David Rebuck interview: The fight continues

d Rebuck talks to David Cook about the many battles he continues to face in expanding the New Jersey gaming market

David Rebuck’s time as director of the New Jersey Division of Gaming Enforcement (DGE) has been very eventful. From witnessing annual decline after annual decline in gaming revenue and casino closures, to the introduction of i-gaming and various legislative issues, no other US state seems to come close to New Jersey in terms of the level of attention placed on it by the gaming industry. Despite the sports-betting saga that never seems to go away, as well as the dilemma of daily fantasy sports and the impending entrance of PokerStars following a long investigation, little seems to be putting Rebuck off his stride just yet.

What did you learn about the gaming industry in your 23 years as New Jersey’s deputy attorney general before becoming director of the DGE?
I had very little experience working with the DGE as a deputy attorney general in the Attorney General’s office. My assignments were not specifically tied to the DGE. Before I was a deputy attorney general, my background was in higher education administration. I was assistant to the president of a public university. I had no experience dealing with gaming issues. My first real in-depth interaction with gaming issues in New Jersey came about when I joined Governor Chris Christie’s staff after he was elected Governor in late 2010. A massive piece of legislation that was passed into law by the state in 2011 with bipartisan support from both parties completely changed the method of regulating the gambling industry in Atlantic City. It gave remedial powers to the director at that time to begin the process of changing the methodology for working with the industry, keeping strict regulation and allowing for opportunities for innovation and growth, which really hadn’t been implemented prior to 2011. I was assigned in May 2011 and they said to go down there and implement what they wanted to have done by our statute. That’s what I’ve been doing since.

How surprised have you been by the decline in the Atlantic City casino market?
I was more optimistic when I first started. I really felt that we had an opportunity to stop the decline and to stabilise the market. My goal at the time was to try to save as many of the casinos as we could. At that time, there were 11. We actually added one in my early stage and then in 2014 we began the process of seeing first hand that some of the weaker institutions were not able to compete and be successful. I was definitely more optimistic than I probably should have been, but I do believe that we are taking more steps as a state than any other region or any other state in the US to provide the tools to allow for new and innovative gaming that doesn’t exist any place else in the US. I do believe the market has stabilised. When you add all gaming revenue generated, we’ve pretty much flat-lined. It has not improved significantly. I do not anticipate that it will, unless we are successful in some of the actions that we’re taking in New Jersey, the biggest one obviously being sports-wagering litigation.

What are the chances that sports betting could still be legalised in New Jersey?
Every step of the way, we lost. We lost ‘Christie I’ at the district level and we lost at the appellate level. We came close, as we had a 2-1 decision go against us at the appellate level. However, I am more optimistic today than ever, and that’s for one reason: after the Christie II decision, we made an application to the entire appellate division to hear the case en banc. En banc means it will be heard by all appellate judges in the division. Generally, those applications are rejected pretty much out of hand. We were advised a while back that the Third Circuit will hear the case en banc. That is probably the first time that we had a small victory in our efforts to date. Will that transpire to a win? I don’t know, but it certainly allows for dialogue and a briefing before the entire Third Circuit, which is unusual.

How has the performance of the New Jersey real-money i-gaming market compared with your expectations when the market launched in 2013?
I didn’t have any idea what it would be. We would rely on experts who gave us their opinions, but I had no idea. My goal as a regulator was initially less to do with how much money was going to be made, but to make sure it got off the ground and ran without any major meltdowns or catastrophes, and work out how people could actually use this and play this type of game in New Jersey. We did have some growing pains over the first few months and certainly maybe the first six months, but now that it has ironed out, I feel that we’re doing pretty good. We never had that great meltdown, disaster, catastrophe or scandal that was being predicted. The underage kids were not playing on their cell phones at the age of 10. The fraud protection devices worked fairly well. For those where we had suspicion of fraud, we have criminal investigations going on. That’s common in any business where you have financial transactions, but there has been nothing exorbitant in the number of cases.

What is the possibility that New Jersey could share player liquidity with other US states or other countries?
We continue to have dialogue with Nevada and Delaware. They have a separate liquidity agreement that has some impediments for New Jersey, because of our law that means we can’t really just jump into it and agree to it. Nevada’s been very open in its dialogue with us about trying to figure out how we get around those. Then there’s the question: does New Jersey expand liquidity by moving across our borders to other jurisdictions where it is legal, such as the UK? I’m not opposed to that. You don’t usually see states in the US enter into international agreements, but I’m not going to reject it out of hand. I’ve had dialogue with the UK officials and others. We’ve got to take that dialogue further and see if there’s a real possibility.

Even with a new owner and despite being ordered to part company with four connected executives, how fair is it to allow PokerStars and Full Tilt to return to a market they operated in illegally?
I know there are people out there who read the report and feel that the actions that the state and I took are inappropriate, but I also believe that for all the reasons I stated in that report that those criticisms are unfounded and we move forward. If any of the companies that we’ve licensed, including Amaya, go astray, then we’ll deal with them accordingly.

What are the chances New Jersey could regulate the daily fantasy sports market?
In 2013, the DGE already authorised our casinos to engage in fantasy sports play.
We have regulations on the daily fantasy sports side and have authorised our casinos to engage in that action. They have not chosen to do so. I don’t know why. I guess it’s primarily because they didn’t have the desire and they did not enter into partnerships with the operators like FanDuel, DraftKings and other smaller brands. At this point in time, no-one here in New Jersey has taken action to shut down the fantasy sports operators.

Chris Christie has said that fantasy sports are not gambling. Where do you stand on whether this should or should not class as gambling?
I agree 100% with the Governor of the state of New Jersey. I find him always right in everything he says [laughs]. We should not be diverted and taken away from our number one issue of the expansion of gambling in New Jersey. That’s the one we’re focused on. If we lose that again, and we’ll know soon, because that hearing could probably be in the next 90 days, then we’ll adapt and see what’s next on our horizon. Some of the stunts they [FanDuel and DraftKings] were accused of, such as insider trading, well shame on them. But if they defrauded their customers, then our protection laws in the state of New Jersey are some of the strongest in the US, and there’s ample opportunity for our citizens to file complaints or cases against them for violations of consumer protection laws.

What will be the other key issues you have to address in the coming months and years?
Winning sports gambling is one case. If we win that, here’s the next case we have to win: change the sports wagering prohibition to allow for sports wagering to be performed on the internet. If we lose sports wagering, then I don’t have to worry about it, because we’re never going to do it. To me, if you’re allowed to have sports wagering in the state of New Jersey, then the next action by the state of New Jersey will be to authorise our citizens to have sports wagering offered through the internet - legally and regulated.

This article appears in the January/February 'CEO Special' edition of Gambling Insider magazine