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The Latest Online Betting Updates in NJ, DE and WA

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The online betting industry moves slowly in the United States compared to the constant changes we see on the international level, but things do happen here in the US. To that end, today’s post covers three of the most interesting developments in online betting over the past few weeks.

Here’s what we have to report on today:

  • New Jersey Files Appeal for Sports Betting Legalization Effort
  • Delaware Online Gambling Revenue is Growing
  • Washington Regulator Orders Valve to Crack Down on Skins Betting

New Jersey Files Supreme Court Appeal for Sports Betting Legalization Effort

Governor Chris Christie has been pushing for legalized sports betting in New Jersey since 2012, beginning with a measure that essentially promises state race tracks and casinos they will not be prosecuted if they choose to offer real money sports betting to their customers.

The effort seeks to exploit a potential loophole the federal law (PASPA) that prohibits states from authorizing and regulating sports betting. New Jersey contends it is not “authorizing” or “regulating” anything; it is simply promising not to prosecute certain race tracks and casinos that choose to offer sports betting.

The New Jersey effort has been shot down in multiple court rulings and appeared to be dead until recently. Now, we have news from that Chris Christie and the Thoroughbred Horsemen’s Association have each petitioned the United States Supreme Court to take up the issue.

The petition contends that PASPA itself is unconstitutional as it violates the Tenth Amendment dealing with the separation of federal and state powers. The 10th Amendment read in full:

“The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

From the petition:

“This federal takeover of New Jersey’s legislative apparatus is dramatic, unprecedented, and in direct conflict with this Court’s Tenth Amendment jurisprudence barring Congress from controlling how the States regulate private parties. Never before has con-gressional power been construed to allow the federal government to dictate whether or to what extent a State may repeal, lift, or otherwise modulate its own state-law prohibitions on private conduct. And never before has federal law been enforced to command a State to give effect to a state law that the State has chosen to repeal.”

The petition does have merit from a Constitutional perspective, but many a court case in the past has managed to bypass the 10th Amendment on technicalities. More specifically, numerous past federal actions have been justified by creative interpretations the Commerce Clause.

Delaware Online Gambling Revenue is Growing reports that the legal online casinos in Delaware have seen a 54% increase in net revenues for August over the same period last year. Delaware originally legalized online casinos and poker in 2012 and then the first online gaming sites went live in 2013. Difficulties in processing payments and verifying player locations combined with the state’s small population resulted in lower-than-hoped revenues for the state’s online gaming operations.

The report links to Delaware’s own revenue figures and notes that all three licensed casino sites in Delaware netted $244,387.43 in total net revenue from casino games and poker. That figure blows past the results from a year ago in which total net revenue came in at $158,979.70.

The growth in net revenues is attributed solely to online casino games. Online poker was the sole vertical that saw a loss in net revenue, from $31,248.36 to $29,155.08. The slowdown in online poker revenues can probably be attributed to the small player pool from which Delaware can draw.

Delaware entered a poker player-sharing agreement with Nevada in 2015, but even that failed to boost online poker revenues. That result is not entirely unexpected due to poker requiring a large and active user base to reach respectable revenue levels. Net poker revenues should rise significantly when and if Delaware signs additional player-sharing agreements with other states.

Washington Regulator Orders Valve to Crack Down on Online Gambling

The Washington Gambling Commission issued a press release earlier this month warning Valve to take whatever measures necessary to stop online gambling in its popular Counter-Strike: Global Offensive video game. At the crux of of the issue are decorative in-game weapons (called “skins”) that players can trade for real money on third-party sites.

Bloomberg originally brought the story to the mainstream consciousness back in April. In that report, Bloomberg writers explained that skins serve as stand-ins for real money gambling. Players can pay real money for skins, place bets online using those skins and then sell those on third-party markets for real money. In that sense, skins serve the same purpose as the clay chips found in any brick-and-mortar casino.

A basic explanation of the problem can be found inside the press release:

“Since February 2016, ‘skins’ continue to be used as consideration for illegal gambling activities on third party websites. ‘Skins’ transactions are usually facilitated within Valve Corporation’s Steam Platform. All third party gambling sites have Steam accounts and use the Steam platform to conduct their gambling transactions. These gambling transactions are automated and performed by a software program or ‘bot,’ and have proliferated so much that a recent market report by Esports Betting Report indicates that one specific gambling website, CSGO Lounge, brought in approximately $1 billion in ‘skin’ gambling between January 1st and, August 1st this year alone.”

The Washington Gambling Commission has given Valve until October 14th to respond to the order and explain what it has done to become compliant with Washington gambling law. Failure to do so could open Valve to “additional civil or criminal action.”

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