PaymentsCompliance: Nevada Bill Would Block Taxes On Blockchain Transactions


A senator in Nevada has told PaymentsCompliance it is crucial to the state’s economic viability that it positions itself as a “safe space for entrepreneurs” developing companies that utilize blockchain technology.

To begin to create a supportive environment, Republican Senator Ben Kieckhefer filed a bill that would prevent local authorities from imposing fees or taxes on the use of blockchain technology.

Nevada Senate Bill 398 is concerned with creating a legal foundation for blockchain contracts and records.

“As blockchain is growing and evolving … I want companies to know that Nevada has a legal structure that ensures transactions conducted over a blockchain will be recognized by our courts,” Kieckhefer said.

Hopefully, the senator said, it will encourage more companies to do business in Nevada.

Kieckhefer said one of the companies he was working with was Filament, which is a Reno-based blockchain company.

“It isn’t often that a new technology comes along that completely changes the way we interact with each other,” Filament chief executive Allison Clift-Jennings wrote in a letter supporting SB 398 to the Senate Judiciary Committee.

“It happened with the advent of the internet and later with the smartphone revolution,” Clift-Jennings said. “The blockchain is a new technology that’s just as important.”

Clift-Jennings said that blockchain technology has the “ability to reduce fraud and bring new trust to existing interactions.”

Under Kieckhefer’s proposal, the use of blockchain technology or licensure would not be taxed by local government in Nevada.

But nothing in the bill “prohibits a local governmental entity from using a blockchain or smart contract in the performance of its powers or duties.”

A similar bill was signed on March 31 by Republican Arizona Governor Doug Ducey that would enshrine signatures recorded on a blockchain and smart contracts — self-executing pieces of code — under state law.

Specifically, House Bill 2417, aimed to make those types of records “considered to be in an electronic format and to be an electronic record.”

The Arizona law was also similar to a measure passed in Vermont last year that would make blockchain data admissible in court.

The bill also focused on data that would be a “factor or record” tied to a blockchain.

“Blockchain technology has certainly gained transaction among Nevada’s entrepreneurs,” Kieckhefer said.

Kieckhefer’s four-page bill states that a local government is prohibited from “(1) imposing a tax or fee on the use of blockchain; (2) requiring a certificate, license or permit to use a blockchain; and (3) imposing any other requirement relating to the use of a blockchain.”

The bill would also prohibit the exclusion of blockchain records in “proceedings,” noting in Section 11 that “if a law requires a record to be in writing, submission of a blockchain which electronically contains the record satisfies the law.”

“A smart contract, record or signature may not be denied legal effect or enforceability solely because blockchain was used to create, store or verify the smart contract, record or signature,” the bill said.

“In a [legal] proceeding, evidence of a smart contract, record or signature must not be excluded solely because a blockchain was used to create, store, or verify the smart contract, record or signature.”

But with less than half of the 120-day session left in Nevada, lawmakers have limited time to approve what is a wide-ranging piece of legislation that deals with relatively new technology.

If the bill dies in the 2017 Nevada legislature, Kieckhefer would have to wait until February 2019 to file another measure.

“While I’m not sure any specific problems will be created if we don’t pass this legislation, I believe Nevada could miss out on a significant opportunity to become a destination state for entrepreneurs and businesses working in this area,” the senator said.

GamblingCompliance: REITs A Risky Business For Casinos, Analyst Warns


Although a prominent feature of the casino industry, the days of U.S. gaming companies spinning off their properties into real-estate investment trusts (REITs) may now have passed, according to one leading gaming analyst.

At least one senior analyst with Fitch Ratings Service believes REITs are now looking to be a more risky business structure for the casino industry.

Alex Bumazhny, director of gaming, lodging and leisure research at Fitch Ratings, said a rising interest rate environment is the “principal deterrent to further gaming REIT transactions.”

In a 23-page report, Bumazhny wrote that gaming revenues “are not ideal for supporting the long-term, largely fixed, triple-net leases found in gaming REITs.”

“Additional REIT transactions are less likely due to rising interest rates, high costs, lengthy spinoff process times with uncertain outcomes, cooling activist interest and questionable business rationales,” Bumazhny wrote.

