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June 9, 2014

Extra Caution Required in Mobile Advertising as New Jersey DGE Releases Guidance for Affiliate Marketers

By: Ifrah Law

Today, the New Jersey Office of the Attorney General, Department of Law and Public Safety, Division of Gaming Enforcement (“DGE”) released additional guidance for affiliate marketing companies working with state online gaming operators.

This guidance comes only weeks after the DGE issued warning letters to affiliate marketers who advertised unregulated online gaming websites in conjunction with legal gaming websites licensed by the state of New Jersey.  Together, these documents signify a new emphasis on this importance of how and where online gaming websites are advertised.

Any affiliate who is not licensed or registered by the state may not operate in the New Jersey i-gaming space, and will have to enact compliance measures to prevent a violation. The measures may include IP blocking or geo-location software to prevent advertising to customers in New Jersey. With the prevalence of mobile gaming, affiliates may have to check on the location of the mobile devices more frequently to ensure that they have not entered into a jurisdiction where the affiliate is not permitted to operate.

Any affiliate marketer who wishes to advertise online gaming in New Jersey must be registered or licensed by the state, depending on the compensation structure of the contract. The letter indicates that affiliates who are paid a flat fee for directing traffic to a site can register as vendors, whereas affiliates whose compensation is tied to player activity are required to obtain an ancillary casino service industry enterprise (“CSIE”) license. If an affiliate has an agreement with a “sub-affiliate” then the type of licensure required for both the affiliate and the sub-affiliate is also determined by the compensation each receives. All affiliates are required to ensure that all sub-affiliates are properly licensed and the letter warns that conducting business with an unlicensed sub-affiliate could result in the revocation of an affiliate’s license.

The DGE letter approves certain compensation models for affiliates based on the type of license required and noted that these specific models are the only ones approved by the Division at this time. For affiliates holding a vendor registration, compensation can be based on the cost per click, the cost per impression, the cost per action (such as a sign up fee or download fee) or if it is part of a flat fee sponsorship deal.

An ancillary CSIE is required if the affiliate marketer is paid based upon how much money a player deposits or the total number of bets the player makes, if there is a revenue share agreement between the affiliate and the gaming operator, or if there is a hybrid revenue share agreement based in part on how much money the player deposits or bets.

The letter goes on to state that DGE will require all affiliates to produce a monthly report detailing all compensation; and all compensation must be based on the contract that the affiliate provides to DGE. Affiliates may not receive compensation for business gained through contracts that are based outside of New Jersey.

DGE affirms in the letter that it recognizes the importance of affiliate marketers in promoting the growth of the internet gaming industry in New Jersey. Today’s letter will provide further guidance to affiliate marketers in the state’s iGaming industry as they continue to help the industry grow.

Ifrah Law

Ifrah Law is a passionate team of experts that understands the importance of listening to and addressing specific concerns of clients – when facing the heat of a federal investigation or the ire of a business competitor. Experience in complex cases related to online gambling and sports betting, internet marking and advertising, and white collar litigation.