SENATE, No. 3019

STATE OF NEW JERSEY

214th LEGISLATURE

 

INTRODUCED AUGUST 25, 2011

 


 

Sponsored by:

Senator  RAYMOND J. LESNIAK

District 20 (Union)

Senator  JIM WHELAN

District 2 (Atlantic)

 

 

 

 

SYNOPSIS

     Authorizes Internet wagering at Atlantic City casinos under certain circumstances.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act authorizing Internet wagering at Atlantic City casinos under certain circumstances and amending and supplementing the "Casino Control Act", P.L.1977, c.110 (C.5:12-1 et seq.).

 

     Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

     1.    Section 5 of P.L.1977, c.110 (C.5:12-5) is amended to read as follows:

     5.    "Authorized Game" or "Authorized Gambling Game"-- [Roulette] Poker, roulette, baccarat, blackjack, craps, big six wheel, slot machines, minibaccarat, red dog, pai gow, and sic bo; any variations or composites of such games, provided that such variations or composites, and any above listed game or variation or composite of such game to be offered through Internet wagering, are found by the division suitable for use after an appropriate test or experimental period under such terms and conditions as the division may deem appropriate; and any other game which is determined by the division to be compatible with the public interest and to be suitable for casino use after such appropriate test or experimental period as the division may deem appropriate. "Authorized game" or "authorized gambling game" includes gaming tournaments in which players compete against one another in one or more of the games authorized herein or by the division or in approved variations or composites thereof if the tournaments are authorized by the division.

(cf:  P.L.2011, c.19, s.4)

 

     2.    Section 6 of P.L.1977, c.110 (C.5:12-6) is amended to read as follows:

     6.    "Casino" or "casino room" or "licensed casino" -- One or more locations or rooms in a casino hotel facility that have been approved by the division for the conduct of casino gaming in accordance with the provisions of this act, including any part of the facility where Internet wagering is conducted. "Casino" or "casino room" or "licensed casino" shall not include any casino simulcasting facility authorized pursuant to the "Casino Simulcasting Act," P.L.1992, c.19 (C.5:12-191 et seq.).

(cf:  P.L.2011, c.19, s.6)

 

     3.    (New section)  “Internet wagering" means the placing of wagers with a casino licensee at a casino located in Atlantic City using a computer network of both federal and non-federal interoperable packet switched data networks through which the casino licensee may offer authorized games to residents of this State
who have established a wagering account with the casino licensee and who are physically present in this State when placing a wager.

 

     4.    (New section)  “Internet wagering gross revenue” means the total of all sums actually received by a casino licensee from Internet wagering operations, less only the total of all sums actually paid out as winnings to patrons; provided, however, that the cash equivalent value of any merchandise or thing of value included in a jackpot or payout shall not be included in the total of all sums paid out as winnings to players for purposes of determining Internet wagering gross revenue.

 

     5.    Section 3 of P.L.1987, c.353 (C.5:12-43.1) is amended to read as follows:

     3.    "Restricted Casino Areas"--The cashier's cage, the soft count room, the hard count room, the slot cage booths and runway areas, the interior of table game pits, the surveillance room and catwalk areas, the slot machine repair room, any room or area related to Internet wagering operations and any other area specifically designated by the division as restricted in a licensee's operation certificate.

(cf:  P.L.2011, c.19, s.21)

 

     6.    Section 100 of P.L.1977, c.110 (C.5:12-100) is amended to read as follows:

     100. a. This act shall not be construed to permit any gaming except the conduct of authorized games in a casino room or through Internet wagering in accordance with this act and the regulations promulgated hereunder and in a simulcasting facility to the extent provided by the "Casino Simulcasting Act," P.L.1992, c.19 (C.5:12-191 et al.). Notwithstanding the foregoing, if the division approves the game of keno as an authorized game pursuant to section 5 of P.L.1977, c.110 (C.5:12-5), as amended, keno tickets may be sold or redeemed in accordance with division regulations.

     b.    Gaming equipment shall not be possessed, maintained or exhibited by any person on the premises of a casino hotel except in a casino room, in the simulcasting facility, or in restricted casino areas used for the inspection, repair or storage of such equipment and specifically designated for that purpose by the casino licensee with the approval of the division. Gaming equipment which supports the conduct of gaming in a casino or simulcasting facility or through Internet wagering but does not permit or require patron access, such as computers, or gaming software or other gaming equipment used to conduct Internet wagering may be possessed and maintained by a casino licensee or a qualified holding or intermediary company of a casino licensee in restricted areas specifically approved by the division. No gaming equipment shall be possessed, maintained, exhibited, brought into or removed from a casino room or simulcasting facility by any person unless such equipment is necessary to the conduct of an authorized game, has permanently affixed, imprinted, impressed or engraved thereon an identification number or symbol authorized by the division, is under the exclusive control of a casino licensee or casino licensee's employees, or of any individually qualified employee of a holding company or casino licensee and is brought into or removed from the casino room or simulcasting facility following 24-hour prior notice given to an authorized agent of the division.

     Notwithstanding any other provision of this section, computer equipment used by the slot system operator of a multi-casino progressive slot system to link and communicate with the slot machines of two or more casino licensees for the purpose of calculating and displaying the amount of a progressive jackpot, monitoring the operation of the system, and any other purpose that the division deems necessary and appropriate to the operation or maintenance of the multi-casino progressive slot machine system may, with the prior approval of the division, be possessed, maintained and operated by the slot system operator either in a restricted area on the premises of a casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic County, New Jersey.

