Pennsylvania Fines Penn $147,500 Over Fraudulent Accounts, Underage Gaming

February 22, 2024
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Penn Entertainment will pay a significant fine after reporting hundreds of fraudulent wagering accounts were created in Pennsylvania on its former Barstool iGaming and sportsbook platforms, as well as its Hollywood Casino platform.
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Penn Entertainment will pay a significant fine after reporting hundreds of fraudulent wagering accounts were created in Pennsylvania on its former Barstool iGaming and sportsbook platforms, as well as its Hollywood Casino platform.

The Pennsylvania Gaming Control Board (PGCB) approved two separate fines for Penn on Wednesday (February 21) totaling $147,500, including $97,500 for insufficient know your customer (KYC) protocols that allowed the multiple accounts to be opened.

The remaining $50,000 was for three incidents of underage gambling at its Hollywood Casino York property.

John Crohe, senior enforcement counsel with the PGCB’s Office of Enforcement Counsel (OEC), told the control board that Penn had failed to have sufficient procedures in place to prevent fraudulent behavior.

Crohe also cited the company’s “insufficient KYC protocols for allowing access to create and use of multiple accounts by individuals.”

A 16-page consent agreement and settlement stipulation released Wednesday included five counts that involved some 34 individuals opening 765 accounts, with 611 of those accounts completing the identification verification process.

According to count one, Penn Interactive Ventures notified the PGCB’s Bureau of Gaming Operations of a large number of incidents of stolen identities and credit cards being used to open and deposit money into Barstool iGaming accounts.

Penn also reported that those responsible for the fraud scheme were able to withdraw a portion of deposited funds into bank accounts they controlled.

A subsequent investigation by state gaming agents confirmed Penn Interactive’s report that between December 9, 2020 and March 18, 2021, 29 people attempted to create 339 Barstool iGaming accounts using stolen identities. A total of 11 individuals also created Barstool accounts in their name. 

No wagering occurred on any of the 339 accounts.

Of the 277 accounts that completed the Barstool iGaming identification verification process, 234 accounts were funded by one or more payment instruments. In total, those responsible for creating the accounts made 965 deposits among the 234 accounts for a total of $223,563.

The people responsible for the fraudulent accounts were able to make 98 withdrawals totaling $81,396.

“All withdrawals were made to bank accounts that were not in the name of the Barstool iGaming platform account holder,” the complaint found.

Penn noted that its Hollywood Casino successfully blocked additional fraudulent attempts to open Barstool accounts and withdraw the remaining $142,167, and made sure all credit and debit card holders whose information was stolen were made whole.

Before its unanimous vote to approve the settlement, the PGCB held an executive session on Tuesday to allow Penn Interactive to inform the control board of the breaches and what has been done to prevent similar incidents going forward without divulging confidential information.

“I think, as you heard yesterday in our confidential hearing, Penn Entertainment ... takes very seriously the security of our interactive gaming sites,” said Adrian King Jr., co-practice leader of law firm Ballard Spahr’s gaming group who represented Penn.

“In this case, we were subject to some fraudulent activity,” he added.

King reminded the PGCB that the company took steps in “real time while this conduct was occurring to stop it.”

“We have since made very, very significant investments in procedures, in equipment, in personnel, to maintain the security of our interactive gaming websites.”

The $97,500 penalty is the largest levied against an online sportsbook or casino operator since the launch of the Pennsylvania market in 2019, according to Vixio GamblingCompliance's Enforcement Tracker. Penn was previously fined $57,500 for allowing wagering by self-excluded individuals via the Barstool and Hollywood Casino platforms.

On Wednesday, the seven-member control board also approved a $65,000 settlement and fine against Sugarhouse HSP Gaming for failure to meet minimum security staffing requirements for 40 days at the Rivers Philadelphia Casino.

Rivers Philadelphia also failed to provide timely notification of a voucher theft to both onsite PGCB staff and the Pennsylvania State Police.

Michael Roland, senior enforcement counsel with the OEC, explained that on September 18, 2022, an unidentified patron claimed he dropped his slot voucher on the casino floor, and a review of surveillance footage showed him dropping the voucher in line at the casino cage.

An unidentified man was noticed entering the line and picking up the voucher, cashing the voucher at the cage and then exiting the casino. The voucher was for $444.95.

Roland said the “male patron who cashed the voucher was never identified.” Although casino security was notified of the incident by the patron, Rivers Philadelphia did not notify authorities for two days.

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