SENATE, No. 980

STATE OF NEW JERSEY

216th LEGISLATURE

 

INTRODUCED JANUARY 27, 2014

 


 

Sponsored by:

Senator  RAYMOND J. LESNIAK

District 20 (Union)

Senator  JIM WHELAN

District 2 (Atlantic)

 

 

 

 

SYNOPSIS

     Authorizes permits for certain New Jersey casinos for interstate and foreign Internet wagering; requires Internet gaming payment processors be licensed as casino service industry enterprises.

 

CURRENT VERSION OF TEXT

     As introduced.

  


An Act authorizing permits for certain New Jersey casinos to provide interstate and foreign Internet wagering under certain circumstances, supplementing Title 5 of the Revised Statutes, and amending P.L.1977, c.110.

 

     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, 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 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.

     "Authorized game" or "Authorized gambling game" shall also include any game that the division may determine by regulation to be suitable for use for wagering through the Internet, including games offered through interstate or foreign Internet wagering authorized under sections 2 through 25, inclusive, of P.L.   , c.   (C.   ) (pending before the Legislature as this bill).

(cf: P.L.2013, c.27, s.2)

 

     2.    (New section)  Authorized games and authorized gambling games may be offered to persons located outside of New Jersey or the United States by any New Jersey casino licensed by the Division of Gaming Enforcement to conduct intrastate Internet gaming under the provisions of the "Casino Control Act,” P.L.1977, c.110 (C.5:12-1 et seq.), provided that the licensed casino, in partnership with its Internet gaming affiliate, obtains an interstate or foreign Internet wagering permit from the division as provided under this act, P.L.   , c.   (C.   ) (pending before the Legislature as this bill).


     3.    (New section)  There is hereby imposed an annual tax on interstate or foreign Internet wagering gross revenues in the amount of 15% of such gross revenues which shall be paid into the Casino Revenue Fund. The 8% tax on casino gross revenues shall not apply to interstate or foreign 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 interstate or foreign 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.

 

     4.    (New section) The Division of Gaming Enforcement shall be responsible for recommending regulations concerning interstate or foreign 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 with respect to all casino gaming activities, including interstate or foreign Internet wagering.  The division shall adopt regulations for the implementation and conduct of interstate or foreign Internet wagering that are consistent with regulations governing New Jersey Internet wagering conducted by Atlantic City casinos and by casino gambling generally.

 

     5. (New section)  A New Jersey casino permitted to conduct interstate or foreign Internet wagering in partnership with its Internet gaming affiliate under this act, P.L.   , c.   (C.   ) (pending before the Legislature as this bill), shall only conduct such wagering pursuant to an interstate or foreign compact or agreement with an interstate or foreign jurisdiction in which Internet wagering on authorized games is lawful and regulated. Interstate or foreign Internet wagering in this State shall be subject to the provisions of, and preempted and superseded by, any applicable federal law. Interstate or foreign Internet wagering in this State shall be deemed to take place in Atlantic City regardless of the player’s physical location.

 

     6.    (New section) All casinos licensees permitted to conduct interstate or foreign Internet wagering shall maintain servers within the territorial limits of Atlantic City, New Jersey, and such offices, employees, records, and other activities as the Division of Gaming Enforcement determines are necessary to ensure the integrity of the authorized games and authorized gambling games, and the ability of the division to carry out its oversight of the licensee’s interstate and global operations.

 

     7.    (New section) a.  No interstate or foreign Internet wagering shall be opened to the public, and no gaming, except for test purposes, may be conducted therein, until a casino licensee in partnership with its Internet wagering affiliate, with a valid operation certificate, receives a permit from the Division of Gaming Enforcement to conduct interstate or foreign Internet wagering.  Such permit, valid for one year, shall be issued by the division upon a finding that the interstate or foreign 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 permitted to conduct interstate or foreign Internet wagering has implemented necessary management controls and security precautions for the efficient operation of interstate or foreign Internet wagering, that interstate or foreign Internet wagering personnel having duties relating to interstate or foreign Internet wagering are licensed for the performance of their respective responsibilities, and that the licensed casino permitted to conduct interstate and foreign Internet wagering is prepared in all respects to receive and entertain their customers.