     Notwithstanding the foregoing, a person may, with the prior approval of the division and under such terms and conditions as may be required by the division, possess, maintain or exhibit gaming equipment in any other area of the casino hotel, provided that such equipment is used for nongaming purposes.

     c.     Each casino hotel shall contain a count room and such other secure facilities as may be required by the division for the counting and storage of cash, coins, tokens, checks, plaques, gaming vouchers, coupons, and other devices or items of value used in wagering and approved by the division that are received in the conduct of gaming and for the inspection, counting and storage of dice, cards, chips and other representatives of value. The division shall promulgate regulations for the security of drop boxes and other devices in which the foregoing items are deposited at the gaming tables or in slot machines, and all areas wherein such boxes and devices are kept while in use, which regulations may include certain locking devices. Said drop boxes and other devices shall not be brought into or removed from a casino room or simulcasting facility, or locked or unlocked, except at such times, in such places, and according to such procedures as the division may require.

     d.    All chips used in gaming shall be of such size and uniform color by denomination as the division shall require by regulation.

     e.     All gaming shall be conducted according to rules promulgated by the division. All wagers and pay-offs of winning wagers shall be made according to rules promulgated by the division, which shall establish such limitations as may be necessary to assure the vitality of casino operations and fair odds to patrons. Each slot machine shall have a minimum payout of 83%.

     f.     Each casino licensee shall make available in printed form to any patron upon request the complete text of the rules of the division regarding games and the conduct of gaming, pay-offs of winning wagers, an approximation of the odds of winning for each wager, and such other advice to the player as the division shall require. Each casino licensee shall prominently post within a casino room and simulcasting facility, as appropriate, according to regulations of the division such information about gaming rules, pay-offs of winning wagers, the odds of winning for each wager, and such other advice to the player as the division shall require.

     g.     Each gaming table shall be equipped with a sign indicating the permissible minimum and maximum wagers pertaining thereto. Each game offered through Internet wagering shall display online the permissible minimum and maximum wagers pertaining thereto. It shall be unlawful for a casino licensee to require any wager to be greater than the stated minimum or less than the stated maximum; provided, however, that any wager actually made by a patron and not rejected by a casino licensee prior to the commencement of play shall be treated as a valid wager.

     h.     (1) Except as herein provided, no slot machine shall be used to conduct gaming unless it is identical in all electrical, mechanical and other aspects to a model thereof which has been specifically tested and licensed for use by the division. The division shall also test any other gaming device, gaming equipment, gaming-related device or gross-revenue related device, such as a slot management system, electronic transfer credit system or gaming voucher system as it deems appropriate. In its discretion and for the purpose of expediting the approval process, the division may utilize the services of a private testing laboratory that has obtained a plenary license as a casino service industry enterprise pursuant to subsection a. of section 92 of P.L.1977, c.110 (C.5:12-92) to perform the testing, and may also utilize applicable data from any such private testing laboratory or from a governmental agency of a state other than New Jersey authorized to regulate slot machines and other gaming devices, gaming equipment, gaming-related devices and gross-revenue related devices used in casino gaming, if the private testing laboratory or governmental agency uses a testing methodology substantially similar to the methodology utilized by the division. The division, in its discretion, may rely upon the data provided by the private testing laboratory or governmental agency and adopt the conclusions of such private testing laboratory or governmental agency regarding any submitted device.

     (2)   Except as otherwise provided in paragraph (5) of subsection h. of this section, the division shall, within 60 days of its receipt of a complete application for the testing of a slot machine or other gaming equipment model, approve or reject the slot machine or other gaming equipment model. In so doing, the division shall specify whether and to what extent any data from a private testing laboratory or governmental agency of a state other than New Jersey was used in reaching its conclusions and recommendation. If the division is unable to complete the testing of a slot machine or other gaming equipment model within this 60-day period, the division may conditionally approve the slot machine or other gaming equipment model for test use by a casino licensee provided that the division represents that the use of the slot machine or other gaming equipment model will not have a direct and materially adverse impact on the integrity of gaming or the control of gross revenue. The division shall give priority to the testing of slot machines or other gaming equipment which a casino licensee has certified it will use in its casino in this State.

     (3)   The division shall, by regulation, establish such technical standards for licensure of slot machines, including mechanical and electrical reliability, security against tampering, the comprehensibility of wagering, and noise and light levels, as it may deem necessary to protect the player from fraud or deception and to insure the integrity of gaming. The denominations of such machines shall be set by the licensee; the licensee shall simultaneously notify the division of the settings.

     (4)   The division shall, by regulation, determine the permissible number and density of slot machines in a licensed casino so as to:

     (a)   promote optimum security for casino operations;

     (b)   avoid deception or frequent distraction to players at gaming tables;

     (c)   promote the comfort of patrons;

     (d)   create and maintain a gracious playing environment in the casino; and

     (e)   encourage and preserve competition in casino operations by assuring that a variety of gaming opportunities is offered to the public.

     Any such regulation promulgated by the division which determines the permissible number and density of slot machines in a licensed casino shall provide that all casino floor space and all space within a casino licensee's casino simulcasting facility shall be included in any calculation of the permissible number and density of slot machines in a licensed casino.

     (5)   Any new gaming equipment or simulcast wagering equipment that is submitted for testing to the division or to an independent testing laboratory licensed pursuant to subsection a. of section 92 of P.L.1977, c.110 (C.5:12-92) prior to or simultaneously with submission of such new equipment for testing in a jurisdiction other than New Jersey, may, consistent with regulations promulgated by the division, be deployed by a casino licensee on the casino floor 14 days after submission of such equipment for testing. If the casino or casino service industry enterprise licensee has not received approval for the equipment 14 days after submission for testing, any interested casino licensee may, consistent with division regulations, deploy the equipment on a field test basis, unless otherwise directed by the director.

     (6)   All equipment used by a licensee to conduct Internet wagering, including but not limited to computers, servers, monitoring rooms, and hubs, shall be located, with the prior approval of the division, either in a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City, New Jersey.  All Internet wagers shall be deemed to be placed when received in Atlantic City by the licensee.  Any intermediate routing of electronic data in connection with a wager shall not affect the fact that the wager is placed in Atlantic City.