REITs have become a prominent operating structure in the regional gaming industry in recent years.

Since 2013, the assets of 54 regional casinos are now owned by REITs and the trend “likely contributed to higher trading multiples for all regional gaming assets,” Bumazhny said.

The first casino REIT was formed by Penn National Gaming, which spun off 21 of its 29 casinos and racinos and leased them back to the original company through triple-net lease agreements.

Since its creation almost four years ago, Gaming and Leisure Properties (GLPI) — the Penn National REIT spin-off — has since completed more than $5bn in transactions.

The most recent acquisition was announced on March 28, when the company spent $44m to acquire the holding companies for Bally’s Casino Tunica and Resorts Casino Tunica from rival Caesars Entertainment.

When the deal closes by June, Penn National will operate both casinos and lease the underlying property from GLPI for a total annual rent of $9m.

GLPI announced in July 2015 that it had acquired the real estate owned by regional gaming operator Pinnacle Entertainment for $4.75bn in an all-stock deal and would lease the casinos back to Pinnacle.

REITs have existed for more than 50 years in the U.S. after Congress granted legal authority to form the trusts in 1960 as an amendment to the Cigar Excise Tax Extension.

REITs do not pay federal income taxes, but are required to distribute 90 percent of their taxable earnings to shareholders.

In addition to Penn National and Pinnacle, MGM Resorts International announced in October 2015 the creation of REIT to be called MGM Growth Properties in a tax structure that does not include a tax-free spin-off.

Meanwhile, Caesars is asking permission from a federal bankruptcy judge to convert its largest operating division into a REIT as part of a pre-packaged Chapter 11 restructuring.

Boyd Gaming and Las Vegas Sands have also been approached by shareholders about spinning off their properties into a REIT. But both companies have stayed away from changing their corporate structure.

Bumazhny believes it is now unlikely additional gaming REITs will be created or larger gaming companies will sell their assets wholesale to REITs.

“Rising interest rates, which are pressuring triple-net lease REIT valuations, have diluted previously generous multiple arbitrages available to gaming companies looking to spin off their gaming assets to a REIT,” Alex Bumazhny of Fitch Ratings wrote. “Additionally, higher valuations ascribed to gaming assets, possibly in part due to the available option of selling to a REIT, have also diluted the multiple-arbitrage opportunity.”

Other factors that make additional casino REITs less likely include tighter laws governing tax-efficient REIT transactions, and tepid interest from the existing pool of gaming companies in monetizing their assets through a REIT transaction.

Bumazhny also attributed the decline in activity to “waning activist investor interest in realizing value through gaming REIT spins.”

In December 2015, Congress passed tax legislation — the Protecting Americans from Tax Hikes Act (PATH) — to eliminate tax-free structures, such as the Penn National and GLPI deal.

However, Caesars could still create a tax-free REIT because the company submitted a request to the IRS in March 2015, eight months before the deadline.

“We are uncertain whether Boyd Gaming or other larger gaming companies that could be viable REIT candidates have made the deadline,” Bumazhny wrote. “However, we suspect that they have done so in order to preserve optionality.”

The remaining key players in the regional casino sector have been quiet on REITs over the past couple of years.

Instead, Eldorado Resorts recently purchased Isle of Capri, Station Casinos owner Red Rock Resorts has issued an IPO and Boyd has refinanced most of its debt and purchased several assets in Nevada.

“None of these transactions preclude a REIT transaction, but they do show that REITs are not top of mind,” Bumazhny said.

GamblingCompliance: E-Sports Betting The Latest Legal Change Eyed By Nevada Law Students


Nevada lawmakers are set to consider a bill to allow for pari-mutuel wagering on e-sports and poker tournaments, in the latest in a series of legislative proposals drafted by students at the William S. Boyd School of Law in Las Vegas.

Senate Bill 240, authored by students of the school’s Gaming Law Policy class, would authorize sportsbooks state-wide to offer “other event” pari-mutuel betting.

“The main reason for our bill is that it’s very hard to set lines for events such as e-sports and the WSOP [World Series of Poker],” said Kathleen Gallagher, a second-year student at the University of Nevada Las Vegas (UNLV) law school.

