Despite Complexities, New Jersey DGE Still Exploring Interstate And International Online Poker Agreements

Ask online poker players and they’ll likely attest that the small size of the regulated online gambling markets in the US has been holding online poker back.

If only states would form interstate agreements and pool their players, we could see another poker boom.

More specifically, one of the most oft-asked questions by US online poker players is when will New Jersey join the interstate agreement currently in place between Delaware and Nevada?

In an interview with Gambling Compliance earlier this year, New Jersey Division of Gaming Enforcement Director David Rebuck offered some insight into New Jersey’s avoidance.

He called the agreement crafted by Delaware and Nevada too bureaucratic and perhaps rushed.

“As drafted, [it] is not the right way to go in having a mutual agreement between states,” Rebuck told GC.

In a subsequent interview with Online Poker Report, Rebuck detailed some of the specific concerns he has with the agreement. He also discussed New Jersey’s ongoing efforts to forge interstate, or even international, partnerships.

MSIGA not a good fit for New Jersey

Delaware and Nevada have been sharing online poker liquidity since March 2015 (the Multi State Internet Gaming Agreement (MSIGA) was signed in February 2014).

But because of the sparse populations of both states, the merging of Delaware and Nevada online poker players barely moved the needle.

The general consensus is that Delaware and Nevada need to team up with New Jersey. This doesn’t look like it’s going to happen in the near future.

When it comes to the MSIGA, Rebuck told OPR: “We’ve run up against a lot of barriers for interoperability.”

Rebuck listed the following issues with the current agreement between Delaware and Nevada that has caused New Jersey to balk at joining:

• The two states that crafted the compact have more control over its future direction.
• The compact as written is too bureaucratic (an unavoidable component based on the gaming laws passed in Nevada and Delaware).
• Joining the compact could create constitutional issues in New Jersey that would require revisiting the state’s gaming laws.
• Joining Nevada and Delaware would only (at least presently) benefit a single New Jersey operator.

Structural concerns with MSIGA

All three states have the option to enter into interstate agreements with other states, but as is often the case, the devil is in the details.

The laws passed in Delaware and Nevada require the states’ governors to sign off on any interstate agreement the states might enter into.

So as Rebuck notes: “The compact between Delaware and Nevada is very formal.”

“In New Jersey, our law for allowing agreements between state regulatory agencies are less restrictive,” Rebuck said. “We don’t need a formal compact. We are allowed to have agreements that can be worked out in a less bureaucratic way.”

He added: “It doesn’t mean we can’t enter into a more formal compact, but I’ve reviewed it and talked to Delaware and Nevada, and there [are] some structural, organizational standards that are in there that I just don’t agree with.”

Constitutional issues also in play

Rebuck also noted there could be possible constitutional issues due to the way New Jersey’s online gambling law is currently written.

The most obvious concern if New Jersey teamed up with Nevada and Delaware would be the stipulation that the servers need to be housed in Atlantic City. Even though it’s a relatively quick fix, it would require opening up the law, which is never an easy process.

“If an opportunity exists, it’s not going to be as easy as flipping a switch,” Rebuck said. “We learned that when the European operators came to New Jersey. It’s never that simple.”

The 800-pound gorilla in the room

As difficult as the structural problems might be, there is a larger issue keeping the New Jersey online poker market segregated from Nevada and Delaware.

Nevada and Delaware both have a single online operator: 888. Because of 888’s monopoly in both markets, liquidity sharing between the two states is a win-win. Opposition simply doesn’t exist.

This wouldn’t be the case in New Jersey.

If New Jersey partnered with Delaware and Nevada, it would once again benefit 888 and its aligned Caesars casinos, offering the company a clear competitive advantage.

“When you look at the compact it really only benefits one company,” Rebuck explained. “In New Jersey, I can’t do an agreement that only benefits one operator.”

Rebuck called this dynamic “one of my biggest concerns” with the compact, but added:

“If there was an opportunity for the other operators [to also benefit] that would be different.”

In the end, don’t expect New Jersey to team up with Nevada and Delaware until there is an opportunity whereby most of the state’s online operators would benefit.

This is why New Jersey is exploring other opportunities.

Pennsylvania would be a good candidate

Rebuck is also paying close attention to the situation in Pennsylvania.

“We’re taking a wait-and-see approach with Pennsylvania,,” Rebuck said. “There may be an opportunity there sometime in the near future.”

Pennsylvania seems like a solid candidate for an interstate agreement with New Jersey considering the common operators in the two states and the attendant increased potential for partnerships.

Not only are there Caesars properties in both jurisdictions, but also several other casino operators with land-based and/or online ties:

• Rush Street operates two Pennsylvania casinos and has partnered with Golden Nugget to launch an online casino in New Jersey — a partnership that will likely be reciprocated in Pennsylvania.
• Mohegan Sun owns and operates a casino in Pennsylvania and operates Resorts Casino in Atlantic City.
• Mount Airy Casino in Pennsylvania has partnered with 888.
• Valley Forge Casino has been linked to GVC/PartyPoker.

Furthermore, according to Rebuck, he’s aware of dialogues between several properties in New Jersey and Pennsylvania that could lead to partnerships.

Still, the NJ DGE director cautioned that it’s premature to speculate about a New Jersey/Pennsylvania liquidity sharing agreement.

Pennsylvania still hasn’t passed an online gambling bill, let alone had serious discussions about interstate agreements. But Rebuck is confident that if both sides are willing, a partnership could be reached.

“If you have two states like Pennsylvania and New Jersey, there’s a lot in common,” he said. “We’ll work our tails off and Pennsylvania will work their tails off to come together on this … it’s a win-win.”

International compacts proving more complicated

New Jersey is also actively pursuing international compacts, most notably in the UK. This type of agreement would not only be a boon for New Jersey, it would be historic.

Unfortunately, it doesn’t look like an international compact is going to happen in the foreseeable future.

According to Rebuck, after some solid progress was made in the long-hoped-for partnership between New Jersey and the UK, they hit a wall.

Rebuck told OPR that “a dialogue with the United Kingdom … got really far” before it was derailed by technical issues the two jurisdictions couldn’t overcome.

“It’s not as easy as one would have thought when we first got into it,” he said.

Rebuck said there is still open communication with the UK, and that he’d love to partner with the country. But right now there are simply too many hurdles.