Regardless of the outcome of New Jersey’s high-profile effort to enable sports betting, the state is poised to introduce mobile gaming within the footprint of casino-hotels. Patrons will be able to wager with electronic devices away from the principal gaming area but still on premises—a kind of Internet gaming without the Internet. Currently, only Nevada authorizes mobile casino gaming.
1On Aug. 8, 2012, New Jersey Gov. Chris Christie signed a bill that, among other things, authorizes mobile casino gaming at casino-hotels (and mobile sports betting at both casino-hotels and racetracks). The bill enables mobile casino gaming as follows:
Notwithstanding any other provision of this act to the contrary, the division [of Gaming Enforcement] may authorize electronic versions of authorized games to be played within an approved hotel facility on mobile gaming devices to be approved by the division, provided the player has established an account with the casino licensee, the wager is placed by and the winnings are paid to the patron in person within the approved hotel facility, the mobile gaming device is inoperable outside the approved hotel facility, and the division authorizes the device for mobile gaming.
2Thus, the bill limits mobile casino gaming to (i) authorized games (e.g., slot machines, roulette, baccarat, blackjack, craps, and variations thereof) (ii) played within the footprint of a casino hotel facility (iii) on approved devices (iv) by persons who have an account with the casino licensee. The “approved hotel facility” within which mobile gaming may occur includes “any area located within the property boundaries of the casino-hotel facility, including the swimming pool area and an outdoor recreation area … but excluding parking garages or parking areas of a casino-hotel facility.”
3Even before the bill was signed by the governor, the New Jersey Division of Gaming Enforcement began drafting mobile gaming regulations. The regulations are expected to be adaptable for Internet wagering, should it be authorized by statute.
In drafting the mobile gaming regulations, the division’s principal challenges include (i) establishing and implementing the technical requirements for mobile devices and the servers with which they will communicate; (ii) limiting the risk of underage gaming; (iii) otherwise verifying the identity of the person using the mobile gaming device; and (iv) ensuring that gaming cannot occur in impermissible areas of the casino-hotel or outside the premises. In light of technological innovations, it is expected that casino gaming can be expanded beyond the traditional casino floor, yet limited to the casino-hotel facility.
New Jersey’s mobile gaming regulations are expected to permit wagering not only from devices supplied by the casinos, but also from patrons’ mobile phones, laptops and tablets, and from tethered devices such as in-room, hard-wired television. According to a division spokesperson, finalizing the regulations may take until the end of the year.
4Providing patrons with the opportunity to wager off the casino floor but on hotel premises can generate not only new gaming revenues, but also new marketing opportunities. For example, mobile gaming may help casinos remain in touch with younger customers who are comfortable using technology to obtain service whenever and wherever they like. According to Jim Whelan, the former mayor of Atlantic City and a sponsor of the bill, mobile gaming will attract “a generation of young adults who are used to getting their recreation and communications from the palm of their hand.”
5 It may also encourage wagering by patrons who are intimidated by the bustle of the casino floor or who wish to spend more time with friends and family. Even for patrons old enough to remember telephones with cords, the ability to use an electronic device to place a bet while sitting by the pool or in a hotel room watching a ball game may be very appealing.
As a collateral benefit, mobile gaming is likely to prepare the casinos, their patrons and the regulators for Internet gaming. As one casino executive said, “[It’s] similar to Internet gaming but within the four walls.”
6Whether mobile gaming will contribute directly to a casino’s bottom line is unclear. Current data suggests that mobile gaming has little direct financial impact. A New Jersey Office of Legislative Services analysis found that tax revenue from mobile gaming in Nevada totaled only $84,000,
7 or less than 0.01 percent of Nevada’s $865.5 million gambling tax revenue in 2011.
8Nevertheless, casino executives believe that even if mobile gaming creates little or no direct revenue, the casinos will benefit from increased visitation, which in turn could result in greater traditional gaming revenues and non-gaming revenues.
Mobile gaming appears to have been a regulatory success in Nevada, if not a significant source of direct revenue. In connection with Nevada’s expansion of mobile gaming to include hotel rooms (previously, it was limited to certain public areas), Mark Lipparelli, chairman of the Nevada Gaming Control Board, said that virtually no security or technology problems have occurred since mobile gaming was introduced in Nevada casinos in 2009.
