Inside Assemblyman Caputo’s Call To Rewrite The Rules of New Jersey’s Online Gambling Industry

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As first reported by the Press of Atlantic City, a new bill would impose stricter licensing requirements on online gaming suppliers in New Jersey.

The legislation – A3894 – would require online gaming companies to hold a casino license, a step above the currently required Casino Service Industry Enterprise License.

The bill’s primary sponsor is Assemblyman Ralph Caputo. Caputo is also the chair of the Assembly Tourism, Gaming and Arts Committee, which unanimously approved the bill on Thursday.

PokerStars the focus of Caputo’s efforts?

The  measure appears to be specifically aimed at PokerStars, as the company is currently awaiting final approval of its license in NJ.

As John Brennan noted on Twitter, should this bill pass (which is still a long way from happening) it would likely further complicate – if not end – PokerStars’ license application in New Jersey.

Caputo has been extremely critical of online gambling in general (he was one of just five members of the Assembly who voted against the 2013 bill that approved online gambling in the state), and particularly of PokerStars.

In an op-ed that appeared at in August, Caputo called PokerStars, among other things, a “disgraced online gambling giant…” with “a history of bad behavior…” whose “hands may be the dirtiest.”

Bill faces steep odds

NJ State Senator Raymond Lesniak, who championed the push for online gambling expansion in New Jersey, is one person who gives the bill little chance to pass:

Analyst Chris Krafcik of GamblingCompliance generally echoed Lesniak’s assessment:

Calling for the return of the CCC

Caputo’s op-ed was eerily similar to an op-ed penned by former Casino Control Commission member Carl Zeitz just weeks prior.

Zeitz, who is identified as a consultant for the Sheldon Adelson-backed CSIG, and later Caputo, questioned the current licensing procedures for online gaming sites, which was perhaps a harbinger for Thursday’s news.

At present, iGaming operators and providers are only required to possess a CSIE license, and are therefore not required to go before the New Jersey CCC in a public hearing – as was the case for all of the land-based operators in Atlantic City.

However, the first stipulation to receive an iGaming operator’s license in New Jersey is the applicant must be a licensed land-based casino. If you are a licensed land-based casino you have already gone through the strict vetting and public licensing hearing Caputo is calling for.

The reason software providers like PokerStars or 888 no longer have to face a public hearing in front of the CCC has to do with a 2011 amendment  to the Casino Control Act that greatly diminished the CCC’s involvement in licensing and day-to-day oversight of gaming.

Following the amendment the CCC’s responsibilities were essentially reduced to conducting licensing hearings for brick and mortar casinos.

Caputo’s bill would require these companies to apply for a casino license and face a public hearing in front of the New Jersey Casino Control Commission.

A solution in search of a problem

While he may have noble intentions, and transparent, public hearings are certainly a good thing, Caputo’s statements downplay the requirements needed to receive a Casino Service Industry Enterprise (CSIE) License.

Caputo paints the process as little more than a rubber stamp.

This is simply not the case. CSIE licenses are the highest class of iGaming licenses the state awards.

A CSIE license is described by the New Jersey Division of Gaming Enforcement as:

Companies providing Internet gaming software or systems, vendors who manage, control, or administer games and associated wagers conducted through the Internet, and providers of customer lists of persons who have placed wagers through the Internet.

The DGE lists the standard for receiving a CSIE license as:

Gaming related CSIE’s and their key personnel/qualifiers must demonstrate good character, honesty and integrity as well as financial stability, integrity and responsibility. Qualifiers must not have engaged in any conduct that is prohibited by Section 86 of the Casino Control Act.

Here are the basic instructions (5 pages) for filing a CSIE application. And here is a look at the 23-page form you must file with the DGE.

Applicants that make it this far will then have to meet with the DGE for further vetting and questioning.

Despite what Caputo would have us believe, CSIE license applicants are diligently investigated and go through the same vetting process that land-based casinos have, sans the public hearing in front of the New Jersey CCC.

This makes Caputo’s proposed requirement redundant – provided one trusts the NJ DGE to do its job properly, a trust that the agency should have definitively earned following the first, problem-free, year of regulated online gambling in the state.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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