     No software, computer or other gaming equipment shall be used to conduct Internet wagering unless it has been specifically tested by the division.  The division may, in its discretion, and for the purpose of expediting the approval process, refer testing to any testing laboratory with a plenary license as a casino service industry enterprise pursuant to subsection a. of section 92 of P.L.1977, c.110 (C.5:12-92).  The division shall give priority to the testing of software, computers or other gaming equipment which a casino licensee has certified it will use to conduct Internet wagering in this State.  The division shall, by regulation, establish such technical standards for approval of software, computers and other gaming equipment used to conduct Internet wagering, including mechanical, electrical or program reliability, security against tampering, the comprehensibility of wagering, and noise and light levels, as it may deem necessary to protect the player from fraud or deception and to insure the integrity of gaming.  When appropriate, the licensee shall set the denominations of Internet games and shall simultaneously notify the commission of the settings.

     No software, computer or other gaming equipment shall be used to conduct Internet wagering unless it is able to verify that a player placing a wager is physically present in this State at the time that the wager is placed.  The division shall confirm on a continuous basis that the equipment used by every licensee to conduct Internet wagering is, in fact, verifying every player’s physical presence in this State each time a wager is placed.

     i.      (Deleted by amendment, P.L.1991, c.182).

     j.     (Deleted by amendment, P.L.1991, c.182).

     k.    It shall be unlawful for any person to exchange or redeem chips for anything whatsoever, except for currency, negotiable personal checks, negotiable counter checks, other chips, coupons, slot vouchers or complimentary vouchers distributed by the casino licensee, or, if authorized by regulation of the division, a valid charge to a credit or debit card account. A casino licensee shall, upon the request of any person, redeem that licensee's gaming chips surrendered by that person in any amount over $100 with a check drawn upon the licensee's account at any banking institution in this State and made payable to that person.

     l.      It shall be unlawful for any casino licensee or its agents or employees to employ, contract with, or use any shill or barker to induce any person to enter a casino or simulcasting facility or play at any game or for any purpose whatsoever.

     m.    It shall be unlawful for a dealer in any authorized game in which cards are dealt to deal cards by hand or other than from a device specifically designed for that purpose, unless otherwise permitted by the rules of the division.

     n.     (1) It shall be unlawful for any casino key employee, licensee or any person who is required to hold a casino key employee license as a condition of employment or qualification to wager in any casino or simulcasting facility in this State, or any casino.

     (2)   It shall be unlawful for any other employee of a casino licensee who, in the judgment of the division, is directly involved with the conduct of gaming operations, including but not limited to dealers, floor persons, box persons, security and surveillance employees, to wager in any casino or simulcasting facility in the casino hotel in which the employee is employed or in any other casino or simulcasting facility in this State which is owned or operated by an affiliated licensee.

     (3)   The prohibition against wagering set forth in paragraphs (1) and (2) of this subsection shall continue for a period of 30 days commencing upon the date that the employee either leaves employment with a casino licensee or is terminated from employment with a casino licensee.

     o.    (1) It shall be unlawful for any casino key employee or boxman, floorman, or any other casino employee who shall serve in a supervisory position to solicit or accept, and for any other casino employee to solicit, any tip or gratuity from any player or patron at the casino hotel or simulcasting facility where he is employed.

     (2)   A dealer may accept tips or gratuities from a patron at the table at which such dealer is conducting play, subject to the provisions of this subsection. All such tips or gratuities shall be immediately deposited in a lockbox reserved for that purpose, unless the tip or gratuity is authorized by a patron utilizing an automated wagering system approved by the division. All tips or gratuities shall be accounted for, and placed in a pool for distribution pro rata among the dealers, with the distribution based upon the number of hours each dealer has worked, except that the division may, by regulation, permit a separate pool to be established for dealers in the game of poker, or may permit tips or gratuities to be retained by individual dealers in the game of poker.

     (3)   Notwithstanding the provisions of paragraph (1) of this subsection, a casino licensee may require that a percentage of the prize pool offered to participants pursuant to an authorized poker tournament be withheld for distribution to the tournament dealers as tips or gratuities as the division by regulation may approve.

     p.    Any slot system operator that offers an annuity jackpot shall secure the payment of such jackpot by establishing an annuity jackpot guarantee in accordance with the requirements of P.L.1977, c.110 (C.5:12-1 et seq.), and the rules of the division.

(cf: P.L.2011, c.19, s.65)

 

     7.    Section 109 of P.L.1977, c.110 (C.5:12-109) is amended to read as follows:

     109. Notwithstanding any provisions of this article, the director may issue an emergency order for the suspension, limitation or conditioning of any operation certificate or any license, other than a casino license, or any registration, or any permit to conduct Internet wagering, or may issue an emergency order requiring the licensed casino to keep an individual from the premises of such licensed casino or from using or maintaining an Internet wagering account, or not to pay such individual any remuneration for services or any profits, income or accruals on his investment in such casino, in the following manner:

     a.     An emergency order shall be issued only when the director finds that:

     (1)   There has been charged a violation of any of the criminal laws of this State by a licensee or registrant, or

     (2)   Such action is necessary to prevent a violation of any such provision, or

     (3)   Such action is necessary immediately for the preservation of the public peace, health, safety, morals, good order and general welfare or to preserve the public policies declared by this act.

     b.    An emergency order shall set forth the grounds upon which it is issued, including the statement of facts constituting the alleged emergency necessitating such action.

     c.     The emergency order shall be effective immediately upon issuance and service upon the licensee, registrant, or resident agent of the licensee. The emergency order may suspend, limit, condition or take other action in relation to the approval of one or more individuals who were required to be approved in any operation, without necessarily affecting any other individuals or the licensed casino establishment. The emergency order shall remain effective until further order of the director.

     d.    Within 5 days after issuance of an emergency order, the division shall cause a complaint to be filed and served upon the person or entity involved in accordance with the provisions of this act.

     e.     Thereafter, the person or entity against whom the emergency order has been issued and served shall show cause before the director why the emergency order should not remain in effect in accordance with the provisions of this act and the regulations promulgated hereunder.

