History of Gambling in New Jersey
Games of chance have a deep rooted history in New Jersey, and date back to the state’s first lottery in 1969. In 1976, the state legislature passed a law making it legal to operate land-based casinos. At that time, New Jersey was only the second state in the U.S. to do so.
Over the next several years, land-based casinos continued to thrive, and attracted many tourists in Atlantic City. But by the early 2000s, Atlantic City’s casinos were in decline, largely due to the rising popularity of online gaming sites.
In 2010, legislation was proposed that would make internet gambling legal in the state. That bill failed, but another version, NJ A2578, was finally passed in 2013. That law authorized casino operators in the state to open an online gaming site provided that betting is restricted to those 21 years of age or older and players are physically located in New Jersey.
Authorized Operators
The 2013 law restricted online gambling only to Atlantic City casinos. Currently, there are only seven operators authorized to provide internet gaming sites:
- Tropicana Casino Resort Atlantic City
- Resorts Casino Hotel Atlantic City
- Ocean Resort Casino
- Hard Rock Hotel & Casino
- Golden Nugget
- Caesar’s Interactive Entertainment (an affiliate of Boardwalk Regency Corporation)
- Borgata Hotel Casino & Spa
Although these are the only licensees, some of them do operate multiple sites. This is perfectly legal so long as the sites are owned by someone with a virtual casino license and their servers are physically located within New Jersey.
Obtaining a New Jersey Gambling License
The Division of Gaming Enforcement (DGE) is responsible for licensing all land-based and internet casinos within the state. Their licensing division casts a very wide net, requiring owners, operators, employees, and companies that do business with casinos to become licensed. Licensing requirements are spelled out in the Casino Control Act, and include:
- Criminal background check (including fingerprinting)
- Copies of state and federal securities filings
- Business Entity Disclosure Form
- Multi-Jurisdictional Personal History Disclosure Form
Casino Control Commission
The DGE passes applications and any associated paperwork on to the Casino Control Commission, who will then look it over and make a determination. If an online casino wishes to dispute a decision, the Commission will hold hearings on those as well. The organization consists of three members: a chairman, vice chairman, and commission.
The governor appoints members to the Commission, and the state’s senate is responsible for confirming them. Upon approval, individuals serve staggered, five-year terms, and may only be relieved for cause.
Transactional Waiver
Before receiving a full license, casino operators will first be given a transactional waiver. This is in essence a temporary permit that allows a gaming site to operate on an interim basis. During that time, a virtual casino will be available to a limited number of players and only during certain hours each day.
While operating on a transactional waiver, gambling sites are monitored very closely. Among other things, inspectors are looking for safeguards that prevent minors from placing bets. Online casinos must also prove they are diligent about tracking a player’s location so that anyone outside New Jersey is unable to wager.
Transactional waivers are generally good for a period of six months. If an online casino has not obtained a full license by the time the transactional waiver expires, it will need to reapply for another six-month waiver. While operating under a transactional waiver, the DGE can place additional stipulations on a casino such as restricting who may act in certain capacities.
Fee Requirements
To become approved, operators will need to pay some hefty fees. Upon application, casinos must pay a $100,000 USD deposit. If approved, that deposit will apply toward the licensing fee, which is $400,000 USD. The initial deposit is non-refundable, so those who are disapproved will have to forfeit.
Licenses are renewable annually at accost of $250,000 USD. Casino operators must also pay a 15% tax on revenue, in addition to making a 2.5% contribution to the Casino Reinvestment Development Authority (CRDA)
Conclusion
New Jersey has long been touted as having some of the most relaxed gambling laws in the United States. Its licensing process on the other hand is highly regulated. The state has a vested interest in protecting its Atlantic City casinos, as well as the reputation of its gambling industry. Through NJ A2578, they have managed to put measures in place that would safeguard players and prevent organized crime, while also expanding revenue for its existing casinos.