     b.  The permit shall include an itemized list by category and number of the authorized games offered through the casino licensee permitted to conduct interstate or foreign Internet wagering.

     c.  A casino permitted to conduct interstate or foreign Internet wagering shall, in accordance with regulations promulgated by the division, file any changes in the number of authorized games featured through interstate or foreign Internet wagering with the division.

     d.  It shall be an express condition of the continued operation of interstate or foreign Internet wagering that a casino permitted to conduct interstate or foreign Internet wagering shall maintain all books, records, and documents pertaining to the casino’s interstate or foreign 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 interstate or foreign Internet wagering permit in force shall be renewed by the division for one year upon proper application for renewal, completion of a review of interstate or foreign 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 interstate or foreign Internet wagering permit the division shall issue an appropriate renewal certificate or validating device or sticker which shall be attached to the interstate or foreign Internet wagering permit.

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

 

     8.    (New section) Holders of interstate or foreign Internet wagering permits shall only conduct interstate or foreign Internet wagering activities in jurisdictions outside New Jersey and the United States in which such activities are lawful. Conduct of interstate or foreign Internet wagering activities in violation of federal law, the law of the State of New Jersey or any other state or Tribal area in the United States, or in any foreign jurisdiction, shall lead to immediate suspension or revocation of an interstate or foreign Internet wagering permit, at the discretion of the Division of Gaming Enforcement.

 

     9.    (New section) Holders of interstate or foreign Internet wagering permits must comply with tax laws and regulations applicable to each jurisdiction in which they provide interstate or foreign Internet wagering services. Failure to comply with these obligations shall lead to immediate suspension or revocation of an interstate or foreign Internet wagering permit, at the discretion of the Division of Gaming Enforcement.

 

     10.  (New section)  a.  The entire interstate or foreign Internet wagering operation, including facilities, equipment and personnel, shall be located in a secure facility inaccessible to the public and specifically designed for that purpose within the territorial limits of Atlantic City, New Jersey, at a location approved by the Division of Gaming Enforcement.

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

     (1)  be arranged in a manner promoting optimum security for interstate or foreign 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 division;

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

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

 

     11.  (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 interstate or foreign Internet wagering shall submit to the division a description of its system of internal procedures and administrative and accounting controls for interstate or foreign 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 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 interstate or foreign 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 interstate or foreign 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 interstate or foreign 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 interstate or foreign 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 interstate or foreign Internet wagering facilities within a secure facility inaccessible to the public and specifically designed for that purpose 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 interstate or foreign Internet wagering;

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

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

     (20)  procedures to verify a player’s physical presence in a jurisdiction outside of New Jersey or the United States in which Internet wagering is lawful each time a wager is placed; and

     (21)  procedures to assist problem and compulsive gamblers.

     b.  Each casino licensee permitted to conduct interstate or foreign Internet wagering 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 interstate or foreign 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 subsections a. and b. of this section, 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 interstate or foreign Internet wagering operations of the particular casino licensee 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 permitted to conduct interstate or foreign Internet wagering shall commence or alter interstate or foreign 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 permitted to conduct interstate or foreign Internet wagering to provide marketing information by means of the Internet to players engaged in interstate or foreign Internet wagering and to offer those players incentives to visit any licensed casino in Atlantic City, or any other promotion relating to activities taking place within the State of New Jersey.

 

     12.  (New section)  a.  An interstate or foreign 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, residency, nationality, and the location of the person at the time the person is establishing the account.  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 permitted to conduct interstate or foreign Internet wagering 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 interstate or foreign Internet wagering account.

     d.  The prospective account holder shall submit the completed application to the casino licensee permitted to conduct interstate or foreign Internet wagering. The casino 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 permitted to conduct interstate or foreign Internet wagering.

     f.  The casino licensee shall have the right to suspend or close any interstate or foreign Internet 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 an interstate or foreign Internet wagering account, even when that person resides outside of New Jersey or the United States.

     h.  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.

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

     j.  The casino licensee permitted to conduct interstate or foreign Internet wagering may at any time declare all or any part of interstate or foreign Internet wagering to be closed for wagering.

