Regulated versus Unregulated Sites In New Jersey?

Home » Poker News » Regulated versus Unregulated Sites In New Jersey?

Monday, April 14th, 2014 | Written by Charles Washington

New Jersey is in the privileged position of being one of just three states in the whole of the USA offering internet gambling to its residents. With a population of 8.8 million people, more than three times the size of Nevada (2.8m), The Garden State is in a unique position of pioneering the country’s nascent online gambling industry, whilst demonstrating to other states the benefits of offering a regulated and licensed egaming environment.

Nevertheless, after five months of operations and just $27 million in revenues, a far cry from the $1 billion predicted by Gov. Chris Christie for the whole of NJ’s first year of legalization, there are indications that New Jersey residents are even beginning to abandon the state’s online gambling site in favour of offshore unregulated ones.

Although the trend is off-putting for the young and still growing industry, there are unfortunately a number of good reasons why gamblers may view US-friendly, unregulated sites as a more attractive option. And here’s why.

Unregulated poker sites offer larger player pools

Although New Jersey offers a wide range of online gambling games, poker still continues to be a major draw for the state with online poker making up around 40% of gaming revenues and online casinos taking up the remaining 60%. In addition, online poker players may also be tempted to try their luck at casino games, thus adding an extra revenue stream for the websites.

However, all indications show average traffic across all NJ sites has been trending downward of late and are presently 31% lower since reaching a peak of 616 cash-game players on January 26th. Despite global online traffic also falling over a similar period, albeit by a much smaller percentage, traffic across the top three US-facing networks was closer to 2,161 players with Bodog’s tally of 1,500 players significantly higher than Party Poker NJ’s figure of 179.

Of course offshore sites service the whole of the US while New Jersey targets only its own state residents. In the meanwhile poker volume is king thus giving unregulated sites the edge over their regulated counterparts, until a significant pool sharing compact between bigger states like Pennsylvania, New York or California is formed to narrow the gap.

Unregulated sites offer exceptional promotions and stability

Benefiting from economies of scale, unregulated site are able to offer some hugely attractive promotional offers, such as signup bonus of more than $1,000, as well as enticing poker players to take part in tournament with huge guaranteed prize pools at their online poker rooms.

Furthermore, whereas New Jersey gambling sites have suffered from a number of teething problems since launching in November 2013, such as geolocation issues and server stability, unregulated sites are not required to adhere to the same location verification protocols held up by New Jersey sites, thus giving them an advantage on the server stability front.

Benefits of NJ’s regulated online gambling sites

On the other side of the coin, there exist huge benefits to playing on NJ’s licensed gambling sites, not least in terms of addressing one of the chief concerns of anti-online gambling advocates, namely the strict monitoring of behaviour particularly of problem gamblers or any would be underage players. In other words, the New Jersey Division of Gaming Enforcement imposes a more rigid identification and verification requirements than those of unlicensed sites, while self-imposed restriction options allow for a more fun and risk free online playing experience for gamblers.

Another chief frustration for those people gambling online at an unregulated site are the problems they sometimes experience regarding payment processing. When Full Tilt Poker ran into trouble, for instance, American players were left in a state of limbo for almost three years with millions of dollars of their money stuck on the site. A more recent example concerns LockPoker.eu, with numerous customers complaining of long cash out delays of up to a year. Regulated online gambling sites in New Jersey, however, ensure player funds are kept separate from operating accounts, and can be cashed out simply enough either online or by visiting a cashier at one of its respective land-based casinos.

As Poker Players Alliance VP of player relations, Rich Muny, explained recently: “We would all rather play on the domestic sites because it benefits us as consumers. Now a disgruntled player can go to a regulator if there’s a dispute with the site over billing or any issue.”

One issue that does remain, however, is the fact major financial institutions such as American Express, Wells Fargo, and J.P. Morgan Chase have all said that they will not process any online gambling transactions on New Jersey sites, legal or otherwise. Part of the reason involves a still muddled interpretation of the UIGEA, with Wells Fargo executive, Nathalie Brown, explaining:

“In compliance with regulation GG (Unlawful Internet Gambling Enforcement Act of 2006), we prohibit the use of consumer credit cards for Internet gambling. The networks (Visa, MasterCard and American Express) monitor the merchant category codes and block charges that don’t comply with federal regulations.”

Conclusion

In the short term NJ gamblers will likely be attracted to regulated sites as they seek bigger prize pools, better promotional offers and more attractive and stable software. In the long run, however, a regulated online poker market will have a more promising future than its unlicensed competitor as players are able to gamble in the comfort of a safe and secure environment. In order for that paradigm shift to occur the growth potential of the regulated market has to first be realized through a more coordinated approach to the industry in terms of legislation, overcoming technological issues, as well as the major financial institutions offering viable payment processing options for customers of regulated sites.