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New Jersey gambling regulator continued its recent trend of issuing significant monetary fines or ordering licensees to reimburse patrons for violations of the state’s gambling regulations, issuing a $75,000 fine to Borgata Casino.
The New Jersey Division of Gaming Enforcement (DGE) issued the fine due to a $4.56m overstatement of BetMGM’s promotional gaming credits (PGCs), which resulted in an underpayment of gross online gambling revenue tax through the June 2023 tax filing.
“We identified that the reports … related to the BetMGM internet gaming platform from October 2023 through May 2023 included internet gaming promotional gaming credit deductions that did not comply” with the DGE’s guidance, Mary Jo Flaherty, interim director of the DGE, wrote in an action in lieu of complaint released Monday (August 19).
Interest and tax penalties of $15,014 and $18,258, respectively, were assessed in a July 5, 2024 audit letter.
The enforcement action against Borgata was the second substantial penalty that Flaherty and her staff have issued this month.
On August 6, the DGE released a complaint in which it ordered bet365 to reimburse $519,323 to 119 New Jersey customers after an audit found the sports-betting operator revised odds to already concluded bets that were placed with “obvious errors”, without prior regulatory approval.
In June, DraftKings agreed to a $100,000 penalty for reporting inaccurate sports-betting data to the state.
It is the second such incident for Borgata in less than 18 months. The Borgata, which is operated by MGM Resorts International, agreed to the fine.
The first incident was on March 27, 2023, when a DGE audit found Borgata had overstated its iGaming promotional gaming credits by $9.84m, resulting in an underpayment of taxes of more than $787,000.
In addition, a letter issued to Borgata following the first incident was intended to serve as a reminder to the casino and BetMGM of the requirements related to iGaming’s PGCs and the need for DGE approval before any deductions are taken.
In the first violation, the DGE did not issue a fine, and therefore only the $787,000 in gross revenue tax, $87,968 in interest and $39,377 in penalties were paid.
“Should there be future violations of the regulatory requirements associated with Internet gaming PGCs, the division may take additional action, including monetary penalties,” the agency warned in 2023.
Flaherty notified Patrick Madamba, senior vice president and legal counsel at the Borgata, of the fine in a three-page letter. BetMGM operates iGaming and sports betting in partnership with the Borgata.
“The division views this matter as serious,” Flaherty wrote. “The original violation was an understatement of gross revenue by almost $10m. This second understatement of gross revenue was in an amount of over $4.5 million.”
These understatements resulted in the assessment of additional taxes, tax penalties and interest of more than $1.3m, according to the DGE.
“The fact that this conduct was repeated less than 18 months after the division warned an additional violation of this type could result in a civil penalty is also to be considered,” Flaherty wrote.
The March 2023 finding was based on the improper inclusion of certain table game bonuses in the calculation of promotional gaming credits. The July 2024 finding was based on a software upgrade by BetMGM, which had the consequence of deducting PGCs in an amount greater than the amount of bonuses awarded.
“Accordingly, claiming PGCs in excess of the amount of the bonus issued is a clear violation of the statute,” Flaherty wrote. “Moreover, in the division's July 10, 2024, audit findings and assessment correspondence, it set forth that it may take additional regulatory action in this matter, including monetary penalties, in that this was the second violation in this PGC area that resulted in a significant gross revenue tax, tax penalty and interest assessment.”
Flaherty noted that the “underpayment of taxes was remedied quickly in each case, and software fixes were deployed to correct the reporting errors with regard to promotional gaming credits.”