(cf:  P.L.2011, c.19, s.77)

 

     8.    Section 1 of P.L.1999, c.352 (C.5:12-129.1) is amended to read as follows:

     1.    The holder of any license issued under P.L.1977, c.110 (C.5:12-1 et seq.), or any person acting on behalf thereof, shall file a report of any suspicious transaction with the Director of the Division of Gaming Enforcement.  For the purposes of P.L.1999, c.352 (C.5:12-129.1 et al.),   "suspicious transaction" means the acceptance of cash [or] , the redeeming of chips or markers or other cash equivalents, or a payment to establish credits in an Internet wagering account involving or aggregating $5,000 if the licensee or person knows or suspects that the transaction:

     a.     involves funds derived from illegal activities or is intended or conducted in order to conceal or disguise funds or assets derived from illegal activities;

     b.    is part of a plan to violate or evade any law or regulation or to avoid any transaction reporting requirement under the law or regulations of this State or the United States, including a plan to structure a series of transactions to avoid any transaction reporting requirement under the laws or regulations of this State or the United States; or

     c.     has no business or other apparent lawful purpose or is not the sort of transaction in which a person would normally be expected to engage and the licensee or person knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.

(cf:  P.L.1999, c.352, s.1)

 

     9.    (New section)  There is hereby imposed an annual tax on Internet wagering gross revenues in the amount of 10% of such gross revenues which shall be paid into the Casino Revenue Fund. The 8% tax on casino gross revenues shall not apply to Internet wagering gross revenues.  The investment alternative tax established by section 3 of P.L.1984, c.218 (C.5:12-144.1) shall apply to Internet wagering gross revenues, except that the investment alternative tax on these revenues shall be 5% and the investment alternative shall be 2.5%, with the proceeds thereof used as provided in that section.

 

     10.  (New section) The Division of Gaming Enforcement may establish an Office of Internet Wagering to which it may delegate authority for the administration of Internet wagering conducted by casino licensees.  The division shall be responsible for recommending regulations concerning Internet wagering for consideration and possible adoption by the commission.  Nothing contained in this section shall be construed as affecting the authority of the Division of Gaming Enforcement with respect to all casino gaming activities, including Internet wagering.  The division shall adopt regulations for the implementation and conduct of Internet wagering that are consistent with regulations governing casino gambling generally.

 

     11.  (New section)  Internet wagering in this State shall be subject to the provisions of, and preempted and superseded by, any applicable federal law.

     Internet wagering in this State shall be deemed to take place where a casino’s server is located in Atlantic City regardless of the player’s physical location within this State.

 

     12.  (New section)  a.  No Internet wagering shall be opened to the public, and no gaming, except for test purposes, may be conducted therein, until a casino licensee with a valid operation certificate receives from the division a permit to conduct Internet wagering.  Such permit, valid for one year, shall be issued by the division upon a finding that the Internet wagering complies in all respects with the requirements of this act, P.L.    , c.    (pending before the Legislature as this bill) and regulations promulgated hereunder, that the casino licensee has implemented necessary management controls and security precautions for the efficient operation of Internet wagering, that casino personnel having duties relating to Internet wagering are licensed for the performance of their respective responsibilities, and that the licensee is prepared in all respects to receive and entertain the public.

     b.    The permit shall include an itemized list by category and number of the authorized games offered through Internet wagering.

     c.     A casino licensee shall, in accordance with regulations promulgated by the division, file any changes in the number of authorized games featured through Internet wagering with the division.

     d.    It shall be an express condition of the continued operation of Internet wagering that a casino licensee shall maintain all books, records, and documents pertaining to the licensee's Internet wagering operations in a manner and location within this State approved by the division.  All such books, records and documents shall be immediately available for inspection during all hours of operation in accordance with the rules of the division and shall be maintained for such period of time as the division shall require.

     e.     Subject to the power of the division to deny, revoke, or suspend permits, any Internet wagering permit in force shall be renewed by the commission for one year upon proper application for renewal,  completion of a review of Internet wagering operations for compliance with this act, a review of all required controls and payment of permit fees and taxes as required by law and the regulations of the division.  Upon renewal of an Internet wagering permit the division shall issue an appropriate renewal certificate or validating device or sticker which shall be attached to the Internet wagering permit.

     f.     Notwithstanding subsections a. and e. of this section, an Internet wagering permit shall remain in force only if the casino licensee that holds the permit also holds a valid operation certificate.

 

     13.  (New section)  a.  The entire Internet wagering operation, including facilities, equipment and personnel, shall be located within a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City, New Jersey.

     b.    Facilities used to conduct and support Internet wagering shall:

     (1)   be arranged in a manner promoting optimum security for Internet wagering;

     (2)   include a closed circuit visual monitoring system according to specifications approved by the division, with access on the licensed premises to the system or its signal provided to the commission or the division;

     (3)   not be designed in any way that might interfere with the ability of the division to supervise Internet wagering operations; and

     (4)   comply in all respects with regulations of the division pertaining thereto.

