Maryland regulators wasted no time cracking down on errant sportsbook operators.
The Maryland Lottery and Gaming Control Commission met Thursday to discuss violations made by BetMGM before launching its sportsbook app in the state and to reprimand the operator for its mistakes.
BetMGM fined for taking bets before Maryland launch
Prior to BetMGM’s official controlled demonstration in Maryland, the operator inadvertently allowed 146 wagers to be placed. This occurred on Nov. 16 — more than one week prior to the official launch of Maryland online sports betting on Nov. 23.
BetMGM representatives blamed the issue on human error that occurred while configuring their beta website during testing prior to launching BetMGM Sportsbook Maryland.
John Mooney, Managing Director of Regulatory Oversight for the Maryland Lottery gave a synopsis of the issue and offered a proposed resolution.
“The beta site is built to mimic the production website and that change inadvertently allowed real players access to the sportsbook page after successfully registering an account and making a first-time deposit. BetMGM worked with GeoComply and had the Maryland inclusion zone turned off there by ensuring that all geolocation checks would fail if the players were outside the state of Maryland. Additionally, BetMGM voided 146 of the 146 wagers that were placed during the incident’s duration. The results were the player stakes being returned to their wallets as if the wagers had never been made with the exception of a single patron who had been able to withdraw their winnings the total of which included their stake. BetMGM has agreed to resolve these violations by entering into a consent agreement with the commission in the amount of $146,000.”
Since BetMGM inadvertently permitted 146 wagers to be placed on its app, the operator thus incurs a $146,000 fine. MLGCC Chair Randy Marriner specified how they came to this proposed number:
“$146,000; that is $1,000 per errant bet.”
$146K fine is slap on wrist to major sportsbooks
Put simply, BetMGM accidentally debuted its online sportsbook to Maryland before successfully passing controlled demonstration tests. For a company as massive and established as BetMGM, their mistakes seem almost negligent rather than malicious. To make matters worse, the meager $146,000 fine levied against them is loose change for a company worth over $14 billion.
MLGCC Commissioner Harold Hodges raised this point during the meeting:
“This, as you said Mr. Chair, is a very serious matter. We have an entity that violated . . . commission rules; a very critical one.”
Hodges continued, saying that he viewed the punishment as an especially light one. He voiced concern that letting such a massive company off with such a small fine could open up the Commission to similar issues in the future.
“From my perspective, my first question is whether we have penalties for violating our rules. I do not see $146,000 — even if it is the largest penalty that we have levied against a company — I see that as no more powerful than slapping their hand or on the wrist frankly. I guess my concern is, number one, that we send a signal out that we are supposed to be governing that this is unacceptable, and I am not sure $146,000 does that.”
Hodges pointed out that there are two issues at play and recommended a different punishment than the proposed $146,000 consent agreement.
“Also, from what I understand, there are two things that this company, BetMGM, did that were really wrong. First, they of course accepted wagers before being issued a license by us, but also they seemed to go out with an IT product that was not proven first . . . I am thinking there should be penalty on that alone. And then, if that is the case, what security implications are there for going out early? I think we, in my opinion, step back as a commission and actually table any decisions on what to do. I do not agree the settlement does it and I am frankly opposed to it. I think if anything, their license should be withdrawn until we look at it and think, ‘what can we do system wide so this does not happen again?’.”
BetMGM fine is largest Maryland Lottery penalty to date
Despite his salient points, Hodges received pushback from his own commission. Members proceeded to point out that $146,000 is by far the biggest punishment levied by the agency to date. Moreover, it appeared that everyone involved learned their lesson.
“I can tell you that the amount of the settlement agreement; the largest settlement agreement prior to this was $5,000. I can tell you the agency is not taking it lightly what had happened. I do not believe BetMGM is taking it lightly. That is why you can see the chief of compliance is on the screen here with some of their technical people. They are taking it very seriously also.”
After that initial statement by Hodges and the follow-up by Mooney, Marriner gave his input on the nature of the mistake and his view of the fine being levied against BetMGM.
“This appears to be an inadvertent mistake, but it is also the largest penalty we have issued to anyone . . . It is a serious mistake.”
Following the views shared by Commission members, Chief Compliance Officer Rhea Loney spoke on behalf of BetMGM in an attempt to quell concerns.
“First, we do take this very seriously. I want to ensure the commission that as soon as we were notified as to this issue that we acted immediately. We worked closely with GeoComply to ensure that any wagering available prior to launch on authorization was stopped immediately. We worked also with the commission to get a report to you all and launched an investigation — a technical investigation — to determine why this occurred.”
“We have implemented measures to ensure in additional state launches that this will never occur again. This has never occurred in any of BetMGM’s prior launches in any states. This is an isolated occurrence for BetMGM. As you mentioned, it was 146 wagers over a three-hour period of time so we did immediately, as soon as we were notified, stop that, remedy it, launch a full technical investigation, and the following day we were able to provide a report on what occurred on the technical side and provide and explain explanation the configuration change that allowed this to occur.”
Given the mammoth size of these gaming companies, the efficacy of this fine remains up for debate. The Commission majority, however, is betting on this being an isolated incident, putting its money on forgiveness rather than overt governance.