When New Jersey enters the Internet gambling age this week, the move will mark the largest expansion of gambling since Atlantic City legalized casinos in 1978. It also means the state will launch the most complex and heavily trafficked online gambling industry to legally operate in the United States.
With that comes challenges and learning experiences, industry leaders say. Most tout confidence in the protections offered to consumers but acknowledge that, moreso than any other state with legalized online gambling, New Jersey faces the task of constantly monitoring its borders and large commuter population.
What's more, the industry that's predicted to bring in millions in revenue to the state is also expected to have more players and more competitors seeking attention than any other Internet gambling market.
"This is a tremendous undertaking. What we're talking about is a new and complex industry with a lot of participants. In Nevada, we were the only player for six months," said Tom Breitling, founder and chairman of Ultimate Gaming. "In New Jersey there are a number of players, and we're not sure how many will be ready at the start."
New Jersey isn't the first to launch online gambling. Nevada beat the Garden State to the punch in April by launching the first legal real-money wagering in the country with poker-only.
Ultimate Gaming, which has teamed with Trump Taj Mahal Casino Resort in New Jersey, was the first operator with UltimatePoker.com in Nevada, joined by WSOP.com in September. Delaware kicked off a full range of casino games with its online gambling last month, but with a population of about 918,000, Delaware's market is expected to be relatively small, experts say.
New Jersey, meanwhile, boasts a population of nearly 9 million, about three times that of Nevada, where the traffic across state lines is inconsequential. A constant stream of commuters and the high likelihood that many players near the state's borders will travel to New Jersey to play means New Jersey's market will offer complexities not seen in other areas.
In New Jersey, players do not have to be state residents, but they do have to endure a registration system that verifies identities, ensures the player meets the legal gambling age of 21 and is physically located within the state's borders.
Locaid LLC will be involved in that process, offering geolocation services for New Jersey. The Florida-based company has provided the same geofencing in Nevada, but New Jersey's system requires more safeguards, said Locaid CEO Rip Gerber.
"The shape of the state doesn't matter too much, but in Nevada most of the borders are desert. You can use just a selection of location services and be highly confident that the Internet wager is taking place in Nevada. That's not the case in New Jersey," Geber said.
Locaid will offer a system in New Jersey with four levels of location verification that include mapping a person's location by using cell towers, tracking IP addresses on computers and matching computers and mobile phones together by having a PIN texted to to a mobile device that must be entered on the computer. Once logged in, locations will continue to be monitored, and those betting near state borders will be closely monitored with more frequent checks.
"Say you're playing online poker when you log into a site, your location is constantly being monitored as you place bets," Gerber said. "When we see that someone is approaching a state border ... that person is watched more closely. Much more reauthentication will be happening at the borders of the state."
The federal crackdown on illegal Internet gambling, which was accessible in the United States for years, caused professional poker player Jamie Kerstetter to move to Mexico about a year ago to play online. The 31-year-old, who recently moved back to Morris Plains, Morris County, tried playing live in a brick-and-mortar setting, but the pace of play and limitations of playing one game at a time were too much.
"I lost my mind," said Kerstetter, who said she believes the industry will attract lots of recreational players who might have otherwise been intimidated to sit down at a live table.
Like Kerstetter, Scott Baumsteim is also moving to take part in New Jersey's Internet gambling. The 29-year-old is in the process of moving from New York to Atlantic City to play. Both are professional players who will be playing for PartyPoker.com, a brand launched by bwin.party, which has partnered with Borgata Hotel Casino & Spa.
"There's going to be a legitimacy to it that wasn't there a few years ago. Then, you were depositing your money into offshore accounts, and sometimes you weren't real sure what was going to happen," Baumstein said. "Now, everything is in the open."
Analysts differ greatly when estimating the size of New Jersey's industry. Some have said it will bring $250 million in revenue to the state in its first year, while others predict as much as $1.2 billion. Still others predict the expansion of online gambling will only cannibalize the already stressed New Jersey market as players who would travel to casinos choose to stay home instead.
"You had billions of dollars leaving the country with zero player protections," said Breitling of Ultimate Gaming. "What New Jersey and Nevada recognized was that it's time for good regulation so that players are protected."
Brian Mattingley, CEO of 888 Holdings, said he believes Internet gambling provides even more protections than gambling in a brick-and-mortar casino because of the levels of verification a player goes through to play online. The company tracks who the customer is and his betting patterns. If anything unusual is seen, the company reaches out to the customer, he said.
Caesars Entertainment, owner of the Bally's, Caesars, Harrah's Resort and Showboat casinos, is teaming with 888 Holdings and Amaya Gaming Group for online gaming.
"Internet gambling is not an evil thing. In fact, the opposite. We know who our customers are. We have their credit cards on record, and if someone looks like they're blowing a lot of money without thinking about it, we can check on that," Mattingley said. "We would much rather have a player that spends less each time they're with us but comes back overall."
Still, some worry that with the advent of online gambling will come a deluge of problem gamblers who suddenly have access to 24-hour play from their homes. The New Jersey Division of Gaming Enforcement recently said it is extending its self-exlusion list to online gambling, allowing individuals to ban themselves for one to five years. Those on exclusion lists for casino properties will automatically be added to the online exclusion list, but people can opt to sign up for online exclusion only.
Donald Weinbaum, executive director of New Jersey's Council on Compulsive Gambling, said the council is pleased to see that people can sign up for the exclusion list from home, but the fact that there are two separate lists for casino properties and online gambling could be problematic, he said.
"People who are addicted to gambling are going to be at risk no matter what they do. Two separate lists is not something we envisioned," Weinbaum said. "Attempts to cut off gamblers on sites are good, but remember, people can play on multiple sites, even at the same time."
A soft play period for invited players only begins Thursday and will last until at least Nov. 25. The system will go live Nov. 26, provided the state is satisfied with the results of the trial period.
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