“Handicapping the odds will keep casinos from suffering large losses,” Gallagher said.

The bill now pending before Nevada Senate members defines “other event” as any event other than a horse race, dog race or sporting event.

If eventually signed by Governor Brian Sandoval, the changes would come into effect on July 1.

“We are clarifying the law,” said Mark Starr, a third-year student at Boyd Law School. “We are submitting a definition to use to approve these events.”

So far, Nevada gaming regulators have only approved the use of pari-mutuel wagering beyond horseracing for daily fantasy sports.

USFantasy Sports launched in August with an initial rollout in about 40 casinos in Nevada.

Nevada has two separate license categories regarding race and sports wagering.

A “race book” is defined by statute NRS 463 as the business of accepting wagers upon the outcome of any event held at a track which uses the pari-mutuel system.

Meanwhile, NRS 464 defines a “sports pool” as the business of accepting wagers on sporting events or other events by any system or method of wagering.

SB 240 would change both statutes to allow for “other event” pari-mutuel wagering. The five-page bill has been referred to the Senate Committee on Judiciary.

“Gaming is the life blood of our city,” said Starr. “We are adapting the regulations to make [pari-mutuel wagering] on other events possible.”

Proposed changes to Nevada’s gaming statutes have been drafted by law students at UNLV for consideration during each of the state’s legislative sessions since 2001.

“We are pretty lucky we fall on this term. The legislature only meets every other year for 120 days,” said P. Nelson Lambert, who enrolled at Boyd to earn his LL.M. degree in gaming law.

The legislative projects were overseen in the past by attorneys Bob Faiss and Greg Gemignani of now-defunct Nevada law firm Lionel Sawyer and Collins.

Faiss, a well-known gaming lawyer for 40 years in Las Vegas, died in June 2014. Gemignani is now a member of law firm Dickinson Wright’s gaming practice.

Student bills in prior sessions have dealt with issues such as the rights of winners of progressive jackpots and the ability of Nevada officials to appoint interim members to the state’s Gaming Control Board.

During Nevada’s last legislative session two years ago, law school students successfully authored an amendment to the state’s charitable lottery statutes so that alumni or local bar organizations could operate charitable lotteries.

In 2011, Nevada lawmakers approved Boyd Law School-backed legislation allowing companies or individuals to apply for a so-called “preliminary finding of suitability” from Nevada gaming regulators.

Under the law, applicants are now able to undergo background investigation to establish that they would qualify for a Nevada gaming license without actually establishing a business operation that triggers a licensing requirement.

Prior to the 2011 legal change, to apply for a Nevada gaming license or a formal finding of suitability, applicants already had to be doing business with a Nevada casino or have an agreement with one.

The previous law, on the books since the 1980s, allowed busy state regulators to focus on license applications that seemed more financially viable.

Since 2011, however, the “preliminary finding of suitability” concept has been used by the likes of Malaysian casino giant Genting and Ireland’s Paddy Power, among others.

Lambert, the LL.M. student, is a member of the Eastern Band of Cherokee Indians in North Carolina.

The tribe have operated Harrah’s Cherokee Casino in partnership with Nevada’s Caesars Entertainment since 1997. The Eastern Band of Cherokee Indians opened a second Harrah’s Casino in 2015 in Murphy, North Carolina.

“It’s our life blood,” Lambert said of casino gaming.

Once the year is over, Lambert told GamblingCompliance he plans to work as a gaming attorney “for the betterment of our tribe.”

“I wanted to learn about the future. What better place to do that than in Las Vegas,” Lambert said. “It has given me a really strong regulatory experience to take home with me.”

Starr, the third-year law student, agreed, saying “it’s about getting our feet wet” when it comes to writing new gaming regulations.

PaymentsCompliance: U.S. Legalized Marijuana Industry Struggling To Bank Its Billions


Payments start-ups in the U.S. have said the rift between federal and state regulations means banks are unwilling to process transactions linked to legalized marijuana businesses.

Despite a flurry of state laws making it legal for retailers to supply marijuana, industry insiders believe a federal-level ban on the drug means the vast majority of transactions — worth billions of dollars — are being made in cash.