 

     14.  (New section)  a.  Notwithstanding section 99 of P.L.1977, c.110 (C.5:12-99), each casino licensee who holds or has applied for a permit to conduct Internet wagering shall submit to the division a description of its system of internal procedures and administrative and accounting controls for Internet wagering, including provisions that provide for real time monitoring of all games, and a description of any changes thereof.  Such submission shall be made at least 30 days before such operations are to commence or at least 30 days before any change in those procedures or controls is to take effect, unless otherwise directed by the division. Notwithstanding the foregoing, the internal controls described in paragraph (3) of this subsection may be implemented by a casino licensee upon the filing of such internal controls with the division.  Each internal procedure or control submission shall contain both narrative and diagrammatic representations of the internal control system to be utilized with regard to Internet wagering, including, but not limited to:

     (1)   accounting controls, including the standardization of forms and definition of terms to be utilized in the wagering operations;

     (2)   procedures, forms, and, where appropriate, formulas covering the calculation of hold percentages; revenue drop; expense and overhead schedules; complimentary services; and cash equivalent transactions;

     (3)   job descriptions and the system of personnel and chain-of-command, establishing a diversity of responsibility among employees engaged in Internet wagering operations and identifying primary and secondary supervisory positions for areas of responsibility; salary structure; and personnel practices;

     (4)   procedures for the establishment of wagering accounts, including a procedure for authenticating the age of the applicant for a wagering account;

     (5)   procedures for the termination of a wagering account by the account holder and the return of any remaining funds in the wagering account to the account holder;

     (6)   procedures for the termination of a dormant account;

     (7)   procedures for the logging in and authentication of  a wagering account holder in order to enable the holder to commence Internet wagering, and the logging off of the holder of the wagering account when the account holder has finished gaming, including a procedure to automatically log off the holder after a specified period of inactivity;

     (8)   procedures for the crediting and debiting of wagering accounts;

     (9)   procedures for the cashing of checks to establish credit in a wagering account; the receipt and security of cash to establish credit in a wagering account, whether such cash is received by wire transfer, advance on a credit card or debit card or by other electronic means approved by the division; and receipt of other electronic negotiable instruments approved by the division to establish credit in a wagering account;

     (10) procedures for the withdrawal of funds from a wagering account by the account holder;

     (11) the redemption of chips, tokens or other cash equivalents used in gaming and the pay-off of jackpots;

     (12) the recording of transactions pertaining to Internet wagering;

     (13) procedures for the security of information and funds in a wagering account;

     (14) procedures for the transfer of funds from wagering accounts to the counting process;

     (15) procedures and security for the counting and recordation of revenue;

     (16) procedures for the security of Internet wagering facilities within a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City, New Jersey;

     (17) procedures and security standards for the handling and storage of software, computers and other electronic equipment used to conduct Internet wagering;

     (18) procedures and security standards to protect software, computers and other gaming equipment used to conduct Internet wagering from tampering by casino employees or any other person, from a location inside or outside of the casino hotel facility;

     (19) procedures for responding to tampering with software, computers and other gaming equipment used to conduct Internet wagering or any gaming-related equipment or hardware used in support of gaming, including partial or complete suspension of Internet wagering operations or the suspension of any or all wagering accounts when warranted;

     (20) procedures to verify a player’s physical presence in this State each time a wager is placed; and

     (21) procedures to assist problem and compulsive gamblers.

     b.    Each casino licensee shall also submit a description of its system of internal procedures and administrative and accounting controls for non-gaming operations regarding the website on which Internet wagering is accessed and a description of any changes thereto no later than five days after those operations commence or after any change in those procedures or controls takes effect.

     c.     The division shall review each submission required by subsection a. and b. hereof, and shall determine whether it conforms to the requirements of this act, P.L.     , c.    (C.      ) (pending before the Legislature as this bill), and to the regulations promulgated thereunder and whether the system submitted provides adequate and effective controls for Internet wagering operations of the particular casino hotel submitting it. If the division finds any insufficiencies, it shall specify the insufficiencies in writing to the casino licensee, who shall make appropriate alterations.  When the division determines a submission to be adequate in all respects, it shall notify the casino licensee.  Except as otherwise provided in subsection a. of this section, no casino licensee shall commence or alter Internet wagering operations unless and until such system of procedures and controls is approved by the division.

     d.    It shall be lawful for a casino licensee to provide marketing information by means of the Internet to players engaged in Internet wagering and to offer those players incentives to visit the licensee’s casino in Atlantic City.

 

     15.  (New section)  a.  An Internet wagering account shall be in the name of a natural person and may not be in the name of any beneficiary, custodian, joint trust, corporation, partnership or other organization or entity.

     b.    An account may be established by a person submitting an application form approved by the division along with proof of age. The division shall specify by regulation what types of proof are sufficient to authenticate age and residency in this State.  The application form shall include the address of the principal residence of the prospective account holder, an electronic mail address of the prospective account holder and a statement that a false statement made in regard to an application may subject the applicant to prosecution.

     c.     As part of the application process, the casino licensee shall provide the prospective account holder with a password to access the wagering account, or shall establish some other mechanism approved by the division to authenticate the player as the holder of a wagering account and allow the holder access to the Internet wagering account.

     d.    The prospective account holder shall submit the completed application to the casino licensee. The licensee may accept or reject an application after receipt and review of the application and proof of age for compliance with this act, P.L.     , c.    (C.      ) (pending before the Legislature as this bill).

     e.     Any prospective account holder who provides false or misleading information on the application is subject to rejection of the application or cancellation of the account by the casino licensee.

     f.     The licensee shall have the right to suspend or close any wagering account at its discretion.

     g.     Any person on the list established by section 71 of P.L.1977, c.110 (C.5:12-71) of persons who are to be excluded or ejected from any licensed casino shall not be entitled to maintain a wagering account.

     h.     Any of the following persons shall not be permitted to maintain a wagering account:

     (1)   the Governor or Lieutenant Governor;

     (2)   any State officer or employee or special State officer or employee;

     (3)   any member of the Judiciary;

     (4)   any member of the Legislature;

     (5)   any officer of Atlantic City; or

     (6)   any casino employee, casino key employee or principal employee of a casino licensee.

     i.      The address provided by the applicant in the application shall be deemed the proper address for the purposes of mailing checks, account withdrawals, notices and other materials.

     j.     A wagering account shall not be assignable or otherwise transferable.

     k.    The casino licensee may at any time declare all or any part of Internet wagering to be closed for wagering.

 

     16.  (New section)  a.  Credits to an Internet wagering account shall not be made except as provided by this subsection.

