How Gambling Developed in New Jersey
New Jersey’s history with games of chance reaches back to its first lottery in 1969. In 1976, the state legislature approved land-based casino operations, making New Jersey only the second U.S. state to take that step.
Atlantic City casinos prospered for years, drawing visitors to the resort city. By the early 2000s, however, the sector was losing ground, largely as online gaming sites grew in popularity.
A proposal to legalize internet gambling in New Jersey was introduced in 2010 but did not pass. A later measure, NJ A2578, succeeded in 2013. It allowed the state’s casino operators to launch online gaming sites, on the condition that players be at least 21 years old and physically located in New Jersey.
Operators Authorized by the State
Under the 2013 law, online gambling was limited to Atlantic City casinos. The source lists seven operators authorized to offer internet gaming sites:
- Tropicana Casino Resort Atlantic City
- Resorts Casino Hotel Atlantic City
- Ocean Resort Casino
- Hard Rock Hotel & Casino
- Golden Nugget
- Caesar’s Interactive Entertainment (an affiliate of Boardwalk Regency Corporation)
- Borgata Hotel Casino & Spa
These are the only licensees identified, though some run more than one site. That arrangement is permitted provided the site is owned by a virtual casino licensee and its servers are physically located in New Jersey.
Applying for a New Jersey Gambling Licence
The Division of Gaming Enforcement (DGE) handles licences for land-based and internet casinos in the state. Its review reaches beyond casino owners: operators, employees and companies working with casinos may also need licences. The Casino Control Act sets out the requirements, including:
- Criminal background check (including fingerprinting)
- Copies of state and federal securities filings
- Business Entity Disclosure Form
- Multi-Jurisdictional Personal History Disclosure Form
The Casino Control Commission
The DGE forwards applications and related documents to the Casino Control Commission for review and a decision. An online casino seeking to challenge a ruling may also have its case heard by the Commission. The body has three members: a chairman, a vice chairman and a commissioner.
Commission members are appointed by the governor and must be confirmed by the state senate. Once confirmed, they serve staggered, five-year terms and can be removed only for cause.
Transactional Waivers
Casino operators first receive a transactional waiver before they can obtain a full licence. This temporary permit allows a gaming site to run on an interim basis, with access limited to a set number of players and specific hours each day.
Sites operating under a transactional waiver face close monitoring. Inspectors examine safeguards against underage betting, among other matters. Operators must also demonstrate that they track player locations carefully enough to stop anyone outside New Jersey from wagering.
A transactional waiver usually runs for six months. If the casino has not secured a full licence by expiry, it must apply again for another six-month waiver. While the waiver is in effect, the DGE may impose further conditions, including limits on who can serve in particular roles.
Fees and Tax Contributions
The application process carries substantial costs. Casinos must submit a $100,000 USD deposit with their application. If approved, the amount is credited toward the $400,000 USD licence fee. The deposit cannot be refunded, so applicants that are rejected forfeit it.
Licences can be renewed each year for a cost of $250,000 USD. Operators must also pay a 15% tax on revenue and contribute 2.5% to the Casino Reinvestment Development Authority (CRDA).
Conclusion
New Jersey is often described as having relatively permissive gambling laws within the United States, but its licensing system is closely regulated. The state has an interest in protecting Atlantic City casinos and the standing of its gambling industry. NJ A2578 established measures intended to protect players, deter organized crime and increase revenue for existing casinos.
