Following the lead of New Jersey and Nevada, Delaware has released a draft of its online gaming regulations. The Delaware online gaming regulations will be enforced by the Delaware State Lottery Office and are available for public comment through July 31st, 2013. This post will outline some of the important aspects of the proposed regulations.
Delaware Online Gaming Regulations Not Limited to Online Poker
Unlike Nevada, which has only legalized online poker, the Delaware online gaming regulations will allow a wide range of online gambling and defines Authorized Game as “any other game which is determined by the Director to be compatible with the public interest and to be suitable for use after such appropriate test or experimental period as the Director may deem appropriate.” This definition would seemingly allow the Director of the Delaware State Lottery Office to authorize any type of online gambling game, including large scale, multi-game tournaments. Delaware’s approach emulates New Jersey’s broadly constructed online gaming bill and regulations, which allow for a wide range of table/casino games.
No “Bad Actor” Clause
In addition, unlike Nevada’s regulations, the Delaware online gaming regulations do not contain a “bad actor” clause, which typically bars an entity from obtaining a license if it has been previously convicted of operating an illegal gambling business. Despite omitting a “bad actor” clause, Delaware’s draft regulations require applicants to prove that they possess “the business ability and experience necessary to satisfactorily conduct . . . Internet [gaming] operations” and automatically disqualify entities that have committed a felony or a crime of moral turpitude within the last 10 years.
Who Needs to Obtain a License Under the Regulations?
As with many newly drafted regulations, ambiguities exist, and perhaps nowhere more so than in the explanation of who must be licensed. It is clear that the entity conducting online gambling games, and all of its employees, must obtain licenses. However, determining who qualifies as an employee under the regulations leaves room for interpretation. For instance, the regulations define a Service Employee as “a person employed in the operation of an Internet lottery and determined by the Director to have employment duties and responsibilities involving direct access to player and gaming information stored on Internet lottery equipment.” All Service Employees must obtain licenses, but it is unclear whether the definition applies to affiliate marketers, who do not always have direct access to players’ and gaming information and are often retained as short-term independent contractors, not employees. The penalty for failing to secure a license as required under the regulations is a Class A misdemeanor.
Adding further ambiguity is another category of persons who must obtain a license, Technology Providers, who are defined as “any person or entity who proposes to contract with an Internet lottery agent or the agency for the provision of goods or services related to an Internet lottery.” The regulations go on to state that Technology Providers are entities that provide the hardware, software, game content or operational services required to operate the Internet gaming platform, but fail to clearly define what qualifies as “operational services” or what the Delaware State Lottery Office considers services that are necessary to operate a gaming platform.
It is important to note that Delaware has only promulgated draft regulations, not final regulations. The State is now accepting comments on the draft regulations, which can be submitted to Rebecca Goldsmith, Delaware Lottery Office, 1575 McKee Road, Suite 102, Dover, Delaware 19904 until July 31, 2013.
The development of Delaware’s online gaming regulations is a significant topic for all gaming attorneys and those interested in Internet poker and gambling in general. If you are interested in learning more about this topic, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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