINED: Cliffs of Newly Released New Jersey iGaming Regulations [Full Regulations Attached]

    Posted by PokerXanadu May 17, 2013

    The New Jersey Division of Gaming Enforcement has released a draft of their regulations for Internet gaming. [View full draft here.] The proposed regulations will be published in the New Jersey Register on June 3rd, with a 60-day public comment period ending on August 2nd.

    Here is a summary of the proposed regulations.

    Site and Service Provider Licensing

    The proposed regulations simply change existing regulations for the licensed Atlantic City casinos to authorize them to conduct Internet gaming. The casinos are required to apply to the Division for an Internet Gaming Permit Application, but there are no new investigations or qualifications required to qualify other than general compliance with the new regulations for their Internet gaming systems and the hiring of a manager to oversee the security and integrity of the Internet gaming.

    The Permit will grant the casino the authority to offer all types of casino gaming through an Internet casino site, as well as mobile gaming within their casino property and simulcast live-table gaming over the Internet. All of the Internet and mobile gaming equipment must be located on the casino property in Atlantic City. The casinos may also have dedicated terminals available for players in their land-based casinos.

    The Permit is renewable yearly. The entirety of the Internet gaming law expires in ten years unless the New Jersey legislature passes a new bill to extend it or make it permanent. (The draft regulations say seven years, which I assume is a draft error.)

    Service providers for Internet gaming related services must be licensed by the Division as an ancillary casino service industry enterprise. Other service providers which aren’t directly providing Internet gaming services, such as communications facilities, must register as a vendor with the Division and may be required to obtain either a casino service industry enterprise license or an ancillary casino service industry enterprise license.

    Who Can Play

    To open an account, a player must be at least 21 years of age. New Jersey residency is not required, although play can only be from a location within New Jersey. Play will be allowed from other jurisdictions as well under reciprocal agreements with New Jersey, authorized by the Division. Sites must verify the location of the player upon each logon and every hour thereafter.

    A player may register one account with each site. Only the player who opens the account is allowed to use it. To open an account, the player’s age and identification must be verified, which can be done over the Internet by matching authentication information to a third-party or government database.

    If this fails, the player must provide two forms of ID, including one that is government issued. The casino employee opening the account must match the person’s signature and the photograph on the ID. It is not specified in the regulations if this must be done in-person only, or could be accomplished over the Internet through a video connection.

    Upon each logon, the player must verify their identity through a PIN, a password (or similar security feature) and by answering two or more challenge questions. After three failed logon attempts the account will be locked. Unlocking will require correctly answering the challenge questions or presenting valid ID in person at the casino. None of the account access information may be stored on the player’s computer and it must be masked after entry, encrypted for transmission and immediately cleared from any computer buffering.

    Player Account Funds

    Deposits to a player account can be done in person at the casino cage by cash, check, money transfer, etc. Online deposits can be done using a debit, credit or prepaid card, or a transfer from the player’s casino deposit account. The regulations do not authorize deposits over the Internet by electronic transfer from a bank account.

    Withdrawals must be first done as a credit to any credit or debit card used to deposit, up to the amount deposited. Additional amounts may be withdrawn by credit to a prepaid card, electronic transfer to a bank account (but the bank account must have been registered in-person at the casino first), transfer to a player’s casino deposit account or cash in-person at a cashier cage. No player to player transfers are allowed.

    The casino must hold all player account balances in a New Jersey bank account “independent from all other operating accounts of the licensee.” The total amount held in this segregated account must be reconciled with total player account balances on a daily basis.

    If a player account has no activity for one year, the account is considered dormant and any balance forfeited. There are no requirements specified in the regulations for notification to a player when their account is going dormant.

    Taxes and Fees

    Sites pay a quarterly tax of 15% on gross revenue (rake, fees, etc.). They also pay a permit fee of “not less than” $400,000 the first year and “not less than” $250,000 yearly thereafter, as well as a Responsible Internet Gaming Fee of $250,000 per year.

    Sites will be required to file federal W2-G reports for income tax on winnings. (For poker players, W2-G reports currently are only required for tournament net winnings which exceed $5000.) There are no provisions in the regulations for reporting or withholding of state income taxes on winnings.

    Player Protections

    Sites must include in their systems design the ability to detect “suspicious behavior, such as cheating, theft, embezzlement, collusion, money laundering, or any other illegal activities” and must report any suspected instances of these immediately to the Division. The site can suspend a player’s account when fraud, cheating or irresponsible gaming activity is suspected. When an account is suspended, the player must be informed by mail or e-mail, and the reason for the suspension must be displayed when the player attempts to login, as well as what the player has to do to lift the suspension.

    Sites must provide a method for players to register complaints and provide a response within five calendar days. Players may also register complaints with the Division for resolution.

    All Internet gaming software must be approved by the Division and include a method to verify its authenticity at least once every 24 hours. The software cannot contain “unauthorized data collection, file extraction, malware, or any other feature that compromises the integrity of the client terminal.” A network integrity and security assessment must be conducted by an independent network professional before commencing Internet gaming, quarterly the first year and yearly thereafter.

    Player self-exclusion options must be available on each site, including wager limits, deposit limits, loss limits, buy-in limits, and time-based limit. Any decrease in self-exclusion limits must be in effect at the next logon, and any increase must not be effective for 24 hours. When a player’s total lifetime deposits exceed $2,500, the player must be notified and acknowledge it before they may continue to wager. Players may also self-exclude from all sites at once through the Division for any time period including a lifetime exclusion. It is also forbidden for a site’s gaming system to induce players to continue or increase wagering at any time.

    Sites must keep logs of all online gaming activities, available to the Division. No time limit is specified for keeping these logs, except account authentication attempts are only required to be kept for 90 days.

    Sites may provide a patron the option to be randomly assigned to a table where all patrons have been selected at random. This will allow sites to offer “rush poker” games.


    These draft regulations are extensive and cover the many details necessary for a robust and effective set of regulations. As is standard in the gaming industry, the fine details of each licensee’s “internal procedures” are left for individual case approval by the Division. But players can be happy about the protections and requirements specified, which should result in a secure system of Internet gaming that is what one wants from a government-regulated market.

    QuadJacks – May 17, 2013

    About PokerXanadu

    PokerXanadu is an avid poker player as well as an advocate for poker player rights on the legislative and regulatory front. http://www.pokerloversunion.org

    View all post by PokerXanadu Visit author's website

    There are 4 Comments

    1. Angry Sam
      - May 18, 2013
        -   Reply

      So can pokerstars apply as an ancillary vendor via another casino that is not the scamming dump known as the Atlantic Club?

      • PokerXanadu
        - May 19, 2013
          -   Reply

        Yes, they could apply to be an approved service provider to an Atlantic City casino. Or, they could find another casino property to purchase. In either case, they need to undergo the background investigation of the NJ Division of Gaming Enforcement and the approval of the NJ Casino Control Commission. They seem to prefer to purchase a casino so that they can eventually operate online poker in the U.S. under their own brand rather than as a service provider.

    2. Pingback Poker World Report Card: Week of May 12, 2013 – QuadJacks

    3. Pingback National Council of Legislators From Gaming States: Summer 2013 Conference Wrap-Up – QuadJacks

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