Sportsbook operators have come under fire in New Jersey after it was reported that some operators were offering bonuses to players that reversed withdrawals.
The New Jersey Division of Gaming Enforcement (NJDGE) has issued a warning to online operators in the state after a review found that several licensees were attempting to incentivize reverse withdrawals.
NJDGE issues warning
In a letter published on Wednesday, the NJDGE said it investigated the issue following several customer complaints. The state regulatory body said that it received a number of complaints from customers whose withdrawals were taking up to two weeks to be processed.
NJDGE Director David Rebuck said that some of the delays could be attributed to investigations into money laundering, identity theft or potential fraud. However, Rebuck noted that the volume of complaints prompted the regulator to review its licensees’ withdrawal policies.
The letter also noted that some customers reported that operators were contacting them and “encouraging or enticing them to reverse the withdrawal request and wager the funds.” Some customers also reported being offered bonuses if they reversed withdrawal requests which is prohibited by New Jersey’s regulations.
Under N.J.A.C. 13:69O-1.3(g) of the state’s sports wagering regulations withdrawals should only be delayed for legitimate reasons such as conducting money laundering checks.
Meanwhile, rule N.J.A.C. 13:69O-1.3(k) requires operators to update the balance of the operating accounts which hold customer money on a daily basis. The same is required for customer activity statements under N.J.A.C. 13:69O 1.3(j) requires the same for customer activity statements.
In the letter, the regulator said: “While no specific timeframe for processing a withdrawal is mandated, it is clear that the rules do not countenance unnecessary delay.”
On top of this, rule N.J.A.C. 13:69O-1.3(d) of the regulations, which outlines how customers can fund their accounts, does not include reverse withdrawals. The regulator has separate conditions on when reverse withdrawals are permitted.
The regulator said: “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.
“The Division has determined that the current rules, taken as a whole, prohibit the practice of soliciting, either overtly or covertly, the rescission or reversal of withdrawals once requested by a patron. The encouragement or incentivization of such rescissions are inconsistent with the intent of having speedy and consistent withdrawals, with a minimal delay solely for the purpose of checking for fraudulent activity.”
New Jersey’s regulator did, however, note that there are some circumstances where a withdrawal may be delayed for a legitimate reason and that these are not a “delaying tactic”, but rather an important know-your-customer check.”
The regulator did not name the operators who received complaints but warned that licensees that encourage customers to reverse withdrawals would face fines.
The regulator wrote: “Operators should clearly understand the Division will take regulatory action and impose civil penalties whenever patrons are improperly encouraged or incentivized to rescind their withdrawal requests to resume gaming activity.”
Reverse withdrawals and links to problem gambling
Although customers can still cancel withdrawal requests, there are valid concerns that this can be an indicator of problem gambling.
Industry experts, regulators and academics have voiced concerns over the ties between reverse withdrawals and gambling-related harms. In the UK, the Gambling Commission ordered online gambling operators to stop offering reverse withdrawals.
The Commission noted that reverse withdrawals were a marker for potential gambling harm and said that this view is supported by “academic research, lived experience and expert advice.”
New Jersey betting handle hits new record
This comes as New Jersey sportsbooks processed a record $996.3m in sports wagers in December 2020.
December’s handle marked a significant increase on the $931m wagered the month prior and an even larger increase on the $557.8m wagered on sports in December 2019.
In terms of New Jersey’s sports betting revenue, sportsbooks in the state generated $66.4m in combined revenue, representing a significant increase on the $50.6m generated in November.