State of New Jersey

New Jersey’s Year One revenues may have fallen well short of initial predictions but regulation has been a success nevertheless, according to the regulator. (Image:

The New Jersey Division of Gaming Enforcement (DGE) has declared the first year of online gaming in the Garden State to be a success, despite revenue being much lower than pre-regulation projections.

The first platforms went live in New Jersey in November 2013, nine months after Governor Chris Christie signed a bill permitting online poker and casino gaming into law, and just over one year on the message from the DGE is that the system is working.

“There have been no major infractions or meltdowns or any systematic regulatory failures that would make anyone doubt the integrity of operations,” said the DGE in a statement. “The issues that have arisen have been dealt with appropriately just like in the brick-and-mortar casinos. However, we are far from out of the woods; we must continue to be vigilant and ready to take on new challenges as they come our way.”

And while those financial results have been disappointing, the New Jersey market soars above the other regulated states, Nevada and Delaware, said the DGE, citing a University of Las Vegas Center for Gaming Research study, which states that the state accounts for more than 90 percent of all regulated online gaming revenue.

From January 2014 through October 2014, internet poker generated $25 million, 75 percent of the total Internet poker revenue in the US. Meanwhile, internet gaming overall generated $120 million.

Initial Hurdles

The DGE acknowledged, however, that there were a lot of challenges early on, such geolocation and payment processing issues, as well as a certain unpreparedness from the new online gaming site themselves.

“One surprise from a regulatory perspective was how operationally unprepared the platforms were to implement Internet gaming in a regulated US environment,” it said. “They thought they would be able to flip a switch and start up their current system here. They quickly found out that was not going to happen.

There was definitely a learning curve for the operators to adjust to our regulatory framework but that has improved dramatically. Companies adapted to our new model which we believe has helped improve the industry and raised its standards.”

Geolocation “false negative” issues have been streamlined through hard work, diligence and technological enhancement, the DGE said, and huge progress has been made so that the system now has a 98 percent success rate.

Credit Card Code to be Introduced

Looking forward to 2015, the DGE said it was treating the concept of interstate and international compacts as a high priority and discussions have already been entered into with Nevada and the UK to this effect.

On the issue of payment processing, the DGE said it had been negotiating with New Jersey Department of Banking and Insurance and the US Office of the Comptroller of the Currency (OCC).

Currently only around 73 percent of Visa and 44 percent of Mastercard transactions are approved, which is an obvious inhibitor of market growth. As a result of the discussions, a special credit card code has been issued specifically for gambling transactions, which should be introduced by spring of 2015.

“Even one year into the process with the experience which has been gained, Internet gaming is still in its early stages of development and the industry and the regulators continue to learn from each other,” said DGE director David Rebuck.