 

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

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

     (a)  cash given to the casino licensee permitted to conduct interstate or foreign Internet wagering;

     (b)  check, money order, negotiable order of withdrawal, or wire or electronic transfer, payable and remitted to the casino licensee permitted to conduct interstate or foreign Internet wagering;

     (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 permitted to conduct interstate or foreign Internet wagering 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 of Gaming Enforcement.

     (2)  When an account holder wins an account wager on a game, the casino licensee permitted to conduct interstate or foreign Internet wagering 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 permitted to conduct interstate or foreign Internet wagering shall credit the holder's wagering account in the amount of Internet chips, tokens or other cash equivalents cashed in.

     (3)  The casino licensee permitted to conduct interstate or foreign Internet wagering shall have the right to credit a wagering account as part of a promotion scheme.

     (4)  The casino licensee permitted to conduct interstate or foreign Internet wagering 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 interstate or foreign 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 casino licensee permitted to conduct interstate or foreign internet wagering shall debit the holder's account in the amount of funds exchanged.  Upon receipt by a casino licensee permitted to conduct interstate or foreign Internet wagering 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 permitted to conduct interstate or foreign Internet wagering 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 casino 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.

 

     14.  (New section)  A casino licensee permitted to conduct  interstate or foreign Internet wagering may accept Internet account wagers only as follows:

     a.  The account wager shall be placed directly with the casino licensee permitted to conduct interstate or foreign Internet wagering by the holder of the wagering account and the casino licensee has verified the account holder’s physical presence in a jurisdiction outside of New Jersey or the United States in which the wagering activity is lawful.

     b.  The account holder placing the account wager shall provide the casino licensee permitted to conduct interstate or foreign Internet wagering with the correct authentication information for access to the wagering account.

     c.  A casino licensee permitted to conduct interstate or foreign Internet wagering shall 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.

 

     15.  (New section)  Notwithstanding the provisions of any other law to the contrary, all amounts remaining in wagering accounts inactive or dormant for such period and under such conditions as established by regulation by the Division of Gaming Enforcement shall be paid 50% to the casino licensee permitted to conduct interstate or foreign Internet wagering and 50% to the Casino Control Fund.  Before closing a wagering account pursuant to this section, the casino licensee permitted to conduct interstate or foreign Internet wagering shall attempt to contact the account holder by mail, phone and computer.

 

     16.  (New section)  a.  The casino licensee permitted to conduct interstate or foreign Internet wagering shall establish a log in procedure for a holder of a wagering account to access interstate or foreign 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 permitted to conduct interstate or foreign Internet wagering 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 logging 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 interstate or foreign Internet wagering.

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

 

     17.  (New section)  The casino licensee permitted to conduct interstate or foreign Internet wagering 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 of Gaming Enforcement regarding games and the conduct of interstate or foreign 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.

 

     18.  (New section)  In order to assist those persons who may have a gambling problem, a casino licensee permitted to conduct interstate or foreign Internet wagering 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 of Gaming Enforcement which enables the use of a toll-free number in the jurisdiction of any customer of the casino licensee permitted to conduct interstate or foreign Internet wagering, which language shall include the words "gambling problem" and "call 1-800 GAMBLER" or its equivalent to be prominently and continuously displayed to any person visiting or logged onto interstate or foreign Internet wagering; and,

     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 permitted to conduct interstate or foreign Internet wagering 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 permitted to conduct interstate or foreign Internet wagering 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.

 

     19.  (New section)  a.  Except as provided in this section, no casino licensee permitted to conduct interstate or foreign Internet wagering 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 permitted to conduct interstate or foreign Internet wagering 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 interstate or foreign 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 interstate or foreign Internet wagering, without maintaining a written record thereof in accordance with the rules of the Division of Gaming Enforcement.

     b.  Notwithstanding section 101 of P.L.1977, c.110 (C.5:12-101), no casino licensee permitted to conduct interstate or foreign Internet wagering 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 permitted to conduct interstate or foreign Internet wagering 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 interstate or foreign Internet wagering account unless:

     (1)  the check is made payable to the casino licensee permitted to conduct interstate or foreign Internet wagering;

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

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

     (4)  the regulations concerning check cashing procedures are observed by the casino licensee permitted to conduct interstate or foreign Internet wagering and its employees and agents.


