A bill that levies civil penalties for operating or assisting in the operation of an online social casino has seen new life after the New Jersey Assembly’s Appropriations Committee voted unanimously to recommend the legislation for passage on June 19. It’s the first action on the Assembly bill or its New Jersey Senate companion in weeks.
Many social casino operators and their vendors could face difficult choices if the proposal becomes law in New Jersey, like challenging the law in court or ceasing to allow people in New Jersey to play on their websites. In its current form, the bill strives to address criticisms of unintended consequences potentially arising from bans on social casino gaming.
A 5447 gets amendment, approval
On Thursday, the 11 members of the Assembly Appropriations Committee taking part in the hearing on A 5447 voted to report out the bill favorably after amending the bill. The amendment alters the definition of “game” in the legislation to explicitly “include any game that mimics or simulates casino-style games or sports wagering.”
In addition, the amendment modifies the definitions of “prize” and “prize equivalent” to mean “cash, a cash equivalent, a token, object, or article, or a virtual facsimile thereof, that can be exchanged, sold, or redeemed, either directly or indirectly…or any form of credit or promise.”
The original text of A 5447 did not include the word casino. The amendment makes the bill more daunting for operators of social casinos.
A 5447 targets social casino operators, others
A 5447 prohibits “a promotional, advertising, or marketing event, contest, or game, whether played online or in-person, in which something of value, such as a prize or prize equivalent, is awarded, either directly or indirectly through means such as a dual-currency system of payment that allows a participant to exchange the currency for a prize or prize equivalent.”
The bill expands the authority of the New Jersey Division of Gaming Enforcement. It gives the division the power to levy penalties of $100,000 for initial violations of the presumed statute, then $250,000 for subsequent offenses. The legislation, as currently composed, would criminalize operating a social casino and offering sweepstakes-based casino-style games.
A 5447 hadn’t seen any activity since May 8, when it got a favorable report from the Assembly Tourism, Gaming, and the Arts Committee. The Senate companion, S 4282, has not been taken up since May 29, when the State Government, Wagering, Tourism & Historic Preservation Committee gave it a favorable report.
A 5447 includes some exemptions that seem to aim to allow other businesses to continue to offer promotions in New Jersey amid the prescribed restrictions. The exemptions seem to directly address criticisms of similar bills in other US jurisdictions.
A 5447’s exemptions for other types of businesses
A 5447 mentions beverage and food vendors explicitly in its section for exemptions to the prohibitions. The bill excludes games that feature “any method of entry that is not free to the participant [which] is ancillary to the purchase of food, non-alcoholic beverages, or other merchandise not exceeding $20 in value…provided that such other items of merchandise will not include coins, tokens, or online credits that have no value other than permitting sweepstakes entry or that are able to be exchanged for money or merchandise from the sweepstakes operator or an affiliated company.”
That exemption hearkens to criticisms of restrictions on social gaming from operators of such websites. For example, an April 6 statement from the Social and Promotional Games Association, a trade group for such companies, addressed a similar bill in Louisiana.
The statement said that “for decades, companies — from fast-food chains to app developers — have utilized sweepstakes as legal promotional tools. … Even more troubling, SB 181’s overly broad definitions could unintentionally criminalize loyalty and rewards programs run by some of the most respected brands in the country.”
Potentially also disheartening for social casino operators offering games to people in New Jersey is that a bill that would have regulated those games was withdrawn from consideration in April. As a result, some operators, like Stake.us, have already stopped servicing customers in the state.
If A 5447 continues to build momentum in Trenton, more operators may do the same. New Jersey is a step closer to becoming the fourth US state to impose restrictions on social casinos after Thursday’s Assembly Appropriations Committee hearing.
