NJ Regulator Warns Online Operators To Avoid Using Improper Payout Delays

Irregularities in the timing of payouts to New Jersey consumers — including bonuses being offered to customers to cancel withdrawal orders — led state Division of Gaming Enforcement Director David Rebuck to issue an unusual warning to online gaming operators Wednesday.

It was the first such “Director’s Advisory Bulletin” issued since a previous one in March about the COVID-19 pandemic that led to a shutdown of all Atlantic City casinos until mid-summer, and the second since November 2019.

“The Division of Gaming Enforcement has received patron complaints regarding the processing time for withdrawals from online gaming accounts,” Rebuck wrote in the bulletin.

“Specifically, patrons have complained that after requesting a withdrawal, it can take up to two weeks for the funds to be available to them. While some of this time period can be attributed to the need to investigate possible fraud, identity theft or money laundering, the volume of complaints has led the Division to undertake a review of existing regulations and industry practices regarding withdrawals to ensure the Division’s concerns regarding player protection and responsible gaming are being properly balanced against a patron’s right to access their funds.

“This review was undertaken to determine if operators’ current withdrawal policies are complying with the intent of existing regulations. This review revealed that in the period between a withdrawal request and the actual release of funds to the customer, patrons reported contact from providers encouraging or enticing them to reverse the withdrawal request and wager the funds.”

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The bulletin then goes further, noting an ill-advised response by some operators — who are unnamed in the bulletin:

“It has been reported by some patrons that they were even offered bonus money to reverse a pending withdrawal request. The Division has concluded that the existing rules of the Division prohibit the practice of soliciting or incentivizing withdrawal requests to be rescinded or cancelled by the patron.

“Numerous regulations address the concept of withdrawals from a patron’s account.”

But Rebuck pointed out that those regulations go only so far:

“While no specific time frame for processing a withdrawal is mandated, it is clear that the rules do not countenance unnecessary delay.

“The Division has interpreted its regulations to authorize the re-deposit of funds earmarked for a ‘requested, but not yet completed,’ withdrawal request — but only if the decision to reverse the withdrawal is made independently by the patron. The Division shall not permit ‘funds in the process of withdrawal’ to be deposited to an iGaming account if such deposit was solicited or incentivized by an operator.

“Accordingly, while no specific time frame is referenced, the rules regarding withdrawals from an online account are intended to require patrons to receive their withdrawn funds without any delay longer than needed to perform an anti-fraud or anti-money laundering check.”

Let’s make a deal, say some operators

There are further issues about apparent bargaining by operators with customers to try to entice them to keep gambling, rather than cashing out:

“The Division specifically finds the delaying tactics that have resulted in patron complaints — that certain customer service personnel are suggesting to customers who inquire about their requested withdrawals that processing of withdrawals takes time, but if a withdrawal request is rescinded, those funds are immediately available for wagering — to be unacceptable and contrary to the aforementioned regulatory provisions.

“Some patrons have informed the Division that they are even given a bonus incentive to rescind their pending withdrawal and wager those funds. This practice is equally unacceptable.

“The Division therefore finds that the solicitation by operators for patrons to rescind withdrawals that are ‘pending’ leads to delays in the processing of withdrawals in the hopes that the patron will cancel the withdrawal and begin wagering with the funds. Such practices are inconsistent with the intent of the rules.

“It is further noted that it would be an aggravating factor in any penalty proceeding for patrons to be offered bonus money or other incentives to reverse a withdrawal request. Patrons who request withdrawals have the right to receive their funds as expeditiously as possible.”

There are exceptions that provide operators with some leeway — but only to a point:

“Patrons may independently act to rescind a withdrawal decision. Such acts are not prohibited, so long as the action is not overtly or covertly influenced by an operator. However, any contact by an operator with a patron during the pendency of a withdrawal request will be scrutinized to determine whether the communication is consistent with this Advisory Bulletin and the Division’s regulations.

“Operators should clearly understand that the Division will take regulatory action and impose civil penalties whenever patrons are improperly encouraged or incentivized to rescind their withdrawal requests for the purpose of resuming gaming activity.”

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