Internet gambling in N.J. gets online test

This is a big week for Internet gaming in New Jersey. A trial period begins Thursday, when invited players will be able to test poker, slots, and other games under the watchful eyes of regulators.

After five days of "soft play," with no more than 500 players at a time for each gambling operator, online sites will open to the public Tuesday - if they prove themselves to the New Jersey Division of Gaming Enforcement.

The agency will use the trial period to make sure "all systems perform as required under the stress of live gaming and that operational and revenue reporting controls are effective," according to agency director David L. Rebuck.

The obvious issues to be monitored are whether Internet gambling sites block individuals under age 21 and whether the gamblers are within New Jersey's borders.

The run-up to Thursday has been frenetic, with regulators tweaking rules as they monitor the setup of systems by the layers of service providers that will facilitate online gambling for Atlantic City's casinos.

"Over the last two weeks there's been a lot of evolution, let alone in the last week, related to what is required and what is not," said Matthew Katz, chief executive of CAMS LLC, which is providing services to several of the online operations in Atlantic City.

"I've got to give them credit," Katz said. The Division of Gaming Enforcement "has been phenomenal as it relates to answering questions the best that they can."

At the top of the pyramid of companies is the licensed casino operator. Of the dozen operators in Atlantic City, only five had received an Internet gaming permit as of Tuesday.

Each holder of an Internet gaming permit chooses a primary partner, such as bwin.party in the case of the Borgata. That company operates the equivalent of the online casino. That virtual casino floor is then filled with games often owned by yet another firm.

Then there is the back of the house, where additional companies will set up accounts for gamblers, handle payments, verify identifications and ages, and confirm that a gambler is in New Jersey.

Because it is easy to fake one's location on the Internet, casinos will rely on cellphone triangulation, which measures the distance of a phone from three cellphone towers, to locate online gamblers. That will be used in combination with the Internet address of the computer being used to gamble online.

At sites operated by Caesars Interactive Entertainment Inc., cellphone texting could be required before a gambler is allowed to start playing, said Seth Palansky, vice president of communication for Caesars Interactive.

"We'll text the user. They will have to respond once. With that response, we can verify their location," Palansky said. "They have to keep their cellphone on while playing."

Caesars Interactive is a subsidiary of Caesars Entertainment Corp., which owns four Atlantic City casinos. The company has a hearing Wednesday in Atlantic City on its applications for Internet gaming permits, Palansky said.

Locating people using cellphones is fairly accurate, said Glenn Booker, a professor of information science and technology at Drexel University. But there could be uncertainty near the state border.

Nevada, which started online poker in April, has a built-in buffer. That buffer has generated some complaints from people who live too close to the state line and have been blocked, A.G. Burnett, chairman of the Nevada Gaming Commission, said last month at an industry meeting in Philadelphia.

New Jersey has no set buffer in regulations, leaving it up to operators. The Borgata, for example, will determine how close a gambler can be to the state line after testing is done next week, said Joe Lupo, senior vice president of operations for the casino.

Another major issue for online gambling is age verification, said John Aristotle Phillips, CEO of Aristotle Inc., which is providing identity and age verification services in New Jersey.

A bartender, for example, cannot verify that the driver's license of a would-be patron corresponds to an actual government record.

"We, on the other hand, are able to do that. We can check the database to see if in fact that data is accurate. It's hard to fabricate an identity in the department of motor vehicles computer," Phillips said.

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