     (1)   The wagering account holder’s deposits to the wagering account shall be submitted by the account holder to the casino licensee and shall be in the form of one of the following:

     (a)   cash given to the casino licensee;

     (b)   check, money order, negotiable order of withdrawal, or wire or electronic transfer, payable and remitted to the casino licensee;

     (c)   charges made to an account holder’s debit or credit card upon the account holder's direct and personal instruction, which instruction may be given by telephone communication or other electronic means to the casino licensee by the account holder if the use of the card has been approved by the casino licensee; or

     (d)   any other method approved by the division.

     (2)   When an account holder wins an account wager on a game, the casino licensee shall pay to the holder Internet chips or tokens or other cash equivalents in the appropriate amount pursuant to the rules of that game for that particular type of wager.  When the  account holder logs off or cashes out the Internet chips, tokens or other cash equivalents, the casino licensee shall credit the holder's wagering account in the amount of Internet chips, tokens or other cash equivalents cashed in.

     (3)   The casino licensee shall have the right to credit a wagering account as part of a promotion scheme.

     (4)   The casino licensee shall have the right to refuse, for any valid reason, all or part of any wager or deposit to the account.

     (5)   Funds deposited in the account shall not bear interest to the account holder.

     b.    Debits to an Internet wagering account shall not be made except as provided by this subsection.

     (1)   When an account holder logs onto a wagering account and exchanges account funds for Internet chips, tokens or other cash equivalents, the licensee shall debit the holder's account in the amount of funds exchanged.  Upon receipt by a casino licensee of an account wager or an account purchase order, the casino licensee shall debit the account holder’s Internet chips, tokens or other cash equivalents in the amount of the wager or purchase.

     (2)   A casino licensee may authorize a withdrawal from a wagering account when the account holder submits to the casino licensee:

     (a)   proper identification;

     (b)   the correct authentication information for access to the account; and

     (c)   a properly completed and executed withdrawal on a form approved by the division.

     Upon receipt of a properly completed and executed withdrawal form, and if there are sufficient funds in the account to cover the withdrawal, the licensee shall send, within three business days of receipt, a check payable in the amount requested to the holder at the address specified in the application for the wagering account or shall transmit payment to the account holder electronically as approved by the division by regulation.

 

     17.  (New section)  A casino licensee may accept Internet account wagers only as follows:

     a.     The account wager shall be placed directly with the casino licensee by the holder of the wagering account and the casino licensee has verified the account holder’s physical presence in this State.

     b.    The account holder placing the account wager shall provide the casino licensee with the correct authentication information for access to the wagering account.

     c.     A casino licensee may not accept an account wager in an amount in excess of funds on deposit in the wagering account of the holder placing the wager.  Funds on deposit include amounts credited under this act, P.L.    c.   (C.      ) (pending before the Legislature as this bill), and in the account at the time the wager is placed.

 

     18.  (New section)  All amounts remaining in wagering accounts inactive or dormant for such period and under such conditions as established by regulation by the division shall be paid 50% to the casino licensee and 50% to the casino control fund.  Before closing a wagering account pursuant to this section, the casino licensee shall attempt to contact the account holder by mail, phone and computer.

 

     19.  (New section)  a.  The casino licensee shall establish a log in procedure for a holder of a wagering account to access Internet wagering.  Part of the log in procedure shall be the provision by the account holder of the appropriate authentication information for access to the wagering account.  The casino licensee shall not allow an account holder to participate in gaming before logging in and providing the proper authentication information to access the holder's wagering account.

     b.    Upon log in, the holder of a wagering account shall have the option to exchange any amount of funds in the wagering account to Internet chips, tokens or other cash equivalents, to be used for Internet casino gaming.

     c.     Upon logging off, the current amount of the holders' Internet chips, tokens or other cash equivalents shall be credited to the holder's wagering account.

 

     20.  (New section)  The casino licensee shall provide to a holder of a wagering account who is logged in to his or her wagering account access to a display of all of the following information:

     a.     the current amount of money in the holder's account, including the current amount of the holder's Internet chips, tokens or other cash equivalents;

     b.    the amount of money the account holder has won or lost on Internet wagering since the account was established;

     c.     the amount of money the account holder has won or lost on during the current gaming session, when a gaming session begins at log on and ends at log off;

     d.    a detailed accounting of all other Internet gaming sessions, when a session begins at log on and ends at log off, including time and date of log on and log off and the amount of money won or lost on gaming and the amount of money spent from the account on merchandise or services; and

     e.     the complete text of the rules of the division regarding games and the conduct of Internet wagering, pay-offs of winning wagers, an approximation of the odds of winning for each wager, and such other advice and information to the account holder as the division shall require.

 

     21.  (New section)  In order to assist those persons who may have a gambling problem, a casino licensee shall:

     a.     cause the words "If you or someone you know has a gambling problem and wants help, call 1-800 GAMBLER," or some comparable language approved by the division, which language shall include the words "gambling problem" and "call 1-800 GAMBLER," to be prominently and continuously displayed to any person visiting or logged onto Internet wagering;

     b.    provide a mechanism by which a holder of a wagering account may establish the following controls on wagering activity through the wagering account:

     (1)   a limit on the amount of money lost within a specified period of time and the length of time the holder will be unable to participate in gaming if the holder reaches the established loss limit;

     (2)   a limit on the maximum amount of any single wager on any game; and

     (3)   a temporary suspension of gaming through the account for any number of hours or days.

     The casino licensee shall not send gaming-related mail or electronic mail to an account holder while gaming through his or her wagering account is suspended.  The casino licensee shall provide a mechanism by which an account holder may change these controls, except that while gaming through the wagering account is suspended, the account holder may not change gaming controls until the suspension expires, but the holder shall continue to have access to the account and shall be permitted to withdraw funds from the account upon proper application therefor; and

     c.     establish a system by which a holder of a wagering account who sustains continuous losses of a sufficient level according to standards set by the division by regulation, will have sent to his or her postal address and electronic mail address a list detailing all gaming winnings and losses through the wagering account, contact information for assistance with identifying a potential gambling problem and other information about gambling problems and compulsive gambling deemed appropriate by the division.

