This has also been the case in Nevada. It's an imperfect system, and regulators would rather be overly cautious than let people outside a state's borders gamble online.
http://www.igamingbusiness.com/news/...-state-borders“Unfortunately for some people, there may not be sufficient verification that they are in New Jersey, even if they are, and they'll be denied,” New Jersey’s DGE’s director, David Rebuck, said.