Grey Market Operations Troublesome for New Jersey Regulators

Sun, May 1, 2016

New Jersey gaming regulators have clarified the state’s position on licensing operators that accept bets in so called “grey markets,” but acknowledge that the determinations are challenging for the state. Regulators issued an advisory saying they will not block licensing to sites operating in grey areas unless another jurisdiction has taken action against the site. DGE Director David Rebuck (l.) said New Jersey would be imprudent to try and determine the legality or illegality of these markets on its own.

New Jersey gaming regulators announced that they will not block online companies operating in grey markets from licensing in the state unless another jurisdiction has moved against the site.

But not before explaining that grey markets are a serious challenge to the state’s licensing procedures and in the end the state can’t attempt to determine what is or isn’t legal in other markets.

The issue came to a head recently for the state as it considered license applications for online gaming from both Amaya Gaming—which owns PokerStars—and GVC Holdings—which recently acquired bwin.party. Both have operations in what can be considered grey markets around the world.

New Jersey Division of Gaming Enforcement Director David Rebuck acknowledged that considering the impact of the international online casino industry—especially grey markets where the legality of online gambling is in question—is making it difficult for the state to form a systematic procedure of checks and balances when reviewing a potential licensee’s application, according to a report on pokersites.com.

In his advisory, Rebuck said it would be imprudent for the division to try and adopt a structured methodology in reviewing operators that service international gray markets.

“Cross-border Internet gaming operations have caused uncertainty with gaming regulators regarding the legality of Internet gaming operations of their licensees in foreign jurisdictions and how those activities should be considered when evaluating suitability for licensure.” Rebuck said. “The Division, in assessing the legality or Internet gaming in a foreign jurisdiction, will not adopt a standard that could erroneously substitute its own judgment for that of another sovereign jurisdiction’s executive, legislative or judicial authority. The state of the law in many jurisdictions is constantly evolving making it extremely difficult for the Division to adopt a more stringent approach.”

Rebuck did say New Jersey will block licensing to operators in black markets, where the practice is clearly illegal.