 

     22.  (New section)  a.  Except as provided in this section, no casino licensee or any person licensed under P.L.1977, c.110 (C.5:12-1 et seq.) and no person acting on behalf of, or under any arrangement with, a casino licensee or other person licensed under P.L.1977, c.110, shall:

     (1)   cash any check, make any loan, or otherwise provide credit to any person for the purpose of crediting an Internet wagering account; or

     (2)   release or discharge any debt, either in whole or in part, or make any loan which represents any losses incurred by any account holder in gaming activity through Internet wagering, without maintaining a written record thereof in accordance with the rules of the division.

     b.    Notwithstanding section 101 of P.L.1977, c.110 (C.5:12-101), no casino licensee or any person licensed under  P.L.1977, c.110 (C.5:12-1 et seq.) and no person acting on behalf of, or under any arrangement with, a casino licensee or other person licensed under P.L.1977, c.110, may accept a check, other than a recognized traveler's check or other cash equivalent from any person for the purpose of crediting an Internet wagering account unless:

     (1)   the check is made payable to the casino licensee;

     (2)   the check is dated, but not postdated;

     (3)   the check is transmitted to the casino licensee and received by the licensee in a manner approved by the division and is exchanged for credits on the Internet wagering account established by the drawer of the check; and

     (4)   the regulations concerning check cashing procedures are observed by the casino licensee and its employees and agents.

 

     23.  (New section)  Any person who offers games into play or displays such games through Internet wagering 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 and any other appropriate disposition authorized by subsection b. of N.J.S.2C:43-2.

 

     24.  (New section)  a.  Notwithstanding section 46 of P.L.1991, c.182 (C.5:12-113.1), any person who knowingly tampers with software, computers or other equipment used to conduct Internet wagering to alter the odds or the payout of a game or disables the game from operating according to the rules of the game as promulgated by the division is guilty of a crime of the third degree and notwithstanding the provisions of N.J.S.2C:43-3, shall be subject to a fine of not more than $50,000 and in the case of a person other than a natural person, to a fine of not more than $200,000 and any other appropriate disposition authorized by subsection b. of N.J.S.2C:43-2.

     b.    In addition to the penalties provided in subsection a., an employee of the casino licensee who violates this section shall have his or her license revoked and shall be subject to such further penalty as the division deems appropriate.

     c.     In addition to the penalties provided in subsection a., a casino licensee that violates this section shall have its permit to conduct Internet wagering revoked and shall be subject to such further penalty as the division deems appropriate.

 

     25.  (New section)  a.  Any person who knowingly offers or allows to be offered any Internet game that has been tampered with in a way that affects the odds or the payout of a game or disables the game from operating according to the rules of the game as promulgated by the division is guilty of a crime of the third degree and notwithstanding the provisions of N.J.S.2C:43-3, shall be subject to a fine of not more than $50,000 and in the case of a person other than a natural person, to a fine of not more than $200,000 and any other appropriate disposition authorized by subsection b. of N.J.S.2C:43-2.

     b.    In addition to the penalties provided in subsection a., an employee of the casino licensee who knowingly violates this section shall have his or her license suspended for a period not less than 30 days.

     c.     In addition to the penalties provided in subsection a., a casino licensee that violates this section shall have its permit to conduct Internet wagering suspended for a period not less than 30 days.

 

     26.  (New section)  a.  No person under the age of 21 shall be permitted to maintain an Internet wagering account.  Any casino licensee or employee of a casino licensee who allows a person under the age of 21 to maintain a wagering account is guilty of a crime of the fourth degree and subject to the penalties therefor; except that the establishment of all of the following facts by a licensee or employee allowing any such underage person to maintain an account shall constitute a defense to any prosecution therefor:

     (1)   that the underage person falsely represented during the application process for an Internet wagering account that he or she was at least 21 years of age; and

     (2)   that the establishment of the Internet wagering account was made in good faith, relying upon such representation, and in the reasonable belief that the underage person was actually 21 years of age or older.

     b.    In addition to the penalties provided in subsection a. of this section, an employee of the casino licensee who violates the provisions of this section more than once shall have his or her license revoked.

     c.     In addition to the penalties provided in subsection a. of this section, a casino licensee that violates the provisions of this section more than once shall have its permit to conduct Internet wagering revoked.

 

     27.  (New section)  a.  The division shall, by regulation, establish annual fees for the issuance or renewal of Internet wagering permits.  The issuance fee shall be based upon the cost of investigation and consideration of the license application and shall be not less than $200,000.  The renewal fee shall be based upon the cost of maintaining enforcement, control and regulation of Internet wagering operations and shall be not less than $100,000.

     b.    The Attorney General shall certify to the division actual and prospective costs of the investigative and enforcement functions of the division, which costs shall be the basis, together with the operating expenses of the division, for the establishment of annual permit issuance and renewal fees.

     c.     A nonrefundable deposit of at least $100,000 shall be required to be posted with each application for an Internet wagering permit and shall be applied to the initial permit fee if the application is approved.

     d.    In addition to the permit issuance and renewal fees, a casino licensee with an Internet wagering permit shall pay annually to the division $100,000 to be deposited into the State General Fund for appropriation by the Legislature to the Department of Human Services, $85,000 of which shall be allocated to the Council on Compulsive Gambling of New Jersey and $15,000 of which shall be used for compulsive gambling treatment programs in the State.