     20.  (New section)  Any person who offers games into play or displays such games through interstate or foreign Internet wagering as a casino licensee permitted to conduct interstate or foreign Internet wagering without approval of the Division of Gaming Enforcement 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.

 

     21.  (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 interstate or foreign Internet wagering by a casino licensee permitted to conduct interstate or foreign 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 of Gaming Enforcement 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. of this section, an employee of the casino licensee permitted to conduct interstate or foreign Internet wagering 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. of this section, a casino licensee permitted to conduct interstate or foreign Internet wagering that violates this section shall have its permit to conduct interstate or foreign Internet wagering revoked and shall be subject to such further penalty as the division deems appropriate.

 

     22.  (New section)  a.  Any person who knowingly offers or allows to be offered any interstate or foreign Internet wagering 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 of Gaming Enforcement 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. of this section, an employee of the casino licensee permitted to conduct interstate or foreign Internet wagering 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. of this section, a casino licensee permitted to conduct interstate or foreign Internet wagering that violates this section shall have its permit to conduct Internet wagering suspended for a period not less than 30 days.

 

     23.  (New section)  a.  No person under the age of 21 shall be permitted to maintain an interstate or foreign Internet wagering account.  Any casino licensee permitted to conduct interstate or foreign Internet wagering or employee of that 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 interstate or foreign Internet wagering account that he or she was at least 21 years of age; and

     (2)  that the establishment of the interstate or foreign 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 permitted to conduct interstate or foreign Internet wagering 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 permitted to conduct interstate or foreign Internet wagering that violates the provisions of this section more than once shall have its permit to conduct interstate or foreign Internet wagering revoked.

 

     24.  (New section)  a.  The Division of Gaming Enforcement shall, by regulation, establish annual fees for the issuance or renewal of interstate or foreign Internet wagering permits.  The issuance fee shall be based upon the cost of investigation and consideration of the permit application and shall be not less than $50,000.  The renewal fee shall be based upon the cost of maintaining enforcement, control and regulation of interstate or foreign Internet wagering operations and shall be not less than $25,000.

     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 $25,000 shall be required to be posted with each application for an interstate or foreign 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 interstate or foreign Internet wagering permit shall pay annually to the division $25,000 to be deposited into the State General Fund for appropriation by the Legislature to the Department of Human Services, $21,250 of which shall be allocated to the Council on Compulsive Gambling of New Jersey and $3,750 of which shall be used for compulsive gambling treatment programs in the State.  At the discretion of the division, the annual $25,000 payment required to be made to the division under this subsection may be allocated to a research center at an institution of higher education in this State having an established program of research on compulsive gambling, and such funds shall be used for the funding of that research.  

 

     25.  (New section)  A casino licensee permitted to conduct interstate or foreign Internet wagering shall be entitled to claim a credit against any tax imposed under the laws of this State on income derived from interstate or foreign Internet wagering conducted in this State in an amount equal to any tax on that income paid to any state of the United States or any foreign country, or any state, province, territory or subdivision of that foreign country.

 

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

     12. "Casino Service Industry Enterprise" -- Any vendor offering goods or services which directly relate to casino or gaming activity or Internet gaming activity, including gaming equipment and simulcast wagering equipment manufacturers, suppliers, repairers and independent testing laboratories, or any vendor providing to casino licensees or applicants goods and services ancillary to gaming activity, including, without limitation, junket enterprises and junket representatives, holders of casino hotel alcoholic beverage control licenses, lessors of casino property not required to hold a casino license pursuant to section 82 of P.L.1977, c.110 (C.5:12-82), licensors of authorized games, and suppliers of Internet gaming software or systems, and vendors who manage, control or administer the Internet games or the bets or wagers associated with the games. Notwithstanding the foregoing, any form of enterprise engaged in the manufacture, sale, distribution, testing or repair of slot machines within New Jersey, other than antique slot machines as defined in N.J.S.2C:37-7, shall be considered a casino service industry enterprise for the purposes of this act regardless of the nature of its business relationship, if any, with casino applicants and licensees in this State.

