NJ DGE confirms negotiations with PayPal for Online Poker Payments

Earlier this month, the word around the water cooler was that PayPal, the world’s largest and most respected internet payment service provider, was eyeing up the US online gambling industry, particularly in New Jersey. The NJ Division of Gaming Enforcement (DGE) confirmed those rumors this week, revealing that the regulator is already in talks with PayPal representatives. Once the payment processing company is granted a license in the Garden State, it will mark the first time in over 10 years that PayPal has accepted online poker payments in any US jurisdiction.

The addition of PayPal to the New Jersey online poker scene would be a tremendous relief for online gamblers in the state. In the last 10 months, ever since New Jersey first opened its virtual doors to real money online poker and casino gaming in mid-November 2013, one of the most common complaints from customers has been related to the lack and inadequacies of financial transfers. Being the most trusted brand in the payment processing industry, PayPal’s impact on the NJ iGaming market should be a positive one, and a substantial one at that.

In the early years of the industry, PayPal was the top providers of online payment services for online poker, casino, sportsbook and bingo gamers. Due to ambiguous laws on the matter of internet gambling, PayPal voluntarily withdrew from the global online gambling market in 2003. From there, companies like Neteller and Skrill (formerly Moneybookers) overtook the top spots. It wasn’t until 2010 that PayPal finally made the decision to once more accept payments related to real money gambling over the internet, but with a strict clause that only residents of jurisdictions where iGaming was expressly legalized would be permitted to use the service for that purpose, and only at websites properly licensed by appropriate, authoritative regulators.

Confirmation of PayPal’s intention to enter the New Jersey online poker market came by way of a Tweet from Chris Krafcik of Gambling Compliance, who said “DGE confirmed yesterday it was in licensing discussions with PayPal.” In reference to Nevada’s online poker market, Krafcik also commented that, “GCB [Nevada’s Gambling Control Board] said PP [PayPal] is not currently a license applicant.”

According to a letter written by Jeanette Blanco from the PayPal, Inc. Legal Department to the Federal Reserve Bank of Cleveland in December of 2013, PayPal maintains more than 50 million active, registered user accounts in the US alone. The letter also spoke of PayPal’s intense security and fraud detection measures. According to Blanco, PayPal’s Risk Management Team includes “130 software engineers, analysts and other technical staff focused on developing science, technology and strategies to aid in detecting and preventing fraud”.

PayPal’s re-entry into the US online poker and casino market could have a resounding effect on the industry as a whole. Not only is it likely to become the most preferred means of making iGaming deposits and withdrawals in New Jersey, PayPal’s presence could coerce existing payment processors into improving their product, attract new processing brands to the market and even help boost an expansion of internet gambling regulation across the country by elevating the sense of security for both users and regulators.

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