October 9, 2017

In April 2016, New Jersey’s Division of Gaming Enforcement (the “Division“) published a letter setting out guidance on its categorisation of the so called “grey” and “black” markets and the related impact on the suitability of companies for licensure in New Jersey. The letter was welcomed by the many in the industry as a sign of a shift away from the unwritten rule of “affirmative legality” historically espoused by US gambling regulators. For others, it raised more questions than it answered.

In response to a recent letter from the Australian government sent far and wide to regulators, operators, suppliers and trade bodies and setting out recent amendments to Australia’s online gambling laws and related enforcement initiatives, the Division recently wrote to its licensees confirming that it now considers Australia to be a black market and seeking confirmations as to what steps companies have taken to block unlicensed services to that market.

The Division has clearly taken note of the Australian government’s pronouncement on its gambling laws, its new vigor on enforcement and the request for its assistance. The latter two may be viewed as more significant in this instance given that the overall legal position relating to the unlicensed provision of online gambling services to Australian residents has not fundamentally changed as a result of the new legislation. However, the Division’s approach to one highly regulated jurisdiction doesn’t offer much in the way of guidance as to how it may view jurisdictions where local counsel argue, with coherence, that the application of the law is debatable and yet where such a jurisdiction’s authorities argue no such debate is needed and that the law clearly applies.

The aforementioned April 2016 letter published by the Division clearly stated the need for a jurisdiction’s position to be “unequivocal” on the application of its laws to the inward supplies of remote gambling services. It is notable that, since the receipt of the letter from the Australian government and the understandable questions following the Division’s response, its director, David Rebuck, has cast doubt on suggestions that any overseas government need only write to the Division to enlist its support.

Reading between the lines, it appears that in order to garner support from the Division any government will need to demonstrate: (i) the extraterritorial applicability of its gambling laws in order to show that its legislation is “unequivocal”; and (ii) that it is taking meaningful enforcement initiatives. It will be interesting to see how the Division responds to any requests from assistance from authorities in jurisdictions where the legal position is less clear-cut, particularly in markets where there is a outright prohibition on online gambling or the absence of an open and transparent licensing system.

The increasingly sophisticated approach of gambling regulators globally is a sage reminder of the need for industry stakeholders to develop and regularly update a coherent regulatory risk rationale.