     For the purposes of this section, "casino applicant" includes any person required to hold a casino license pursuant to section 82 of P.L.1977, c.110 (C.5:12-82) who has applied to the division for a casino license or any approval required under P.L.1977, c.110 (C.5:12-1 et seq.).

     Notwithstanding any provision of law, rule, or regulation to the contrary, an intrastate, interstate, or foreign Internet gaming payment processor shall be considered a casino service industry enterprise.

(cf: P.L.2013, c.27, s.4)

 

     27.  Section 92 of P.L.1977, c.110 (C.5:12-92) is amended to read as follows:

     92.  Licensing of casino service industry enterprises. a. (1) Any business to be conducted with a casino applicant or licensee by a vendor offering goods or services which directly relate to casino or gaming activity or Internet gaming activity, including gaming equipment and simulcast wagering equipment manufacturers, suppliers, repairers, and independent testing laboratories, shall require licensure as a casino service industry enterprise in accordance with the provisions of this act prior to conducting any business whatsoever with a casino applicant or licensee, its employees or agents; provided, however, that upon a showing of good cause by a casino applicant or licensee, the director may permit an applicant for a casino service industry enterprise license to conduct business transactions with such casino applicant or licensee prior to the licensure of that casino service industry enterprise applicant under this subsection for such periods as the division may establish by regulation.  Companies providing services to casino licensees regarding Internet gaming shall, notwithstanding any other provision of P.L.1977, c.110 (C.5:12-1 et seq.), be responsible for the full cost of their licensure, including any investigative costs.  Notwithstanding any provision of this section to the contrary, an intrastate, interstate, or foreign Internet gaming payment processor shall be considered a casino service industry enterprise, and shall be subject to licensure by the division prior to conducting business with a casino applicant or licensee.  Any Internet gaming payment processor conducting business with a casino applicant or licensee on the effective date of this act, P.L.   , c.   (pending before the Legislature as this bill), shall be permitted to continue conducting business with the casino applicant or licensee but shall be licensed as a casino service industry enterprise within one year of that effective date.

     (2)   In addition to the requirements of paragraph (1) of this subsection, any casino service industry enterprise intending to manufacture, sell, distribute, test or repair slot machines within New Jersey, other than antique slot machines as defined in N.J.S.2C:37-7, shall be licensed in accordance with the provisions of this act prior to engaging in any such activities; provided, however, that upon a showing of good cause by a casino applicant or licensee, the director may permit an applicant for a casino service industry enterprise license to conduct business transactions with the casino applicant or licensee prior to the licensure of that casino service industry enterprise applicant under this subsection for such periods as the division may establish by regulation; and provided further, however, that upon a showing of good cause by an applicant required to be licensed as a casino service industry enterprise pursuant to this paragraph, the director may permit the casino service industry enterprise applicant to initiate the manufacture of slot machines or engage in the sale, distribution, testing or repair of slot machines with any person other than a casino applicant or licensee, its employees or agents, prior to the licensure of that casino service industry enterprise applicant under this subsection.

     (3)   Vendors providing goods and services to casino licensees or applicants ancillary to gaming, including, without limitation, junket enterprises and junket representatives, and any person employed by a junket enterprise or junket representative in a managerial or supervisory position, non-casino applicants or licensees required to hold a casino hotel alcoholic beverage license pursuant to section 103 of P.L.1977, c.110 (C.5:12-103), lessors of casino property not required to hold a casino license pursuant to section 82 of P.L.1977, c.110 (C.5:12-82), and licensors of authorized games shall be required to be licensed as an ancillary casino service industry enterprise and shall comply with the standards set forth in paragraph (4) of subsection c. of this section.

     b.    Each casino service industry enterprise required to be licensed pursuant to paragraph (1) of subsection a. of this section, as well as its owners; management and supervisory personnel; and employees if such employees have responsibility for services to a casino applicant or licensee, must qualify under the standards, except residency, established for qualification of a casino key employee under this act.

     c. (1) Any vendor that offers goods or services to a casino applicant or licensee that is not included in subsection a. of this section including, but not limited to casino site contractors and subcontractors, shopkeepers located within the approved hotels, gaming schools that possess slot machines for the purpose of instruction, and any non-supervisory employee of a junket enterprise licensed under paragraph (3) of subsection a. of this section, shall be required to register with the division in accordance with the regulations promulgated under this act, P.L.1977, c.110 (C.5:12-1 et seq.).

