Here's Why The DGE Issues Transactional Waivers

New Jersey Online Gambling: What Exactly Is A Transactional Waiver?

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For online gaming operators and service providers, full licensure by the New Jersey Division of Gaming Enforcement is a long and intensive process.

Under the best of conditions, the procurement of a gaming license can take multiple years, which is why the NJ DGE came up with the transactional waiver model, a way to fast-track companies for launch without relaxing its licensure requirements.

Transactional waivers are more or less temporary licenses granted by the DGE following a thorough but preliminary vetting process. In its granting of transactional waivers the DGE states:

“… the Division has the authority to issue transactional waivers to Internet gaming companies that have submitted a completed CSIE application and have been subject to preliminary investigation.”

For example, Central Account Management System (CAMS), which supplies “know your customer” checks, payment processing, and geolocation services to New Jersey online gaming operators was granted full licensure in May of 2015, nearly two years after it was first approved for a transactional waiver. And keep in mind that CAMS is not an online gaming operator or platform provider, it is a service provider.

CAMS wasn’t the first company to receive full licensure. Two other companies were granted full licensure by the New Jersey DGE in April of 2015, and Sportech.

What does a transactional waiver allow?

Transactional waivers allow companies to launch their full slate of approved games, but they are only valid for a period of six months, and must be renewed for future six month terms if full licensure has not been granted.

Furthermore, the Division has the right to revoke a transactional waiver at any time, and can craft custom requirements on a company operating under a transactional waiver.

PokerStars is one such company currently operating under a transactional waiver with specific stipulations in New Jersey, as its TW includes several explicit requirements, including:

“Amaya and any of its subsidiaries and affiliated entities shall not permit Isai Scheinberg, Mark Scheinberg, Pinhas Schapira, Yehuda Nir, Paul Telford, Paul Tate, Nelson Burtnick, Ray Bitar, Rafael Furst, or Chris Ferguson to serve or act as an owner, director, officer, shareholder, security holder, financial source, lender, employee, consultant, lobbyist, intermediary, independent contractor, advisor, agent, or representative of Amaya or its subsidiaries and affiliated entities, in any capacity, whether directly or indirectly, whether by formal contract or by informal arrangement, without prior written approval of the Division.”

PokerStars’ transactional waiver

The ongoing investigation and charges of insider trading swirling around Amaya’s former CEO David Baazov have led to a flurry of questions concerning PokerStars’ transactional waiver in New Jersey.

Baazov took a voluntary leave of absence from his CEO and chairman positions on March 29, with COO Rafi Ashkenazi appointed interim CEO and Divyesh (Dave) Gadhia named interim chairman.

PokerStars was initially granted a transactional waiver on September 30, 2015. Its TW was recently renewed on March 31, 2016, several days after Amaya announced Baazov would be stepping down as CEO and chairman of the board.

Baazov has denied any wrongdoing, and issued the following statement at the time of his departure:

“As always, I continue to be dedicated to doing the right thing for Amaya and all its stakeholders. I believe that stepping down in the short term will help to avoid distraction for the company and its management while I vigorously contest all allegations made against me and pursue my bid to acquire the company.”

It’s unclear what, if any, impact this will have on Amaya/PokerStars’ New Jersey license.

In a statement to on March 30, the DGE said:

“The Division is closely monitoring the matter regarding the insider trading related charges that were filed by Quebec’s Financial Securities Regulator, the AMF, against Amaya CEO David Baazov and other Amaya employees.  The Division’s licensing investigation is not yet fully completed. Therefore, Amaya is conducting business in New Jersey on a transactional waiver.  As the Division investigation proceeds, we will address this matter with Amaya, the AMF and other licensing jurisdictions.”

Taking all of the following factors into account:

  • The investigation and charges confined to Baazov;
  • Baazov’s denials of wrongdoing;
  • Baazov stepping down from his CEO and chairman roles;
  • The DGE knowing about, and looking into, the AMF charges during its comprehensive vetting of PokerStars;
  • The DGE renewing PokerStars’ TW;
  • The DGE’s pragmatic statement above.

… it appears that, with the facts as currently known, PokerStars is not in immediate jeopardy of losing its current licensing status in New Jersey.

- 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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