The New Jersey Division of Gaming Enforcement fined Rush Street Interactive NJ (RSI) for an underage online gambling incident.

The complaint is dated June 28, 2018. The public record of the civil action order from the DGE is dated Jan. 7.

This is the only violation of this kind in more than five years of online gambling in NJ.

The letter, signed by DGE Director David Rebuck, includes a civil penalty in the amount of $30,000 “as agreed to by the parties in the Stipulation of Settlement.”

On Wednesday, the parent company of SugarHouse online casino issued a statement to NJGS in response to the fine:

“We take this matter very seriously. As soon as our team discovered the misconfiguration, we self-reported it to the gaming commission and took immediate action to correct and prevent recurrence. Responsible gaming is a top priority for us.”

Underage gambling issue dates back to 2016

The Rush Street team declined to elaborate on exactly what went down, but the public record of the complaint offers more detail.

The problem dates back to November 2016 in the early days of SugarHouse online casino in NJ. The incidents ended in January 2018 after a little more than a year.

From the complaint:

“The underage patrons were able to make wagers from November 10, 2016, the registration date of the first underage patron, until RSI successfully deployed an emergency fix on January 30, 2018.”

The report also clarifies how many underage gaming accounts were created:

“Due to a software defect in RSI code discovered on Jan. 29, 2018, thirteen patrons ranging in age from 18 to 20 years old …. were able to create online gaming accounts and place wagers. Three of these patrons also made deposits to their accounts. The other 10 patrons wagered using bonus funds that were issued at the time of registration.”

New Jersey regulations require that gamblers, whether online or at an Atlantic City casino, be at least 21 years of age.

Breaking down the illegal bets outlined in the report:

  • Underage patrons were able to make wagers from Nov. 10, 2016 (the registration date of the first underage patron) until RSI deployed an emergency fix on Jan. 30, 2018.
  • Total wagers from all 13 accounts were $4,977.76.
  • Largest amount deposited by an underage individual was $740 with total losses of $190.

Defect in age verification system at SugarHouse

What exactly went haywire? How did the underage gambling go on for so long before Rush Street raised the emergency flag?

Based on the report, the problem stemmed from an age verification system, or Know Your Customer (KYC) process.

The system requires a date of birth to verify if a user is of legal age. When working properly, the system prevents underage customers from creating an account.

This is where the problem occurred.

Instead of using a patron’s exact date of birth, the software defect in the program code allowed for a three-year variation of the birthdate, thereby causing the KYC process to fail to detect the underage patrons.

Online casino not online sportsbook

It’s clear, based on the timeline, that this underage gambling incident is connected to the PlaySugarHouse online casino and not the sportsbook.

The NJ sports betting portion of the app launched Aug. 23 — almost two months after the complaint was filed.

However, the underage gambling violation is the first such case in NJ online gambling history after five years.

In 2018, illegal sports bets were placed at two Atlantic City casinos and online sportsbooks. Both Golden Nugget and Caesars were fined or required to refund the bets that were taken on NJ college football games last fall.

As with underage gambling, bets on New Jersey college teams, no matter where the game is played, are illegal as well.

Rush Street + NJ online gambling

While Rush Street may be in its rookie year for offering NJ online sports betting (as is everyone else), it’s not the case with online casino games.

SugarHouse Online Casino launched as part of the NJ online gambling market back in 2016, via its partnership with Golden Nugget.

In terms of revenue, Golden Nugget continues to be the market leader. The NJ online casino revenue numbers released by the DGE earlier this month show that the Golden Nugget generated $10,178,563 from online gambling for December 2018 (a 67.2 percent increase from the same period last year).

Besides SugarHouse, that number includes Golden Nugget’s online casino and Betfair NJ, both of which launched in 2013.

None of these operators are strangers to NJ gambling site rules.

The SugarHouse Sportsbook was added to the Kambi-powered platform over the summer, just in time for NFL and college football season.

Rush Street rolled it out under the Golden Nugget license, but it’s now one of three online skins being offered under the Monmouth Park license (William Hill and TheScore being the others).

The move was made to allow SugarHouse online sportsbook to offer NBA online sports betting.

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.