DGE threatens regulatory action and civil penalties if operators delay cashouts and encourage players to cancel them.

New Jersey Regulator Cautions Operators Over Attempts To Encourage Gamblers To Reverse Cashouts

On Wednesday, the New Jersey Division of Gaming Enforcement (DGE) issued a Director’s Advisory Bulletin, cautioning operators about a worrisome trend.

The DGE is acting based on numerous complaints from users of the state’s online casinos, poker rooms and sportsbooks. Customers have complained that the process to cash out their balances takes unreasonably long, up to two weeks. Of greater concern is the fact that when they’ve contacted the operator to inquire about their funds, they have on occasion been encouraged to cancel the request and continue gambling. A few have even reported that a site representative offered them bonus money as an incentive to do so.

This is, of course, completely contrary to responsible gambling principles.

It’s not clear to which operators the complaints relate, nor whether it is only a few parties engaged in these practices or if the problem is widespread in the state. There are roughly two dozen online casinos operating in New Jersey. In addition to these are 14 mobile sportsbooks and three significant poker sites or networks. The DGE addressed its bulletin to the market generally, without naming names.

While there isn’t a specific clause forbidding this in the DGE’s rules, it does go against their overall intent. Any delays in the withdrawal process should be as brief as possible, and solely the result of security procedures.

Six separate sections of the rules deal with withdrawal policies. The DGE reviewed these and found that:

“The current rules, taken as a whole, prohibit the practice of soliciting, either overtly or covertly, the rescission or reversal of withdrawals once requested by a patron. The encouragement or incentivization of such rescissions are inconsistent with the intent of having speedy and consistent withdrawals, with a minimal delay solely for the purpose of checking for fraudulent activity.”

DGE issues stern warning of crackdown to come

The DGE is unwilling to place strict limits on cashout times. This is because the need to properly investigate suspicious activity is paramount, and circumstances may necessitate delays.

That said, the Bulletin stresses that operators should keep processing times to a minimum. Moreover, they must not encourage a player to cancel their request and keep playing. It doesn’t matter if the encouragement is overt or indirect.

Going forward, the DGE will scrutinize communications between operators and their customers during the cashout period for violations of this policy. If the operator offers some material incentive to cancel the request, such as bonus funds, the DGE will consider that an aggravating factor.

The Bulletin concludes with some stern language, making it clear that this is the only warning. Its next step, if the practice continues, will be to start taking punitive action:

“Operators should clearly understand that the Division will take regulatory action and impose civil penalties whenever patrons are improperly encouraged or incentivized to rescind their withdrawal requests for the purpose of resuming gaming activity.”

A hardline approach may indeed be necessary. One feature of the online gambling industry is that the cost per acquisition for users is very high. For online casinos, it’s often in the hundreds of dollars. Losing a player is costly to a site, so it’s natural that they wish to avoid that. To keep players safe, the regulator must ensure that the expected penalties for coercing players to stay will exceed the cost of letting them go.

A common occurrence in the black market

Slow payments and policies that discourage withdrawals are common among illegal offshore sites. Payment processing often has to be done through circuitous means due to the illegal nature of the business. Sites use this as cover to delay cashouts, or else cite vague clauses in their terms of service to deny the request.

When the problem becomes frequent at a given site, it can indicate financial difficulties. Black market sites don’t keep player funds segregated. This means they can run out of cash when too many players withdraw at once. When cashout times keep increasing, it often means the site is about to go under, taking remaining balances with it.

That presumably is not the case here. Regulated markets do require sites to keep sufficient cash on hand to cover all outstanding balances, at least in theory. Nonetheless, it’s unacceptable to see this practice cropping up in what should be a safe market.

After all, responsible gambling is all about knowing when to stop. Ideally, operators would be actively involved in helping players make that decision. In practice, this is a big lift, because it runs counter to their own business interests.

What isn’t too much to expect, however, is that when players have made the decision to stop of their own accord, operators do not intervene to prevent that.

One of the major promises of legal online gambling is that it is safer and more honest than the offshore industry. That isn’t a very high bar to clear, and everyone on both the industry and regulatory side must work together to ensure that no one unwilling to do so gets a seat at the table.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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