In the status quo, there are a number of affiliates that promote both New Jersey-regulated online gambling sites and offshore operators. The new policy from the DGE would, on face, force affiliates to choose one or the other.
The bulletin started a clock set for 150 days. The clock started on June 4 and expires on November 1, 2015. At the end of that period, affiliates must:
Affiliates who were not promoting illegal online gaming sites at the time of the bulletin do not need to take any action.
If an affiliate complies with those conditions, they qualify for what the DGE is calling a “deferment on enforcement,” meaning the DGE will not:
If an affiliate does not comply, the penalty is clear:
[…] non-compliant affiliates and their principals, officers and directors, as well as any future applicants, will be deemed unsuitable for licensure or registration by the Division going forward. To be clear, the negative suitability assessment will attach to each principal owner, officer and director regardless of any changes in corporate ownership and structure. Moreover, the Division will advise all other gaming regulatory agencies which affiliates, and their principal owners, officers and directors, have not complied with New Jersey law and identify each as unsuitable for licensure or registration in New Jersey.
In response to a followup question, the DGE clarified that the policy applies to existing and future affiliates.
“Following the expiration of the 150 day window,” the DGE told me, “an affiliate, regardless of whether currently licensed or registered, that continues to promote illegal sites to United States customers ‘will be deemed unsuitable for licensure or registration by the Division going forward.'”
“Thus, without a license or registration, the affiliate would be unable to provide services to New Jersey casinos or platform providers.”
One question I heard from several affiliates following the release of the bulletin: does the policy apply to all US-facing traffic, or only New Jersey traffic?
To put it another way: if an affiliate geo-targets their site to only promote regulated sites to traffic from New Jersey, while still showing offshore sites to traffic from the rest of the U.S., would they be in compliance with the new policy?
I put this question to the DGE and they replied that “the restriction applies to all affiliates marketing on behalf of illegal sites that are not approved or licensed to accept online wagers from customers located in New Jersey or the United States, regardless of what jurisdiction the affiliate actually performs work in.”
“Companies that continue to market for illegal sites in any jurisdiction following the expiration of the 150 day window,” the DGE continued, “will likewise be deemed unsuitable for licensure of registration.”
In short: promoting online gambling sites that aren’t licensed by a regulator in the U.S. to any U.S. traffic – including, but not limited to, New Jersey – appears to run afoul of the DGE’s new policy.
The DGE’s policy on affiliate marketing is likely to echo in states that follow New Jersey into the regulated online gambling market.
And note that the DGE intends to share information regarding noncompliant affiliates with “all other gaming regulatory agencies” – meaning that the DGE will exert some influence on suitability investigations in other states even if a state doesn’t follow the DGE’s lead on policy.
Nicky Senyard, CEO of Income Access, which provides the affiliate backend for many of New Jersey’s operators, told me she believes that “other states are looking toward New Jersey” on iGaming regulatory issues, suggesting that the precedent set by the DGE on this matter will at a minimum inform the discussion on affiliates in other states.
A poster on TwoPlusTwo noted a potential negative consequence of the compliance conditions: that an affiliate would effectively be swearing to activity that other jurisdictions might find problematic.
After all, while New Jersey is offering a “deferment on enforcement,” there’s no guarantee that officials from other states (or the federal government) will take a similar approach.
I asked the DGE if an affiliate would be required to indicate in their certification that:
The DGE’s response: “For those affiliates currently engaged in marketing for illegal sites, the certification must attest to the fact that the entity has ceased marketing illegal sites to customers in the United States within the 150 day period.”
Sounds like #1 to me.
Of course, since affiliates not engaged in promotion of illegal sites aren’t subject to the compliance conditions, any affiliate who files a notification could arguably be assumed to have promoted illegal sites.
Senyard didn’t hesitate when I asked her this question, answering with a quick “yes” before qualifying that “we’re talking incremental growth.”
“Affiliates need to invest to make New Jersey work,” said Senyard, “and when it was unclear as to who was allowed to do what,” that investment would have been tougher for some affiliates to justify.
Senyard sees the broader picture for affiliates brightening in New Jersey.
“The market is growing, the opportunity is growing,” said Senyard, giving credit for that growth to a series of decisions by regulators – including, but by no means limited to the updated affiliate policy – stemming from a “constant best practice position” held by the DGE.