On Aug. 8, 2012, Governor Chris Christie signed into law legislation legalizing mobile gaming within the boundaries of Atlantic City's casino hotel facilities.1 The New Jersey Division of Gaming Enforcement quickly promulgated temporary regulations, which became effective on Oct. 8, implementing the legislation.2 The temporary regulations will remain in effect for a 270-day period, while the division solicits comments from all stakeholders and then adopts final regulations. In praising his staff for their work, division director David Rebuck noted: "We are looking forward to having Atlantic City casinos take advantage of mobile gaming and we see...[this] as one more step in the expansion of gaming opportunities afforded to Atlantic City customers."3 New Jersey joins Nevada as the only other state to authorize gaming on mobile devices in its casino hotel facilities.4
Mobile gaming is the offering of electronic versions of authorized casino games for play on 'client terminals,' a term broad enough to include a casino patron's smartphone, tablet, notebook computer or a hand-held device distributed by the casino licensee.5 Client terminals are, however, prohibited from containing patron account information or game logic that determines the outcome of any authorized casino game.6 Such information and logic must reside only on the casino licensee's 'mobile gaming system,' which includes the hardware, software and communications comprising the system for offering electronic versions of authorized casino games to be played on client terminals.7 The client terminals themselves are merely slave peripheral devices for a patron's input of information and the display and play of the electronic games offered by a casino licensee.
Mobile gaming may be conducted throughout the property boundaries of a casino licensee's approved hotel facility, excluding parking garages and parking areas.8 A patron can thus play electronic versions of authorized casino games (e.g., poker, roulette, baccarat, blackjack, craps, big six wheel, slot machines, minibaccarat, red dog, pai gow and sic bo) using his or her own iPhone®, for example, while dining in a restaurant, having a drink at a bar, sitting in the hotel lobby or his or her hotel room, or lounging at the pool.
A casino licensee's mobile gaming system must, however, be capable of disabling all gaming activity on a client terminal whenever it is removed from the casino licensee's property boundaries.9 Even with this limitation, New Jersey's regulation of casino gaming has certainly come a long way from its inception in 1978, when gaming could be lawfully conducted only in a single, windowless, restricted-access, casino room within a casino licensee's facility.
The Ins and Outs of Patron Participation in Mobile Gaming
Establishing and Funding a Mobile Gaming Account
To participate in mobile gaming, a patron must first appear in person at the casino licensee's casino hotel facility and establish a mobile gaming account.10 The division's regulations set forth minimum requirements, which casino licensees must satisfy in establishing a unique mobile gaming account for each patron.
Pursuant to the regulations, a casino licensee must: 1) create a patron identification file and verify the patron's identity; 2) verify that the patron is at least 21 years old, and not: a) self-excluded from casino gaming, b) on the state's exclusion list, or c) otherwise prohibited from participating in casino gaming in New Jersey; 3) require the patron to establish both a PIN and either a password or other security measure as approved by the division for access to the account; 4) maintain a record of the patron's acceptance of the casino licensee's terms and conditions to participate in mobile gaming; and 5) maintain a record of the patron's acknowledgement of the opportunity for compulsive gambling assistance.11
Once established, a patron must next fund his or her mobile gaming account through the deposit of cash or by use of a credit or debit card.12 While new in the context of casino gaming in the state, the concept of pre-funded wagering accounts is well known to the state's pari-mutuel wagering aficionados, who have enjoyed 'advance deposit wagering' for over a decade.13 Additionally, a casino licensee may issue and deposit cash complimentaries, promotional credits or bonus credits in a patron's mobile gaming account.14 A patron may withdraw funds from his or her mobile gaming account by various means, including cashing-out at the cashier's cage within the casino or directly transferring funds to the patron's banking account. However, casino licensees are expressly prohibited from permitting a patron to place funds in, or transfer funds to, any other patron's mobile gaming account.15
All mobile gaming accounts are subject to a daily limit (i.e., "the daily maximum amount a patron may use to fund his or her mobile gaming account, excluding winnings").16 By regulation, mobile gaming systems are required to default to a daily limit of $500 when a patron's mobile gaming account is first established. A patron may select a higher or lower daily limit when establishing the account, but the daily limit may not at any time be more than $2,500.17 Once the daily limit is first established by the patron, any decrease must be effective no later than the patron's next log-in.18 To allow for a cooling-off period to protect the patron, any increase in his or her daily limit shall not become effective until 24 hours after the patron's increase request.19
Information Available to Patrons During Gaming Sessions
A gaming session is defined by the regulations as "the period of time commencing when a patron activates a particular game by placing a wager and terminating when a patron concludes playing that game."20 The division's regulations require that the following information be readily available through the client terminal before a patron's gaming session begins, and at any other time during the gaming session where applicable: 1) sufficient information for the patron to identify the specific game selected; 2) the rules for the play of the game and payouts; 3) rules that describe the procedures to be followed in case a patron is disconnected from the mobile gaming system during the gaming session; and 4) information regarding all charges imposed on patrons, such as fees, rake and vigorish for the play of the game.21 Additionally, a patron must be provided with the ability to view the outcome and subsequent account balance changes for the previous game played (including, any game completed subsequent to either a network disconnection, client terminal malfunction or other outage).22 Notably, the regulations expressly prohibit casino licensees from relying on sound to convey the meaning of the rules for the play of a game and payouts.23
Compulsive Gambling and Other Player Protections
