NJ Targets Affiliates Promoting Unregulated Online Poker Sites

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Thursday, May 22nd, 2014 | Written by Charles Washington

Almost six months after launching its first online poker site, the New Jersey Division of Gaming Enforcement (DGE) has now decided to clamp down on those US affiliates promoting unregulated online poker rooms, and has now sent a letter to six of the main offenders requesting that they “immediately remove any online gaming links that are not authorized under federal law or under the law of any state.” The affiliates immediately affected include PokerSource.com, CardsChat.com, Pokersites.com, RakeBrain.com, RaketheRake.com, and one as of yet unidentified website.

Commenting on its decision, DGE spokeswomen Kerry Langan told gambling news outlet OnlinePokerReport.com, that “we believe this [promoting unregulated sites] may either taint legitimate sites by associating them with the illegal ones, and conversely may lend the appearance that these illegal sites are affiliated with authorized sites.”

Grey market major drain on NJ igaming revenues

Last month, New Jersey’s 16 online gambling sites generated $11,428,737 in revenues, down from the $11,878,374 collected in March, and representing the first time igaming revenues have declined since regulation began. However, whilst online casinos maintained a steady trajectory with around $8.8 million in revenues, online poker reported a slide in revenues to $2.6 million in April from $3.2 million in March.

In addition to geolocation and financial processing problems holding back the industry, the abundance of unregulated, unlicensed online poker rooms continuing to operate within the state’s grey market is viewed as the biggest threat to NJ’s nascent online poker environment.

Major shakeup ahead for US online poker

The DGE’s request that affiliates remove unauthorized gaming links from their sites is designed to force affiliates to chose between either promoting regulated online poker rooms or risk future legal action by continuing to promote offshore websites. In the long run, the move could also help stamp out altogether unlicensed online poker sites from operating in NJ’s regulated market.

Included in the cease-and-desist letters sent out by New Jersey Assistant Attorney General George Rover is a reference to New Jersey’s gaming act, specifically as it applies to offending affiliates. As the letter then explains:

“5:12.95.26 Offering of Internet gaming without approval, fourth degree crime; fines:
Any person who offers games into play or displays such games through Internet gaming without approval of the division to do so is guilty of a crime of the fourth degree and notwithstanding the provisions of N.J.S.2C:43-3, shall be subject to a fine of not more than $25,000 and in the case of a person other than a natural person, to a fine of not more than $100,000 any other appropriate disposition authorized by subsection b. of N.J.S.2C:43-2.”

Legitimacy of DGE move

OnlinePokerReport published a copy of the letter the DGE sent to affiliate marketer RaketheRake.com and mentioned on the list of poker sites currently being promoted by it were the following non-USA based websites; Bovada Poker, Merge Gaming, Black Chip Poker, and America’s Cardroom.

Although doubts remain whether a federal law prohibiting affiliates from promoting offshore poker rooms such as these actually exists, a state specific threat by New Jersey may prove legitimate, and already PokerSource.com seems to have acquiesced and removed its offshore site promotions. For the other affiliates warned by the DGE, however, it would appear to be business as usual for now.

Unregulated sites enjoy unfair advantage

New Jersey’s online poker market is dominated by two companies, namely WSOP.com and the partypoker New Jersey network, which have an average of 150 and 120 cash game players over a week period respectively, and currently account for 81% of the state’s market.

Nevertheless, such traffic is considerably lower than forecast made by analysts pre-regulation, and with Bovada still very much active in USA’s grey market with an average of 1,500 cash game players, NJ’s other regulated sites have almost completely been shut out of New Jersey.

Unlike regulated sites characterized by strict player verification checks, limited payment processing options, limited geological participation by players, and the requirement to pay local taxes, unregulated sites are not restricted by the same constraints, giving them a huge advantage over their regulated counterparts.

The NJDGE’s latest move against affiliates is thus seen as an important means at readdressing the unfair situation in the USA’s regulated online poker environment. Other unlicensed operators such as Merge and the Winning Poker Network decided to exit New Jersey and Nevada post-regulation, possibly in order to stave off a potential legal threat from authorities, and with NJ’s latest clamp down on affiliates, the future of unlicensed online poker sites in The Garden State would seem to be drawing to a close.