Financial institutions, fearful of being on the receiving end of stinging enforcement actions by federal authorities, will often refuse transactions or deny account services to businesses involved in the industry.

“Banks are very risk adverse, especially when it comes to dealing with marijuana businesses,” said Adam Healy, the chief information security officer at digital wallet provider Tokken.

“How can we de-risk these transactions?”

Tokken, along with other start-ups such as Kind Financial and PayQwick, have created online systems that help dispensaries and banks record and monitor transactions, with the goal of moving transactions away from cash.

“Really, how we see it in terms of law enforcement, is that we don’t want to operate in the shadows,” Healy told PaymentsCompliance.

“We really see it as an advantage to provide stability for the industry.

“We are talking about billions of dollars in transactions.”

Industry analysts GreenWave Advisors and the Arcview Group estimated the cannabis industry in the U.S. last year reached $6.5bn and $6.7bn respectively.

Both research groups estimate the industry will surpass $20bn by 2020.

But, with few exceptions, marijuana customers pay with cash, leaving retailers to pay their employees, taxes, landlords and suppliers with stacks of possibly questionable and hard-to-trace cash.

“Consumers and retailers don’t want to deal with the cash issue,” Healy said. “Local governments don’t want that volume of cash on the street due to public safety concerns.”

He added that if it was easier to bank marijuana-related businesses it would also mean billions of dollars in liquidity for smaller, community banks and millions in tax revenue for local and state governments.

That means the business cannot only accept card transactions from consumers but also utilize its balance like any other mainstream company with a business banking account, paying suppliers, employees and taxes.

Tokken was founded in February last year by a formal federal banking regulator, and says it helps law enforcement authorities by recording all transactions indelibly using distributed ledger technology.

All transactions are also “geofenced”, meaning the company can prove customers are making purchases where they say they are.

PayQwick, which has also targeted the legalized marijuana sector, has taken a slightly different approach.

Registered federally as a money services business, the firm is a licensed money transmitter in Washington and is overseen by the state’s Department of Financial Institutions.

It is also supervised in Oregon by the state’s Division of Finance and Corporate Securities, and intends to expand into Colorado, Nevada, and other states that adopt seed-to-sale traceability systems.

Marijuana customers, retailers and producers are able to use PayQwick’s app, website and prepaid card to make purchases or transfer money between each other.

The system allows for a customer to sign up for an account online and link it to their bank account and transfer funds to PayQwick, which sends the customer a physical card.

When the card is swiped the funds are transferred from the consumer’s PayQwick account to that of the retailer, which can then transfer it to their bank account.

It vows to minimise the risk of exposure to illicit activity by taking on the regulatory compliance role itself, ensuring customer due diligence requirements are met and anti-money laundering rules are being adhered to.

GamblingCompliance: California Bill Aims To Increase Legislative Oversight Of Tribal Gaming


A California Assemblyman has introduced a bill that would severely restrict the governor’s ability to sign off on federal approvals of newly acquired lands for tribal casinos without prior approval by the legislature.

Marc Levine, a Democrat, said he introduced Assembly Bill 1377 as a way for the legislature to decide “whether compacts are appropriate for communities.”

Levine’s bill specifically would require California’s governor, if a casino is approved on newly acquired land, to notify the legislature.

AB 1377 would also “prohibit the governor from concurring in that determination without the prior approval, by concurrent resolution, of the legislature.”

Opponents of the bill believe Levine wants to make it more difficult for tribes to ask the federal government to secure land-in-trust in California, especially for those communities wanting to build casinos.

But Levine noted that the California Constitution already authorizes the governor to negotiate compacts to permit casino gaming on Indian lands, and those agreements must be ratified by the legislature.

“The construction of off-reservation gaming does not match the expectations of voters who approved tribal gaming,” Levine told GamblingCompliance.

The Indian Gaming Regulatory Act 1988 (IGRA) generally restricts tribal gaming to existing Indian lands, with limited exceptions for newly recognized and restored tribes, as well as the specific case of off-reservation casinos.