At all times during a patron session (i.e., the "period of time when a patron is logged on to a mobile gaming system"), the patron must have access to a player protection page from any screen where game play or wagering activity may occur.24 The player protection page is required to include information on how to obtain compulsive gambling assistance via 1-800-Gambler.25 The page must also include information regarding: daily limits; password security; how to file a complaint with the casino licensee; how to obtain a copy of the terms and conditions agreed to by the patron at registration, patron account and game history; and rules regarding underage gaming, including sanctions.26
Whenever a casino licensee changes the terms and conditions applicable to mobile gaming, the casino licensee is required to obtain from the patron an acknowledgement accepting any such change(s). Unless otherwise authorized by the division, the patron's acknowledgement must be date- and time-stamped by the mobile gaming system.27
All bonus and promotional wagering offers marketed to patrons through a client terminal or otherwise are to be clearly stated and unambiguous. The terms of such offers must include, at a minimum, the period when the offer is available and eligibility and redemption requirements.28
The Back of the House Technical Stuff: Mobile Gaming System Minimum Standards
The division's regulations establish minimum technical standards for a casino licensee's mobile gaming system. The regulations establish what is required of the system, but the regulations do not tell casino licensees and mobile gaming system suppliers how they must satisfy the applicable requirements. In other words, the regulations do not specify a particular methodology or technology for satisfying each of the prescribed minimum standards. Accordingly, casino licensees and mobile gaming system suppliers are not hamstrung into a lockstep approach to satisfying the prescribed minimum standards. Instead, they enjoy a wide berth to exercise design flexibility and technological creativity in meeting the division's prescribed minimum standards. Additionally, the division's drafting approach will likely allow casino licensees and mobile gaming system suppliers to take advantage of future advancements in technology without the necessity for endless amendments to the regulations.
Account Security and Access
Mobile gaming systems must utilize sufficient security to ensure patron access is limited to only the mobile gaming account holder, and the system must be designed to associate a patron's account with only a single client terminal during each patron session (i.e., the "period of time when a patron is logged on to a mobile gaming system").29 Mobile gaming account access security measures must include, at a minimum, unless otherwise approved by the division, a PIN and either a password, security account card or other security mechanism.30 As noted previously, patron account access information is prohibited from being permanently stored on a client terminal.31 Such information must be masked on the client terminal after entry and encrypted immediately after entry is complete.32 The information may, however, be temporarily stored or buffered during patron entry provided the buffer is automatically cleared after the patron confirms the account access entry is complete, or if the patron fails to complete the account access entry within one minute.33
Mobile gaming systems must also be capable of immediately disabling a patron session whenever, for example, the system detects user inactivity for more than 15 minutes, the patron terminates a session, the system is unable to validate the identity of the user, the system detects a critical error that impacts game play, or the casino licensee or the division directs that a patron session be terminated.34
Automated Screening Processes
Mobile gaming systems must be capable of implementing automated screening procedures to identify patrons attempting to access the system and prevent the following patrons from placing a wager: 1) patrons under the age of 21; 2) patrons who have placed themselves on the self-exclusion list; 3) patrons on the state's exclusion list who are prohibited from participating in casino gaming in New Jersey; and 4) patrons who have exceeded their daily limit.35 The system must also be capable of detecting and reporting suspicious behavior (e.g., cheating, theft, embezzlement, collusion, money-laundering or other illegal activities) and attempts to access the system by persons who are prohibited from participating in casino gaming in New Jersey.36
Communication Standards
Mobile gaming systems must be designed to ensure the integrity and confidentiality of all patron communications and ensure the proper identification of the sender and receiver of all communications.37 Only devices authorized by the division are permitted to establish communications between a client terminal and a mobile gaming system.38 Communications performed across a public or third-party network are required to use a secure communications protocol to ensure the integrity and confidentiality of the transmission.39 Wireless communications between the authenticator device and the authentication server are to be encrypted using a robust method acceptable to the division. Examples of acceptable methods, as set forth in the regulations, include IPsec and WPA2.40 All communications that contain patron account numbers, user identification or passwords and PINs are to utilize a secure transfer method such as 128 bit key encryption or another method approved by the division.41 Additionally, casino licensees are required to mask the service set identification (SSID) of the gaming system network to ensure its unavailability to the general public.42
Electronic Events Logs
Mobile gaming systems must be capable of electronically logging the date and time each mobile gaming account is created or terminated in an account creation log.43 The system must also maintain for each patron a game play history log that includes all information necessary to re-create patron game play and account activity during each patron session, including the date and time for the start and termination of each session, games played, game play outcomes, wagers, and changes in the patron's account balance.44
Mobile gaming systems must also maintain an electronic software installation/ removal log, which captures pertinent information regarding the installation or removal of software, including the date and time of the action, identification of the affected software and the identity of the person performing the action.45 Similar information must be recorded electronically on a game availability log whenever a change is made to the availability of game software.46
Lastly, unless otherwise exempted by the division, mobile gaming systems must also maintain an electronic promotions log of all promotional offers extended to patrons through the system.47 The log must include sufficient information to audit a casino licensee's compliance with the terms and conditions of current and previous offers.48
Will Casino Licensees Actually Offer Mobile Gaming?
