Several regulated online gambling industry members have expressed to me that the affiliate arrangement in New Jersey was not working. The main complaint is that some affiliates that are promoting New Jersey sites are also advertising offshore sites on the same pages and websites. Some in the regulated New Jersey online gaming market believe that this is unfair competition from illegal sites and want to put an end to it.
Gambling911 first reported what had been rumored for weeks. The New Jersey Attorney General’s office would start to enforce the promotion of offshore sites and affiliates could become targets of state law enforcement, according to this report. Online Poker Report obtained the letter sent to one large online poker affiliate.
New Jersey’s online gaming revenue numbers have fallen below estimates. One reason often cited for this is the existence of offshore sites still operating in the market.
Last week, the Winning Poker Network left New Jersey, as well as Delaware and Nevada. These three states are the only ones with regulated online gaming.
In emails to players, Winning Poker cited the existence of regulated online poker as the reason for leaving the market. A few players in these states quickly reported that they were advised by the network to change their state in the system. This would allow them to continue playing. There are still several unlicensed U.S.-facing sites that are happy to accept action from players in regulated states.
What Should Affiliates Do?
Promoting offshore sites in regulated states is becoming more and more risky. It is probably time to stop promoting offshore sites entirely. Affiliates with a New Jersey vendor’s license should seriously consider this action. The license application tells New Jersey law enforcement exactly who you are and where to find you. While you are at it, do the same for Delaware and Nevada.
Another idea is to create a New Jersey mini-site. Many successful affiliates have done this. These may not be giant moneymakers today but the investment will pay for itself in the long run.
What Should Affiliates Not Do?
Affiliates should not be optimizing sites for terms like “New Jersey Poker Sites” and then advertising offshore ones on it. Offshore sites should not be described as “100% fully legal” and pages optimized for legal poker site terms should only include sites that are licensed and regulated. To state otherwise is false advertising. It could also make you the target of comments from executives of regulated sites made at industry events, which actually happened in recent months. This could put an unnecessary and unwanted spotlight on your business.
There is another reputation issue to consider. If a site fails to pay players down the road and you advertised them as “100% safe and legal” then it reflects poorly on your business.
It is time to realize that regulated states and those operators feel that they have the right to those players without unlicensed competitors and are serious about defending this opinion. It appears that offshore sites are starting to recognize this and the shift in attitude will only continue. Affiliates in this for the long term need to give serious consideration to how their strategy going forward may affect their future in the regulated online gaming industry.
Opinion on New Jersey Affiliate Action
I applaud the DGE for acknowledging this problem and taking action to correct it. I agree with the state’s stance that offshore sites should not be promoted alongside regulated ones. It is not in the best interest of the industry as it hopes to grow online gaming to other states. It is easy to see how a player could get confused about what poker rooms are licensed and legal when they are presented with offshore sites in similar context.
The affiliate licensing process left a lot of questions as to what was allowed and what was not. This clears up some of those questions. I feel that it would be a great idea for the DGE to create a fact sheet about what exactly is expected from affiliates and operators in the marketing of New Jersey sites to clear up any confusion that may remain.
There is one concern that I have. Some major affiliates may decide to dump New Jersey sites entirely as the offshore business is far more lucrative. This would be counterproductive as it would get fewer eyes on advertising by New Jersey sites. While not a perfect solution, geotargeting by state may be the best compromise here.
None of the above is meant to be legal advice. It is simply the actions I would be taking if I were in the position of some of the affiliates that appear to be in violation of the order from the DGE. If you are unsure about how online poker regulations affect your business you should consult an attorney that specializes in gaming.
— John Mehaffey