The New Jersey online casino alarm bells have been going off this week, and it’s not because of someone hitting the jackpot.

The reason for the alarm stems from the news that the Department of Justice Office of Legal Counsel reversed course on the Wire Act.

A 2011 Wire Act opinion essentially gave the green light for states like New Jersey and Pennsylvania to launch intrastate online gambling.

Such a reversal means many questions are popping up when it comes to NJ gambling sites.

But the biggest one for players at online casinos and sportsbooks may boil down to this: Will payments and deposits at online gambling sites still work?

Online gambling deposits + Wire Act

In a nutshell, players rely on these sources to fund their NJ online gambling accounts.

But there is a good chance payment processors are on edge since the Wire Act news broke on Monday. There is also a good chance the situation will remain that way until the dust settles. Why?

In many cases, the money transfers are crossing state lines. In the new opinion, transfers of information that cross state lines are considered interstate (not intrastate) and therefore prohibited.

Denying transfers to online gaming sites such as Golden Nugget, DraftKings Sportsbook and other sites could come into play.

Of course, payment processing for NJ gambling sites has been an issue since before the news came out this week. You only have to search Google to hear about depositing woes at NJ sportsbook apps and the like.

Online Poker Report’s Eric Ramsey spoke to Jerry Rau, an emerging markets consultant focused on the gaming industry, about the topic.

“Payment processing has been a struggle since the beginning because of the high decline rate for cards,” Rau told OPR. “So most issuers of credit and debit cards do not approve gaming transactions now. The vast majority of transactions that are attempted [are] declined.

“The issue is revenue versus risk for them. It’s a pure equation. There’s not enough revenue in this for the risk.”

Rau went on to say that PayPal is the “highest risk payment option” due to its size and history of timidness.

“They’re the most skittish of all the processors at this point in time,” he said.

Other depositing options at NJ gambling sites

If banks, credit card companies and PayPal get out of the online gaming business, gamblers will not necessarily be stranded.

The majority of Atlantic City-based online casinos and sportsbooks offer several other funding methods. Some may not necessarily be as convenient, but they work just fine for betting purposes.

  • Cash at the casino cage of a land-based partner (DraftKings customers, for example, would go to Resorts Atlantic City)
  • Purchase a prepaid card (such as SugarHouse, Caesars or Play+)
  • PayNearMe (deposit cash at local 7-Eleven or other participating retailer)

NJ online gaming is fine, for now

Following Monday’s Wire Act announcement, it has been business as usual for NJ online casinos. And it will continue to do so.

According to the New Jersey Division of Gaming Enforcement (DGE), online gambling sites generated a record $29 million in revenue in December, which is about a 40 percent increase from the same month in 2017.

And here’s the number that stands out even more: $1 billion. That’s the amount of money NJ online gaming has generated in the Garden State since its 2013 launch.

The new Wire Act opinion is enough of a shakeup that it could slow down progress on a lot of fronts, and that includes payments and deposits.

In fact, a new memo from the US Deputy Attorney General Rod Rosenstein that surfaced a few days later clarified a few pieces of the opinion. According to the memo, the opinion will not take effect for 90 days as it creates prosecutorial guidelines.

Will payment processors tread lightly and monitor the issue closely in the coming months? It’s highly likely.

Bill Gelman

About

Bill Gelman is a veteran sports writer based just outside of Philadelphia and not too far from the Jersey Shore. Bill spends time in Atlantic City writing about casino openings and expansions, special events and world championship boxing at Boardwalk Hall. He is now adding NJ sports betting and online gambling to the mix.