Off-reservation gaming is permitted only when federal officials agree a casino on the newly acquired lands would be in the best interests of the tribe and not to the detriment of the surrounding communities.

In that case, the state’s governor must formally concur with the federal government’s decision, although there is no requirement for state legislative input.

“So this bill forces a conversation about how we plan for gaming expansion throughout California,” Levine said. “It’s not about being for or against gaming, but how do we get it right for our constituents.”

The next step for AB 1377 is a hearing by the Assembly Governmental Organization Committee, but as of Monday no hearing date had been scheduled.

Governor Jerry Brown, a Democrat, declined to comment on the bill, with a spokeswoman saying officials “don’t comment on pending legislation.”

Before any committee hearing takes place both supporters and opponents, including some Native American tribes, of Levine’s bill are expected to propose changes or even try to kill the legislation.

“While the association has not taken a formal position on this legislation, we are aware of it and have concerns,” said Carlos Valdez, deputy director of public affairs with the California Nations Indian Gaming Association (CNIGA).

Valdez said CNIGA has concerns “about changing a process that has worked for both the tribes and the state.”

“This bill proposes adding complicated and possibly unnecessary steps to an already vigorous process,” Valdez said. “We are looking forward to engaging Mr. Levine in discussions on the intent of this legislation.”

Governor Brown approved California’s first two off-reservation casinos several years ago for the North Fork Rancheria and Enterprise Rancheria Indian tribes. However, both projects have since been mired in legal challenges.

Levine’s bill was also introduced amid a new battle over the Wilton Rancheria’s plans to build a $400m casino-resort in northern California.

Stand Up for California, a gambling watchdog group, last month submitted an appeal with the Bureau of Indian Affairs (BIA), alleging the U.S. Department of the Interior improperly handled the tribe’s application for trust land status.

As a restored Indian tribe, the Wilton Rancheria’s project would not seem to be affected by Levine’s bill.

Still, Stand Up for California director Cheryl Schmit praised the bill, arguing that it would develop a more reasonable process to ensure any casinos on newly acquired lands would be in the best interest of the tribe and the surrounding community.

“AB 1377 confronts state legislators with the question of whether gaming in California should expand beyond that which the federal government foists upon the state,” said Cheryl Schmidt of Stand Up for California. “Permitting off reservation gaming will require the state to confront challenging questions about which tribe gets what and why.”

Schmidt, who suggested AB 1377 might do better as an amendment to the state Constitution, said the measure will also allow lawmakers to decide if a tribal casino should be moved from a rural area to a more lucrative urban location.

However, she criticized the bill for lacking “substantive standards for the role of the state legislature.”

Schmit said the process should involve:

  • Approval of the affected community, including a vote of the affected county consistent with the current law regarding gambling expansion
  • A rigorous environmental review process in accordance with state law by the hosting government
  • A careful analysis of socio-economic impacts and the cumulative impacts of the proposal
  • Comprehensive intergovernmental agreements that mitigate environmental impacts, as well as the costs of the county or city services such as law enforcement, fire and emergency services
  • The right of any or all affected parties to seek judicial relief before final ratification of a tribal state compact by the state legislature.

GamblingCompliance: After Epic Super Bowl, U.S. Sports Betting Push Picks Up Steam


A new poll has found only 15 percent of American adults admit they would bet on the Super Bowl if it were legal to do so, a surprisingly low percentage given the amount of money the casino industry’s main lobbying group estimates was wagered illegally this year.

The poll was released as two Republican lawmakers in Maryland introduced legislation to legalize sports betting should the federal ban be overturned by the courts or Congress.

The Seton Hall Sports Poll mostly focused on Super Bowl 51 between the New England Patriots and Atlanta Falcons, won by the Patriots after an epic comeback.

Rick Gentile, director of the poll, found that 10 percent acknowledged wagering on the game, either through a bet, a pool or a fantasy league, whereas 84 percent said they had no wager on the game.

Gentile then asked 661 adults nationwide whether they would have bet on the game if sports gambling was legal in their state.

Among the respondents, 15 percent said yes, whereas 79 percent said they would not place a Super Bowl bet, and 6 percent said they did not know.