 

     28.  (New section) No organization or commercial enterprise, other than a casino located in Atlantic City that has been issued a permit to conduct Internet wagering and has located all of its equipment used to conduct Internet wagering, including computers, servers, monitoring rooms, and hubs, in Atlantic City, shall make its premises available for placing wagers at casinos using the Internet or advertise that its premises may be used for such purpose.  An organization or commercial enterprise that is determined by the division to have violated the provisions of this section shall be subject to a penalty of $1,000 per player per day for making its premises available for placing wagers at casinos using the Internet and of $10,000 per violation for advertising that its premises may be used for such purpose.

 

     29.  (New section) It shall be a condition of conducting Internet gambling that a casino licensee enters into an agreement with other such licensees to contribute to a fund established by those licensees that, through an assessment on the participating licensees in a manner determined by them, will raise $20 million annually in each of the first three State fiscal years commencing with the State fiscal year in which Internet wagering commences which amount shall be contributed to the New Jersey Racing Commission to be used to support the horse racing industry in this State through the augmentation of purses.

 

     30.  This act shall take effect immediately.

 

 

STATEMENT

 

     This bill authorizes Internet wagering at Atlantic City casinos to enable New Jersey residents to place wagers on casino games via the Internet.

     Specifically, the bill provides:

·        all games, including poker, which may be played at a casino, as well as variations or composites thereof, may be offered through Internet wagering;

·        all equipment used by a licensee to conduct Internet wagering, including but not limited to computers, servers, monitoring rooms, and hubs, must be located either in a restricted area on the premises of the casino hotel or in a secure facility inaccessible to the public and specifically designed for that purpose off the premises of a casino hotel but within the territorial limits of Atlantic City and all Internet wagers will be deemed to be placed when received in Atlantic City by the licensee regardless of the player’s physical location within this State; any intermediate routing of electronic data in connection with a wager will not affect the fact that the wager is placed in Atlantic City;

·        in order to participate in Internet wagering, a player must be physically present in New Jersey whenever a wager is placed by that player;

·        each licensee that conducts Internet wagering must be able to verify that a player is physically present in New Jersey when placing a wager;

·        the division must confirm on a continuing basis that a licensee’s equipment is able to verify that the player is physically present in this State when placing a wager;

·        Internet wagering in this State will be subject to the provisions of, and preempted and superseded by, any applicable federal law;

·        there is imposed an annual tax on Internet wagering gross revenues in the amount of 10% of such gross revenues which will be paid into the casino revenue fund; the 8% tax on casino gross revenues will not apply to Internet wagering gross revenues; and the investment alternative tax will apply to Internet wagering gross revenues, except that the investment alternative tax on these revenues will be 5% and the investment alternative will be 2.5%, with the proceeds thereof used as provided by law;

·        the Division of Gaming Enforcement may establish an Office of Internet Wagering to which it may delegate authority for the administration of Internet wagering conducted by casino licensees; the division would be responsible for recommending regulations concerning Internet wagering for consideration and possible adoption by the commission; this would not affect the authority of the Division of Gaming Enforcement with respect to all casino gaming activities, including Internet wagering;

·        the application process for a licensed casino to obtain a permit to establish Internet wagering, with the permit valid for one year and subject to renewal.  As part of the application process, a casino licensee must submit a description of its system of internal procedures (including security procedures) and administrative and accounting controls for Internet wagering, including provisions that provide for real time monitoring of all games.  A casino licensee must also submit its gaming software and other Internet wagering equipment to the Division of Gaming Enforcement for testing to ensure compliance with technical standards for such equipment set by the commission;

·        procedures for the crediting and debiting of a wagering account;

·        it will be lawful for a casino licensee to provide marketing information by means of the Internet to players engaged in Internet wagering and to offer those players incentives to visit the licensee’s casino in Atlantic City;

·        required features of Internet wagering to assist the wagering account holder;

·        required features to assist problem gamblers and potential problem gamblers;

·        penalties for violations of the provisions of the bill;

·        an annual fee for Internet wagering permit holders for the initial permit and permit renewal to cover the costs of regulation by the commission and the division, with the initial fee to be at least $200,000 and the renewal fee to be at least $100,000; and

·        an annual fee for Internet wagering permit holders of $100,000 to be allocated to programs to prevent compulsive gambling and to assist compulsive gamblers.

     Except as otherwise provided in the bill, a licensed casino's Internet wagering operation would be subject to the existing provisions of the Casino Control Act and the regulations promulgated thereunder, including, but not limited to:

·        the licensure of all employees with gaming-related duties or responsibilities;

·        penalties for a violation of the act; and

·        supplemental sanctions deemed appropriate by the commission for violations.

     The division will adopt regulations for the implementation and conduct of Internet wagering that are consistent with regulations governing casino gambling generally.

     The bill provides that no organization or commercial enterprise, other than a casino located in Atlantic City that has been issued a permit to conduct Internet wagering and has located all of its equipment used to conduct Internet wagering, including computers, servers, monitoring rooms, and hubs, in Atlantic City, would be able to make its premises available for placing wagers at casinos using the Internet or advertise that its premises may be used for such purpose. Violations would be punishable by a penalty of $1,000 per player per day for making a premises available for placing wagers at casinos using the Internet and of $10,000 per violation for advertising that a premises may be used for such purpose.

     It also provides that it will be a condition of conducting Internet gambling that a casino licensee enters into an agreement with other such licensees to contribute to a fund established by those licensees that, through an assessment on the participating licensees in a manner determined by them, will raise $20 million annually in each of the first three State fiscal years commencing with the State fiscal year in which Internet wagering commences which amount will be contributed to the New Jersey Racing Commission to be used to support the horse racing industry in this State through the augmentation of purses.

     The sponsors note that, in State v. Trump 160 N.J. 505 (1999), a majority of the New Jersey Supreme Court adopted a purposive reading of Article IV, Section 7, paragraph 2, subparagraph D, of the State Constitution.  The court clearly indicated that the purposes of the provision were "a rejuvenated tourist industry, increased employment, capital investment and much needed urban redevelopment," and "to raise revenue to benefit senior and disabled citizens." Trump, 160 N.J. at 516.