     (2)   Notwithstanding the provisions of paragraph (1) of this subsection, the director may, consistent with the public interest and the policies of this act, direct that individual vendors registered pursuant to paragraph (1) of this subsection be required to apply for either a casino service industry enterprise license pursuant to paragraph (1) of subsection a. of this section, or an ancillary casino service industry enterprise license pursuant to paragraph (3) of subsection a. of this section, as directed by the division, including, without limitation, in-State and out-of-State sending tracks as defined in section 2 of the "Casino Simulcasting Act," P.L.1992, c.19 (C.5:12-192); shopkeepers located within the approved hotels; and gaming schools that possess slot machines for the purpose of instruction.  The director may also order that any enterprise licensed as or required to be licensed as an ancillary casino service industry enterprise pursuant to paragraph (3) of subsection a. of this section be required to apply for a casino service industry enterprise license pursuant to paragraph (1) of subsection a. of this section.  The director may also, in his discretion, order that an independent software contractor not otherwise required to be registered be either registered as a vendor pursuant to subsection c. of this section or be licensed pursuant to either paragraph (1) or (3) of subsection a. of this section.

     (3)   (Deleted by amendment, P.L.2011, c.19)

     (4)   Each ancillary casino service industry enterprise required to be licensed pursuant to paragraph (3) of subsection a. of this section, as well as its owners, management and supervisory personnel, and employees if such employees have responsibility for services to a casino applicant or licensee, shall establish their good character, honesty and integrity by clear and convincing evidence and shall provide such financial information as may be required by the division.  Any enterprise required to be licensed as an ancillary casino service industry enterprise pursuant to this section shall be permitted to transact business with a casino licensee upon filing of the appropriate vendor registration form and application for such licensure.

     d.    Any applicant, licensee or qualifier of a casino service industry enterprise license or of an ancillary casino service industry enterprise license under subsection a. of this section, and any vendor registrant under subsection c. of this section shall be disqualified in accordance with the criteria contained in section 86 of this act, except that no such ancillary casino service industry enterprise license under paragraph (3) of subsection a. of this section or vendor registration under subsection c. of this section shall be denied or revoked if such vendor registrant can affirmatively demonstrate rehabilitation as provided in subsection d. of section 91 of P.L.1977, c.110 (C.5:12-91).

     e.    No casino service industry enterprise license or ancillary casino service industry enterprise license shall be issued pursuant to subsection a. of this section to any person unless that person shall provide proof of valid business registration with the Division of Revenue in the Department of the Treasury.

     f.     (Deleted by amendment, P.L.2011, c.19)

     g.    For the purposes of this section, each applicant shall submit to the division the name, address, fingerprints and a written consent for a criminal history record background check to be performed, for each person required to qualify as part of the application. The division is hereby authorized to exchange fingerprint data with and receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation consistent with applicable State and federal laws, rules and regulations. The applicant shall bear the cost for the criminal history record background check, including all costs of administering and processing the check. The Division of State Police shall promptly notify the division in the event a current or prospective qualifier, who was the subject of a criminal history record background check pursuant to this section, is arrested for a crime or offense in this State after the date the background check was performed.

     h. (1) Subsequent to the licensure of any entity pursuant to subsection a. of this section, including any finding of qualification as may be required as a condition of licensure, or the registration of any vendor pursuant to subsection c. of this section, the director may revoke, suspend, limit, or otherwise restrict the license, registration or qualification status upon a finding that the licensee, registrant or qualifier is disqualified on the basis of the criteria set forth in section 86 of P.L.1977, c.110 (C.5:12-86).

