New Jersey Seeks Gaming Industry Comments On Proposed Regulations

August 1, 2023
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The New Jersey Division of Gaming Enforcement has set a Friday deadline for licensees to submit comments on the latest in a series of comprehensive regulatory reforms that include new rules to authorize skill-based games.

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The New Jersey Division of Gaming Enforcement (DGE) has set a Friday (August 4) deadline for licensees to submit comments on the latest in a series of comprehensive regulatory reforms that include new rules to authorize skill-based games.

Other proposed amendments and new rules include updates to the state’s self-exclusion process, license application fees, gross revenue taxes imposed on retail and online gaming and sports betting, as well as new details for removal of funds from dormant internet accounts.

A new proposed rule would cap the amount billed to an applicant for the investigation associated with a key casino employee license to $4,000, which is in addition to the $750 application fee.

These proposed updates are the fourth package of reforms since 2011, when the DGE was placed in charge of promulgating rules for Atlantic City casinos. The last time gaming regulators approved new rules, amendments or repealed regulations was prior to the coronavirus pandemic in early 2020.

“With the pandemic having a major impact on retail and online casino operations, the division determined that another comprehensive examination of its rules was necessary to determine if any mandated procedures were unnecessary or if any additional issues should be addressed,” the DGE said in a statement.

“The intent of these reforms is to provide regulatory relief and streamline procedures while still insuring the highest degree of integrity and consumer protection.”

The DGE has proposed New Jersey Administrative Code (NJAC) 113:69E-1.28Y to authorize skill-based games.

“Patrons can compete against the game software or against another patron in arcade style electronic games for real money. The new section specifies that such games are not slot machines and, accordingly, do not have a guaranteed payback of at least 83 percent.”

The proposed regulation also requires the games to be clearly labelled so that customers can distinguish them from regular games of chance, and the games cannot be altered during gameplay to account for a patron's skill.

Peer-to-peer skill-based gaming shall be monitored for collusion and money laundering activity using an automated feature, or in accordance with the internal controls of the casino licensee, according to the proposed regulations.

A skill-based game may provide an “adaptive feature to increase the payback percentage in order to improve the actual return to player.”

The DGE is also accepting comments on proposed amendments to its regulation governing identity theft, and the deposit and withdrawal of funds for mobile gaming and sports-betting accounts.

Such operators have always been required to enable their patrons to deposit or withdraw funds at the cage of the casino or racetrack with whom the operator is partnered. This requirement is now being codified within the state’s gaming regulations.

To prevent persons who commit identity theft or obtain stolen credit cards from obtaining cash improperly, an online operator processing a withdrawal at the cage of a casino or racetrack shall be required to obtain and maintain a still photograph of any person withdrawing $500 or more.

The operators shall also be required to obtain identification of the person making the withdrawal, with the identification method conforming to the DGE's statutory requirements codified.

The proposed new regulation will require such identification and photo to be released upon demand of the DGE, a law enforcement agency, or pursuant to the lawful order of a court of competent jurisdiction.

According to a summary of the regulation, the DGE believed the changes “should make it harder for criminals who commit identity theft, or who obtain stolen credit cards, from being able to profit from such offenses.”

“The proposed amendments will ensure that should such crimes occur; an investigating law enforcement agency will have the identification and a picture of the person obtaining the cash. This should help to deter such activity.”

The comment period will also close on Friday for several proposed amendments and a new rule that introduce changes to the costs and fees associated with the regulatory process.

Those changes make it mandatory for the DGE and the New Jersey Casino Control Commission to identify and collect the true costs associated with the regulatory process and need to be updated to be consistent with the expansions of regulated gaming in the state.

Prior to the launch of iGaming in 2013, the DGE noted that 100 percent of gaming revenue and 100 percent of the cost of regulation in New Jersey was paid by the land-based casino industry.

By 2022, however, only 54 percent of the gaming revenue was generated by casinos, and 46 percent was being produced by iGaming and sports betting.

The DGE noted that one of the key goals associated with the proposed rulemaking is to ensure that the proportion of iGaming and sports wagering costs are more clearly identified.

“Moreover, the proposed changes include a new rule to effectuate existing statutory authority permitting the DGE to recoup the costs of certain defined services related to investigatory and regulatory efforts,” the DGE said in a statement issued with the proposed changes.

Democratic Governor Phil Murphy’s fiscal year 2023 budget directs $68.08m to the Casino Control Fund to oversee gaming in New Jersey, with $60.13m allocated to the DGE and $7.95m allocated to the commission, to perform their regulatory responsibilities.

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