The poll outcome appears to reflect the lingering stigma attached to betting, according to Gentile.

“Historically, we’ve gotten the same response,” he told GamblingCompliance.

“We’ve asked this question in various forms for ten years. People simply don’t want to admit they have or will gamble on the Super Bowl or March Madness.”

“I keep asking the question because it’s fascinating to hear their responses,” Gentile said.

In the only state in U.S. where sports wagering is fully legal, betting handle on the Super Bowl in Nevada set a record this year of $138.5m.

Nevada’s sportsbooks won about $10.9m, or just under an 8 percent hold, according to the Nevada Gaming Control Board.

Still, the American Gaming Association (AGA) estimated that Americans wagered a total of $4.7bn on the Super Bowl, with 97 percent of the bets, or $4.5bn, being placed illegally due to the federal ban signed into law in 1992.

The Professional and Amateur Sports Protection Act (PASPA) bans single-game wagering in all states bar Nevada, while allowing very limited wagering in Delaware, Montana and Oregon.

Even as pollsters and lobbyists debate the potential of legalized sports betting, there are a number of states that have filed new legislation since January 1 aimed at authorizing legal sports betting in spite of the federal ban.

The latest effort is in Maryland, where a pair of Republican state delegates — Jason Buckel and Kevin Hornberger — have filed House Bill 989, which would establish a “Task Force to Study the Implementation of Sports Gaming.”

The goal of the group would be to recommend a policy for the state should there be some change in the federal law outlawing sports betting.

“The introduction of a sports-betting bill in Maryland is the latest indication of a growing desire to lift the federal sports-betting ban,” said Erik Balsbaugh, vice president of public affairs at the AGA.

“With public support behind them, states are realizing that lifting the ban would allow them to recapture lost revenues that could support vital public services,” Balsbaugh said.

The Maryland task force would consist of three delegates, three state senators, the director of Maryland’s gaming regulatory agency, plus representatives from the state’s casino and horseracing industries.

Casinos and racetracks would be eligible to apply for a “sports gaming license,” according to the seven-page bill. HB 989 is currently being considered by the House Ways and Means Committee in Annapolis.

To become reality, HB 989 would require either a congressional repeal or amendment to PASPA, and approval by a state-wide voter referendum at the next November election following its passage.

Through the bill, Maryland has joined Michigan, New York, Pennsylvania, and South Carolina as states that have introduced sports-betting legislation this year, with one eye on PASPA’s demise.

New Jersey has passed a series of sports-betting bills in recent years in defiance of PASPA, with a legal appeal currently pending before the U.S. Supreme Court.

“You are going to see more states enacting ‘stand-by’ legislation,” said Daniel Wallach, a gaming attorney with Becker & Poliakoff in Fort Lauderdale, Florida.

Wallach told GamblingCompliance on Monday that these bills “would enable states to take advantage right away” of any changes in federal law.

“For the first time we are on the verge of something,” Wallach said. “As many as eight to ten states will have these bills. In some cases they’ll be bills to change the state constitution, others will allow them to be ready when the law changes.”

Maryland’s bill was introduced about a week after Michigan Representative Robert Kosowski introduced House Bill 4060, which aims to allow the state’s land-based casino license holders to accept wagers on sporting events.

Similar to Maryland, Michigan residents would first have to approve the measure in a state-wide referendum.

Wallach expected the U.S. Supreme Court to grant a hearing on New Jersey’s efforts to legalize sports betting.

Last month, the U.S. Supreme Court delayed a ruling on whether it would take up New Jersey’s latest challenge to the scope of PASPA.

Instead, the court asked the U.S. solicitor general’s office for advice on its consideration of a federal appeals court ruling that New Jersey’s 2014 sports-betting legislation violates federal law.

The court’s decision to ask for the solicitor general to file a brief on behalf of the federal government means a decision could take several more months, especially since President Trump has not named a new solicitor general yet.

In a 9-3 decision last August, the 3rd U.S. Circuit Court of Appeals in Philadelphia said New Jersey’s sports-betting law violates PASPA.

However, Wallach went so far as to predict the “Supreme Court will invalidate PASPA by June 2018.”

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


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.