Station Casinos will pay an $80,000 fine to Nevada gaming regulators to settle a two-count complaint over issues with the company’s sports wagering system that allowed the operator to accept online and mobile wagers on sporting events after they concluded.
The stipulation for settlement with the Nevada Gaming Control Board (NGCB) was filed on June 10 and was approved unanimously on Thursday (June 23) by the five-member Nevada Gaming Commission (NGC).
Station Casinos, which is the operating subsidiary of Red Rock Resorts, initially planned to contest the NGCB complaint first issued on September 13, 2021, which claimed the company accepted approximately 348 wagers on events with already known outcomes.
In its response to the complaint dated October 7, 2021, gaming attorney Marc Rubinstein wrote that the NGCB could not cite any specific violation of state regulations by Station Casinos.
Rubinstein, a partner with Reid Rubinstein & Bogatz, argued there was no “legitimate basis for the disciplinary action against Station” since neither customers nor the state were financially affected by the software issues.
He reminded commissioners Thursday that similar incidents had happened in the past to multiple Nevada licensees.
“We are settling the case because quite frankly from our point of view we felt vindicated in our initial position that a complaint should not have been filed and are settling this even though we think it is a really high number,” Rubinstein said of the $80,000 amount. “We are settling it for nuisance value because it would be very expensive to litigate.”
Commissioner Steven Cohen pushed back against the argument.
“It may not have been your problem, but you own it,” Cohen said, referencing Rubinstein's claim that the software issues did not cause any harm.
“Anytime there is a void of these wagers there is harm,” Cohen said. “We are here to protect the integrity of the system.”
NGC chairwoman Jennifer Togliatti said at the outset of Thursday’s 25-minute hearing that in her role she had participated in discovery disputes related to disciplinary matters, and she had to review some of the documents that were submitted as Station Casinos originally planned to contest the complaint.
“I had the occasion outside of the record to understand some of the issues in the case and some of the potential mitigation that Red Rock Resorts was potentially going to put forth,” Togliatti said.
“I’m going to say for the record that I don’t have any issues with the resolution of this matter in light of what I know and I’m going to support it.”
In the original complaint, the NGCB said when the company reported an issue to regulators, it blamed a malfunction caused by “insufficient server memory” related to software provided by Stadium Technology Group. The NGCB noted it had issued one regulation violation letter to Red Rock Resort in 2018 and two in 2019.
According to the complaint, regulators told the company it needed to have a redundant monitoring process in place to ensure wagers were not accepted on events where the outcome was already determined. The NGCB said the company failed to ensure that process was in place.
Station Casinos remains in the process of replacing its betting system with software developed by GAN Limited.
GAN announced an agreement in October to build out the company’s platform for retail sportsbooks, betting kiosks and the STN mobile app.
Rubinstein told the commission that Station Casinos is expecting to finish replacing the Stadium system within the next year to year-and-a-half.
“Part of the delay is that the provider has not yet been licensed in the state of Nevada,” Rubinstein said of GAN. “They are going through the process of getting their license as well as submitting their [platform] for approval for the first time in the state.”
He also assured the commission that Station will continue to monitor the system to make sure that no past-posting issues occur before the GAN system is installed.
“Obviously, the fact that we are entering into this stipulation voluntarily, we accepted culpability,” Rubinstein said.
“We have always accepted some culpability; our objection was always there are other folks that contributed to this, and we want everyone to recognize that.”
Rubinstein said it was not just Stadium's technology at fault but also those customers who knew the events were over and placed wagers anyway.
“They aren’t necessarily innocent either. And to some extent, again I don’t want to take on the [NGCB] and their relationship with Stadium … we felt could have done more as well to come up with a better remedy.”
In the original complaint, the control board said the illegal wagers took place over a three-year period.
The $80,000 fine approved Thursday was far less than previous fines issued by Nevada regulators for similar violations committed by the now-defunct CG Technology.
In 2018, the bookmaker was fined $2m, with $1.75m in penalties and $250,000 to the Nevada Council on Problem Gambling, to settle a four-count complaint filed by the NGCB. One of the counts was for accepting wagers on games and events that had already concluded.
CG Technology in July 2016 agreed to pay a $1.5m fine and Lee Amaitis, the company’s president and CEO, resigned as part of a settlement of similar charges.
“We always do look to the past for determining of what an appropriate fine is,” senior deputy attorney general John Michela told the commission on Thursday.
Michela said he was not aware of any other past-posting complaints other than those filed against CG Technology, adding that comparing CG Technology to Station Casinos “was apples to oranges.”