Whether and to what extent casino licensees will actually offer mobile gaming is an open question. Offering mobile gaming will require a significant outlay of capital without possibly generating sufficient incremental casino revenue to justify the expense. However, in light of New Jersey's passage of intrastate Internet gaming legislation, casino licensees may be inclined to await adoption of the division's regulations and then seize upon the opportunity to develop a gaming platform and offerings applicable to both their on-site and off-site 'wireless' patrons.
For the division's part, its mobile gaming regulations are forward-looking, and designed to facilitate amendment to encompass Internet gaming. Relatively few changes will have to be made to the regulations to expand the permissible boundaries of wireless gaming from the footprint of each of Atlantic City's casino hotel facilities to New Jersey's state borders as allowed under the newly enacted intrastate Internet gaming legislation. The division's current mobile gaming regulations can be read to allow for the operation of a casino licensee's mobile gaming system by a properly licensed third-party operator.49 This regulatory provision will mesh with the widely expected third-party operation of Internet gaming systems on behalf of existing owners of Atlantic City's brick and mortar casino hotel facilities.
Originally published in New Jersey Lawyer
Footnotes
1. L.2012, c. 34, §7-10, eff. Aug. 7, 2012, codified as N.J.S.A. 5:12-100(b).
2. N.J.A.C. 13:69O-1.1 et seq.
3. Mobile Gaming Regulations for Atlantic City Industry Become Effective, Division Press Release, Oct. 9, 2012, http://www.nj.gov/oag/ge/2012news/MobileGamingRegs.pdf.
4. See N.R.S. 463.0176.
5. See N.J.A.C. 13:69O-1.1.
6. N.J.A.C. 13:69O-1.2(b).
7. N.J.A.C. 13:69O-1.1.
8. N.J.S.A. 5:12-100(b); N.J.A.C. 13:69O-1.2(a).
9. N.J.A.C. 13:69O-1.2(a); see also N.J.S.A. 5:12-100(b).
10. N.J.A.C. 13:69O-1.3(a); N.J.S.A. 5:12-100(b).
11. N.J.A.C. 13:69O-1.3(b).
12. N.J.A.C. 13:69O-1.3(d)(1), -(2).
13. See New Jersey's Off-Track and Account Wagering Act, N.J.S.A. 5:5- 127, et seq. (L.2001, c. 199, eff. Feb. 1, 2002).
14. N.J.A.C. 13:69O-1.3(d)(3).
15. N.J.A.C. 13:69O-1.3(f).
16. N.J.A.C. 13:69O-1.1.
17. N.J.A.C. 13:69O-1.4(f).
18. N.J.A.C. 13:69O-1.4(f)(1).
19. N.J.A.C. 13:69O-1.4(f)(2).
20. N.J.A.C. 13:69O-1.1.
21. N.J.A.C. 13:69O-1.4(j)(1)-(4).
22. N.J.A.C. 13:69O-1.4(i).
23. N.J.A.C. 13:69O-1.4(j)(2).
24. N.J.A.C. 13:69O-1.4(h).
25. N.J.A.C. 13:69O-1.4(h)(1).
26. N.J.A.C. 13:69O-1.4(h)(2)-(7).
27. N.J.A.C. 13:69O-1.2(g).
28. N.J.A.C. 13:69O-1.2(k).
29. N.J.A.C. 13:69O-1.1, 1.4(a), 1.4 (e).
30. N.J.A.C. 13:69O-1.4(a).
31. N.J.A.C. 13:69O-1.4(d).
32. Id.
33. Id. at (1)-(2).
34. N.J.A.C. 13:69O-1.4(e)(1)-(5).
35. N.J.A.C. 13:69O-1.4(g)(1)-(4).
36. N.J.A.C. 13:69O-1.4(c)(1)-(2).
37. N.J.A.C. 13:69O-1.7(a).
38. N.J.A.C. 13:69O-1.7(e).
39. N.J.A.C. 13:69O-1.7(a).
40. N.J.A.C. 13:69O-1.7(b).
41. N.J.A.C. 13:69O-1.7(d).
42. N.J.A.C. 13:69O-1.7(c).
43. N.J.A.C. 13:69O-1.8(a).
44. N.J.A.C. 13:69O-1.8(b).
45. N.J.A.C. 13:69O-1.8(d).
46. N.J.A.C. 13:69O-1.8(e).
47. N.J.A.C. 13:69O-1.8(f).
48. Id.
49. See N.J.A.C. 13:69O-1.1 (defining "mobile gaming operator") and N.J.A.C. 13:69O-1.2(f)(1) (providing for the inclusion of terms and conditions for mobile gaming as an appendix to a licensee's internal controls, including "name of the party or parties with whom the patron is entering into a contractual relationship, including any licensee").
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