Borgata Fines $75,000 By DGE For Overstating iGaming Promo Credit On BetMGM Platform
The New Jersey Bureau of Gaming and Enforcement (DGE) has fined Bogata Casino $75,000 following an audit that found it significantly overstated the iGaming promotional game credit (PGC) on its BetMGM platform. This latest breach, identified between October 2023 and May 2024, resulted in the casino understating gross revenue by more than $4.5 million, understating gross revenue tax by $365,161. Borgata's second major breach in 18 months: This is the second time in less than 18 months that Bogata has been found to have violated DGE's regulations regarding PGC. In March 2023, DGE found a similar issue with Bogata achieving nearly $10 million in promotional credits, resulting in significant underpayment of over $787,000 in taxes. The recurrence of these significant errors has prompted DGE to take stricter action against casinos. In DGE's audit report on July 10, 2024, it was noted that PGCs were overvalued in recent cases due to software upgrades on the BetMGM platform. The upgrade allowed promotional credits to be deducted for amounts exceeding bonuses paid to players by mistake. DGE emphasized that charging PGCs in excess of actual bonus amounts is a direct violation of the New Jersey Gaming Act, specifically N.J.S.A. 5:12-38a, which stipulates that such credits can only be issued as bets by sponsors and reported if they have received them (pdf), as stated in NJDGE's move on August 15. In a letter to Borgata's senior vice president and legal adviser, Patrick Madamba, DGE's interim director, expressed serious concern about the recurring nature of the breach, as reported by SBC Americas. "The department takes this issue seriously. The original breach was an undercount of nearly $10 million in gross revenue. This second undercount of gross revenue was more than $4.5 million. This undercount resulted in an valuation of additional taxes, tax fines, and more than $1.3 million in interest. It should also be taken into account that this was repeated less than 18 months after the department warned that further violations of this type could result in civil fines," Flaherty wrote. Flaherty highlighted that while underpayments were immediately corrected in both cases, a recurrence of such errors immediately after previous breaches could lead to further regulatory action. DGE's audit results, published on July 10, 2024, made clear that further violations could result in more serious penalties, including higher fines or other sanctions. DGE's extensive enforcement actions: Borgata and iGaming partner BetMGM are not the only operators that have faced fines from DGE in recent months. In July 2024, DraftKings was fined $100,000 for a significant reporting error that led to three months of sports betting tax returns. These errors involved overstating parry bets and understating other betting categories, which resulted in inaccurate tax returns. In addition, in early August 2024, DGE issued a bet365 order to pay New Jersey Better more than $500,000. The guidance follows an investigation that found Sportsbook to have altered its odds on events without notifying DGE, affecting 199 winning bets placed between December 2020 and November 2022. DGE labeled these actions as part of a "long-term and unacceptable course of action."