Guest post by Jeremy Kleiman of Saiber LLC law firm in New Jersey
For the past 10 years it has seemed as though New Jersey’s bid to overturn the Professional and Amateur Sports Protection Act 1992 (“PASPA”) and regulate sports betting was a longshot. The current case being considered by the Supreme Court is nothing short of a game changer, which could change the face of gambling in the US for both US and international operators.
If we can assist in any way with your understanding of the likely opportunity in New Jersey, a State with a population of nearly 9 million, and your strategy, please do not hesitate to let us know. We have been awaiting the liberalisation of online betting in the US since the advent of the internet, with many false hopes and damaging blows along the way. Could it be that it is now happening under our noses…and fast. Having waited so long, don’t miss the opportunity.
2018 has the potential to be a transformative year for the gambling industry in New Jersey. Likely changes include the addition of sports betting, re-opening of 2 shuttered casinos, implementation of a US interstate compact allowing pooled liquidity, and several regulatory changes that will ease the licensing process.
Sports betting decision likely by June
The US Supreme Court heard oral arguments on 4 December 2017 around New Jersey’s challenge to the federal prohibition on sports betting outside the State of Nevada (and to a very limited degree, the States of Delaware, Montana and Oregon). Based on the substance and tone of the questioning by the 9 Supreme Court Justices, the collective conventional wisdom of legal and industry experts is that the Court will likely rule by a vote of 6-3 in favor of New Jersey. It is unclear whether the PASPA will be invalidated in its entirety, or whether the Court will issue a narrow ruling in New Jersey’s favor allowing it to authorise but not “regulate” sports betting. The Court is expected to issue its ruling by 30 June 2018, the end of the current Court term.
In the meantime, New Jersey’s gambling regulator, the Division of Gaming Enforcement (“DGE”), is working full bore to prepare a regulatory regime to manage sports betting at casinos and racetracks, as well as online. Having spent time meeting with the British Gambling Commission and a number of UK sports betting operators to learn how the industry operates and regulates, DGE expects to have final regulations drafted by the time the Supreme Court rules, and is preparing to allow sports betting to go live within weeks thereafter.
What will the sports betting regulatory regime look like?
We expect DGE will modify the sports wagering regulations it previously adopted in 2012 after the Legislature passed the sports wagering law that is the subject of the Supreme Court appeal. Revised regulations will treat sports betting as a new gambling product in a similar way to its treatment of iGaming. Authorisation will be granted to existing casino licensees to offer sports pools in an approved sports wagering lounge, and through online accounts to players physically located in New Jersey. Casino licensees will be permitted to contract with licensed vendors for the operation of sports wagering. Operators will need to meet the typical requirements applicable to casino licensees – responsible gambling programs, approved internal controls and compliance procedures, and conspicuous disclosure of house rules.
A rebirth of Atlantic City casinos
2018 is also predicted to be the year that 2 shuttered casinos re-open in Atlantic City. Hard Rock International purchased the old Trump Taj Mahal Casino and has been redeveloping the property for a Summer 2018 opening of Hard Rock Hotel and Casino Atlantic City. Hard Rock is a powerful brand and should have a positive impact on tourism and casino revenue in beleaguered Atlantic City.
The former Revel Casino – the largest hotel and second tallest building in New Jersey – has been shuttered since 2014. The property was acquired by a Colorado businessman who recently applied for a casino license. Subject to regulatory approvals, the casino is expected to open as early as May 2018 under the name AC Ocean Walk. This would be a game-changer for the north end of the Atlantic City boardwalk.
Implementation of Interstate Internet Gaming Compact
In 2014, the States of Nevada and Delaware entered into an agreement to pool liquidity among online gambling patrons in their respective states. Whereas Nevada has only authorised online poker, the agreement was effectively limited to pooling players for poker among two states with poor liquidity. New Jersey finally signed onto the agreement in September 2017. Full implementation is expected in 2018. The significance of New Jersey joining the agreement cannot be understated. In addition to being a sizeable poker market that will benefit Nevada and Delaware, New Jersey and Delaware will be able to share jackpot liquidity on all online casino games. New Jersey’s participation in the interstate agreement is conditioned upon the servers upon which game software resides being located in New Jersey to comply with the peculiarities of New Jersey law.
Regulatory changes for 2018
A number of regulatory changes were proposed in 2017 and will take effect in 2018. These changes should reduce the regulatory burden on certain individuals and companies applying for a gaming license or qualification in connection with such license, as well as update the rules around internet gaming. These changes include the following:
• Allowing certain licensees to submit a Multi-Jurisdictional Business Form previously submitted in another jurisdiction (for example, Great Britain), along with a New Jersey-specific Supplemental Form, to comply with the 5-year resubmission requirement. This change is designed to reduce duplication of burdensome paperwork for casino companies and holding companies.
• Revising the disclosure form (“PHD-2”) required to be filed by independent directors of holding companies of gaming suppliers and other non-casino licensees to reduce the amount of disclosure required.
• Authorising a “bet behind” wager for live dealer blackjack. This change is designed to allow an unlimited number of online patrons to wager on blackjack games with limited seats at each table.
• Allowing progressive wagers over internet, including multi-website progressive systems.
2018 is predicted to bring big changes to the gambling industry in New Jersey – land-based and online/mobile sports betting; re-opening of casinos; interstate online poker and casino activity; and regulatory changes to reduce the burden of licensing paperwork and authorise new interactive games.
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