GamblingCompliance: New Jersey Fines PokerStars Over Out-Of-State Bets

8TH FEB 2017 | WRITTEN BY: CHRIS SIEROTY

The New Jersey Division of Gaming Enforcement (DGE) has levied a $25,000 fine against Amaya for allowing out-of-state bets to be placed on its PokerStars mobile site.

The fine was the second issued by the DGE within the last year against an online gaming company for accidentally accepting wagers from beyond New Jersey’s borders.

On June 27, 2016, the DGE similarly fined GameAccount Network (GAN) $25,000 for allowing out-of-state betting on its Android app.

GAN is the online gambling software provider for Betfair in New Jersey.

According to a civil action order signed by DGE director David Rebuck on January 20 but published on Tuesday, the fine against Amaya US Services stems from an investigation into a software glitch that revealed gamblers not physically in New Jersey were allowed to wager on PokerStars.

“The [DGE] issued a fine of $25,000 to Amaya US Services for a software flaw related to geolocation checks that affected a small number of players on PokerStars.NJ,” an Amaya US spokesman said in a statement emailed to GamblingCompliance on Tuesday.

“Upon discovery, the issue was quickly resolved and Amaya US proactively reported it to the DGE,” an Amaya spokesman said. “While the number of people and amounts wagered were minimal, Amaya US acknowledges and accepts that this is a serious matter and continues to be wholly committed to providing a safe, secure and compliant playing platform in New Jersey.”

Before the problem was discovered and corrected, 12 people located outside New Jersey deposited a total of $425 and were able to play for an average of 22 minutes each.

In the two-page order, Rebuck wrote that the fine was backed up by “sufficient legal and factual support.”

PokerStars reported to the DGE that it had identified a flaw in its “handoff software” that allowed a limited number of gamblers located outside New Jersey to engage in real-money gaming “before a subsequent geolocation check detected [them] and blocked them from wagering.”

The DGE wrote the issue “was corrected on or about September 8 and all patrons are correctly being checked to confirm they are physically present in New Jersey.”

New Jersey’s 2013 internet gaming law requires that online bets are placed only in New Jersey, with licenses limited to casinos in Atlantic City and servers installed within the city as well.

Although federal laws including the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) ban unlawful betting across state lines, there is no suggestion Amaya broke them in this case.

“UIGEA creates a federal violation if the operator knowingly accepts a money transfer from someone from a state where betting online is illegal,” Anthony Cabot, a partner with Lewis Roca Rothgerber Christie, said in an email Tuesday.

“No violation would occur where the operator did not know or had no reason to know that players from outside New Jersey were participating in the activities,” Cabot wrote.

Last year’s fine against GAN stemmed from an incident in which the company “inadvertently activated software on its Android application” that allowed six people located outside New Jersey to wager “less than $350 on their internet gaming accounts.”

Between the time at which DGE discovered the inconsistencies and the date of the fine order, GAN retooled its Android app software to fix the glitch, per the DGE’s order last June. The DGE said that fix was “tested and approved by the division.”

In both cases, software errors allowed very few out-of-state players to place bets in New Jersey’s regulated online casino market. Regulators have generally cited the state’s strict geolocation rules and systems as a significant success story.

The Amaya and GAN fines are not the first that the DGE has levied for compliance breaches in New Jersey’s online gaming market.

Since online gambling was launched Bwin.Party ($10,000) has also been fined for non-compliance of terms of a divestiture agreement that was a condition of its suitability approval in 2013.

Caesars Interactive ($25,000) and Resorts Casino ($7,200) have been fined for direct advertising to residents on a self-exclusion list. Meanwhile, Borgata ($5,000) and the Tropicana Casino ($2,200) were also previously fined for accepting wagers from underage gamblers.

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