9 Update on New Jersey Sports WageringAs reported previously in Casino Enterprise Management’s June 2012 edition, the New Jersey Legislature authorized sports wagering at New Jersey casinos and racetracks in January 2012, notwithstanding possible challenges under the Professional and Amateur Sports Protection Act (PASPA),
10 which bars sports wagering in all but a handful of grandfathered states, not including New Jersey.
On June 28, 2012, the division proposed regulations to create a framework for sports wagering at New Jersey casinos and racetracks.
11 The regulations are open for public comment until Aug. 31, 2012, and they are expected to become effective on or around Oct. 1, 2012, barring changes to the regulations that would require republication or legal action that might prevent implementation.
On Aug. 7, 2012, the NCAA and the four major professional leagues (NFL, MLB, NHL and NBA) filed suit in federal court in Trenton, N.J., naming the governor, the director of the division and the executive director of the New Jersey Racing Commission as defendants and seeking to enjoin them from implementing New Jersey’s sports wagering statute and regulations. The complaint invokes PASPA and alleges that sports wagering in New Jersey “would irreparably harm amateur and professional sports by fostering suspicion that individual plays and final scores of games have been influenced by factors other than honest athletic competition.”
12 The same day, Christie predicted the state would prevail: “I don’t believe that the federal government has the right to decide that only certain states can have sports gambling. On what basis?” Christie said. “And it doesn’t acknowledge that there is illegal sports gambling going on in every state in America, as we speak. So why is this more injurious than illegal sports gambling to the operations of the league or the NCAA?”
13Christie acknowledged that New Jersey has “a long road ahead of us with the courts,” but added, “[W]e’re prepared for the fight.”
14
Footnotes1 See NRS 463.0176.
2 S-1323, Section 7. Similar language in S-1323 addresses mobile gaming on sporting events on the premises of casino-hotels and racetracks (Section 13). The New Jersey racing industry is already permitted to accept off-premises wagers on horse races from New Jersey residents through an account wagering system. See N.J.S.A. 5:5-139, et seq. Telephones and computers are among the permitted means of communication. See N.J.A.C. 13:74-7.10.
3 Id.
4 “Christie signs law allowing mobile gambling devices in Atlantic City’s casinos,” Atlantic City Press, Aug. 9, 2012.
5 See
www.innovategaming.com/ac-casinos-could-introduce-mobile-gaming.
6 See footnote 4, supra.
7 Legislative Fiscal Estimate [Second Reprint] to S-1323, June 5, 2012.
8 See C. Sieroty, “Nevada, U.S. casinos slowly recovering from recession,” Las Vegas Review-Journal, May 9, 2012.
9 See article by R. Velotta at
www.vegasinc.com/news/2011/sep/22gaming-commission-approves-mobile-gambl....
10 28 U.S.C. §§ 1301-1304 (2012).
11 44 N.J.R. 1871(a).
12 See article by M. Bricketto in Law 360 at
www.law360.com/media/articles/367524/ncaa-pro-leagues-sue-nj-officials-t... (with link to copy of complaint).
13 See article by C. Red in New York Daily News at
www.nydailynews.com/sports/i-team/new-jersey-gov-chris-christie-takes-ma....
14 See footnote 12.
Oettle and Gross are members of the International Association of Gaming Advisors, the preeminent group of gaming advisors worldwide. Visit www.theiaga.org to learn more about how to become involved with this prestigious organization.Kenneth F. Oettle is Senior Counsel at Sills Cummis & Gross P.C. in Newark, N.J. He has represented gaming companies, casino service industries and institutions holding gaming-related equity and debt since the inception of casino gaming in New Jersey. Oettle can be reached at koettle[at]sillscummis.com.Jason K. Gross, a Member of the Sills Cummis & Gross Corporate Practice Group, focuses his practice on acquisitions, dispositions, corporate governance, and regulatory and compliance matters. He previously worked for a major, NYSE-listed casino company as corporate counsel. Gross can be reached atjgross[at]sillscummis.com.
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