As many of you are aware, earlier this year, New Jersey Governor Chris Christie signed an online gaming bill into law which, among other things, allows licensed service providers to operate online gaming websites so long as they are partnered with Atlantic City brick and mortar casinos. These service providers will deliver the technical framework and website for operating, maintaining and collecting funds for the casino’s online gaming venture.

Despite the fact that online gaming websites are not authorized to go “live” in New Jersey until later this year, draft regulations have already been issued and the New Jersey Division of Gaming Enforcement has given Atlantic City casinos a deadline of June 30th to find online gaming partners for their potential online gaming operations. If Atlantic City casinos do not have their online gaming partnerships secured by June 30th, they may not be allowed to offer online gaming this year.

While Governor Christie has made it clear several times over the past year that he wants New Jersey’s online gaming operations, and associated tax revenue, to commence as soon as possible, the New Jersey Division of Gaming Enforcement’s recent ultimatum may be somewhat premature.

Most Casinos Do Not Have New Jersey Online Gaming Partners

Out of the 12 major casinos operating in Atlantic City, only the Borgata Hotel Casino and Spa has reached an agreement with an online gaming service provider, electing to work with Bwin.Party Digital Entertainment. The other casinos, including Caesars, both Trump Hotels (Trump Taj Mahal Casino Resort and the Trump Plaza Hotel and Casino), Harrah’s and Bally’s, are still evaluating potential partners and conducting extensive background investigations. The background searches are absolutely necessary for casinos, due to the fact that any misconduct of the partners could lead to the revocation of the their operator’s license and shut down the casino’s online gaming website, and block the flow of associated revenue, for an indeterminate amount of time. Furthermore, the New Jersey Division of Gaming Enforcement informed the casinos that they will also closely investigate potential service provider partners for suitability.

New Jersey’s Online Gaming Regulations Are a Work in Progress

In addition to conducting background searches, many Atlantic City casinos are contemplating partnering with overseas online gaming service providers, which has caused added complexity and even more in-depth investigation. Also, because legalized online gaming is an entirely new concept within the United States, drafting and enforcing regulations will naturally be a learning process for the New Jersey Division of Gaming Enforcement and will evolve as unexpected contingencies arise. As such, the current draft regulations issued by the New Jersey Division of Gaming Enforcement are somewhat ambiguous and create uncertainty for Atlantic City casinos and their potential online gaming service provider partners. This uncertainty should result in more clarifying public comments and discussion, as opposed to sanctioned deadlines.

While the regulations applicable to the marketing and operation of online gaming sites are complex and nuanced, with the proper planning and knowledgeable legal guidance, these games can be exceedingly profitable ventures.