     (2)   A hearing prior to the suspension of any license, registration or qualification issued pursuant to this section shall be a limited proceeding at which the division shall have the affirmative obligation to demonstrate that there is a reasonable possibility that the licensee, registrant or qualifier is disqualified on the basis of the criteria set forth in section 86 of P.L.1977, c.110 (C.5:12-86).

(cf: P.L.2013, c.27, s.12)

 

     28.  This act shall take effect immediately.

 

 

STATEMENT

 

     This bill authorizes the Division of Gaming Enforcement in the Department of Law and Public Safety to provide permits to New Jersey casinos that are licensed by the division to conduct intrastate Internet gaming, to also conduct interstate or foreign Internet wagering in partnership with their Internet gaming affiliate.  The New Jersey casinos, in partnership with their Internet gaming affiliates, must obtain an interstate or foreign Internet wagering permit from the division.  Casinos permitted to conduct interstate or foreign internet wagering would be able to conduct such wagering only under an interstate or foreign compact or agreement with the interstate or foreign jurisdiction where Internet wagering on authorized games in lawful and regulated. 

     Specifically, the bill provides:

     all games, as well as variations or composites thereof, may be offered through interstate or foreign Internet wagering;

     all equipment used by a casino licensee permitted to conduct interstate or foreign Internet wagering, including but not limited to computers, servers, monitoring rooms, and hubs, must be located in a secure facility inaccessible to the public and specifically designed for that purpose within the territorial limits of Atlantic City, New Jersey, as approved by the division, and all interstate or foreign Internet wagers will be deemed to be placed when received in Atlantic City by the licensee regardless of the player’s physical location;

     each casino licensee permitted to conduct interstate or foreign Internet wagering must be able to verify the location of the player in a jurisdiction in which the Internet wagering is lawful;

     the division must confirm on a continuing basis that a casino licensee’s equipment is able to verify the location of the player at the time the player is placing a wager;

     interstate or foreign Internet wagering will be subject to the provisions of, and preempted and superseded by, any applicable federal law;

     an annual tax on interstate or foreign Internet wagering gross revenues in the amount of 15% of such gross revenues will be paid into the casino revenue fund; the 8% tax on casino gross revenues will not apply to interstate or foreign Internet wagering gross revenues; and the investment alternative tax will apply to interstate or foreign 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 would be responsible for recommending regulations concerning interstate or foreign Internet wagering for consideration and possible adoption by the commission, but the division will promulgate and implement the regulations necessary for such  wagering;

     an application process to obtain a permit to establish interstate or foreign Internet wagering, with the permit valid for one year and subject to renewal.  As part of the application process, a casino seeking an interstate or foreign Internet wagering permit must submit a description of its system of internal procedures (including security procedures) and administrative and accounting controls for interstate or foreign Internet wagering, including provisions for real time monitoring of all games.  A casino licensee permitted to conduct interstate or foreign Internet wagering must also submit its gaming software and other interstate or foreign Internet wagering equipment to the division 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 permitted to conduct interstate or foreign Internet wagering to provide marketing information by means of the Internet to players engaged in interstate or foreign Internet wagering and to offer those players incentives to visit any casino in Atlantic City, or to engage in any other lawful activities within New Jersey;

     required features of interstate or foreign 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 the interstate or foreign 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 $50,000 and the renewal fee to be at least $25,000; and

     an annual fee for interstate or foreign Internet wagering permit holders of $25,000 to be allocated to programs to prevent compulsive gambling and to assist compulsive gamblers, or, at the discretion of the division, may be allocated to a research center at an institution of higher education in this State having an established program of research on compulsive gambling, and such funds shall be used for the funding of that research.

     Except as otherwise provided in the bill, an interstate or foreign 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.

     A casino licensee permitted to conduct interstate or foreign Internet wagering will be entitled to claim a credit against any tax imposed under the laws of this State on income derived from interstate or foreign Internet wagering conducted in this State in an amount equal to any tax on that income paid to any state of the United States or foreign country, or any state, province, territory or subdivision of that foreign country.

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

     This bill also provides that payment processors for intrastate, interstate, or foreign Internet gaming must be licensed by the division as casino service industry enterprises, and provides a one-year window during which payment processors currently doing business with licensed casinos may obtain the casino service industry enterprise license.