THE FIGHT: Social Casino Fight Shows How Far New Jersey Has Come

The U.S. is still in legislative limbo as far as online poker goes, but things on the east coast are starting to heat up.

New Jersey SealLast week David Rebuck, Director of the New Jersey Division of Gaming Enforcement, sent a memo to all New Jersey casino CEOs, advising them that New Jersey is planning to launch online gaming (including poker) on Tuesday, November 26, as scheduled. Any casino that has been licensed for online gaming can go live at that time, provided that the casino has satisfied a 5-day “soft play” test of their software. Currently it’s believed that 2 to 4 of New Jersey’s operators will make that deadline. Caesars-888 and Borgata-bwin.party seem like locks; after that, the picture is cloudier.

Along with the memo, DGE published modifications to the regulations that will govern Internet gaming in New Jersey, on the basis of comments received from operators and vendors. Most of the changes were technical in nature, but DGE’s comments regarding social casino games – games like Slotomania, DoubleDown Casino and High 5 Casino – were illuminating.

Three vendors, including slot titans IGT and WMS, sought clarification from DGE that offering social casino games within and without New Jersey is legal in New Jersey. The Council of Compulsive Gambling of New Jersey, Inc. hoped to preclude operators from even promoting social casino games on stand-alone and third-party websites (like Facebook) because of age-verification concerns.

Understand that these games have become bona fide revenue streams for their owners. Caesars Interactive earned $66 million from games like Slotomania in the second quarter of the year. Some executives also believe that social casino games can serve as an acquisition tool for real-money land-based and online gamblers, at least to a limited extent.

Most real-money gamblers are flabbergasted to learn that consumers are willing to pay for in-game currency that can never be turned back into cash. Yet they are, and thus casino operators and their technology providers have a strong interest in seeing social casino games continue to be offered as they have been for the last few years, free of regulation.

In response to the comments it received, DGE noted that it has no authority to regulate free, non-gambling games that are not offered through a licensed online gambling site like Facebook. To the extent that operators offer such games through their online gaming sites, however, DGE will subject operators to age-verification and daily time-limit self-exclusion requirements.

Operators are also prohibited from accepting in-game payments through a player’s RMG account and from offering free versions of games “substantially similar” to RMG versions of games unless the free version has a payout percentage less than or equal to the RMG version.

DGE’s concern on the last point is obvious. It does not want operators offering free-version slot games at 95% payout percentage (for example) to “hook” customers  if the RMG counterparts only offer a 90% payout percentage.

The hubbub over social casino games shows that we’re getting down to brass tacks in New Jersey. THE FIGHT to legalize online poker in the Garden State may have been won back in February but poker players won’t be able to rest easy until the first hands are dealt next month.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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