DGE forces affiliates to take a stance on either side of the law

New Jersey Regulators Serve Notice To Illegal Online Gambling Operators, Promoters

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The Division of Gaming Enforcement (DGE) is serious about cracking down on illegal online gambling websites in New Jersey.

In a letter obtained by Online Poker Report, the agency warns affiliates about the consequences of marketing to customers in its state. It’s fair to presume that operators using these affiliates are receiving similar letters.

The escalation originates with head regulator David Rebuck, who has grown increasingly vocal about the problem. And rightly so. With the advent of sports betting, the NJ gambling industry is more incentivized than ever to deter illegal competition.

A ‘massive problem’ for regulators

“The illegal market is massive in the United States,” Rebuck said, making a panel appearance at last week’s Global Gaming Expo. “And it has been for a long time, stunningly to us.”

He was speaking specifically about sports betting, but his comments apply to online gambling as a whole. Here’s more:

“There’s an extremely naive understanding of the United States market today.

“In the US market, anybody can take two seconds to open their cell phone and search their state or tribe. And type in, ‘How do I place a sports wagering bet in Nebraska?’ … It’ll instantly take you to an illegal website. And that website could be readily accessible. Within a short time, you’ll be able to open an account and commence wagering.”

At a legislative hearing last month, Rebuck indicated that his division has identified more than 108 offshore gambling sites illegally serving US customers.

These sites, often based in countries like Antigua and Costa Rica, operate beyond the reach of state officials. It would likely take multi-agency effort at the federal level to drive them offshore for good.

The first step in enforcement?

A great many websites serve as affiliates of those sportsbooks, though, actively promoting them as viable options in the US. Turning the screws on those supporting the illegal industry is a practical way to sweep a leg out from under it.

Affiliates of offshore gambling sites now find themselves in the DGE’s crosshairs. Here’s an excerpt from the letter:

This letter shall serve as official notice that your website, by offering unauthorized gaming links, is promoting activity that is contrary to New Jersey and federal law. We request that you immediately remove any online gaming links that are not authorized under federal law or the law of any State.

The addressee of this particular notice is promoting one of the industry’s biggest pariahs alongside regulated NJ options.

Bovada has been active in the US for many years, possibly the only operator Rebuck has targeted by name. He did not mince words, either: “You will not get licensed in New Jersey, and I will fight you to get licensed in any state.”

These affiliate letters from the DGE present that stance in more official verbiage:

The division will not license or register any company that is promoting illegal sites, as this activity negatively affects that company’s good character, honesty, and integrity.

Regulators are also sending copies of these letters to the Division of Criminal Justice “so that it may consider taking appropriate legal action.” Violators risk running afoul of state and federal laws against racketeering and gambling advertisement.

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The illusion of choice, at least

The DGE seems to be offering affiliates a level of choice. If a website wants to promote offshore gambling, then so be it. It may be illegal to do so, but that’s for law enforcement to sort out.

Those affiliates, however, won’t be permitted to associate with operators licensed in New Jersey. It’s something of a regulatory line in the sand, with no room to straddle both sides. The onus is on each licensee to verify that its affiliates are working within the mandate.

This is not the first time the DGE has made an effort to address offshore operators.

In 2014, Rebuck’s agency began a similar crackdown on affiliates of online poker sites operating in the black market. It worked. Even Bovada, one of the most egregious violators, agreed to stop taking new customers from NJ.

The legalization of NJ sports betting has illuminated the problem once again, however, and Bovada is still offering its sportsbook to American customers. With little-to-no taxation or oversight, it enjoys a number of inherent advantages over US-regulated sites.

Competition is key in a healthy market, but only when the competitors are fighting on equal footing — and operating within state and federal laws. The efforts of Rebuck and his agency are arguably critical for the long-term health of online gambling in NJ and beyond.

- Eric is a reporter and writer covering regulated US gambling, sports betting, and DFS. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.
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