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The Colorado Limited Gaming Control Commission has approved one of the largest enforcement penalties in the almost five years since the federal ban on sports betting was overturned by the U.S. Supreme Court permitting legalization of wagering outside of Nevada.
The five-member commission voted unanimously on Thursday (February 16) to accept a $400,000 settlement from Monarch Casino and Resort, after executives from the company’s Black Hawk casino discovered and self-reported that three now-terminated employees were placing a series of proxy bets on behalf of customers.
Proxy wagering, in which a person other than the account holder places a sports bet for a customer, is illegal in Colorado.
According to the stipulation and agreement, an investigation by state gaming regulators found that 79 proxy wagers totaling almost $61,000 were placed for 11 different customers from January 2021 to June 2022.
All but 19 wagers were placed online through the BetMonarch mobile app, including those made by gamblers out-of-state. The other bets were made at the casino’s sportsbook.
Richard Nathan, chairman of the Colorado Limited Gaming Control Commission, praised Monarch for self-reporting the violations and taking steps to correct them, but described the settlement as reasonable given the regulatory failings that took place.
Half of the $400,000 fine would be held in abeyance for a period of two years and payable only in the event of additional compliance failings.
“The last thing we want is another $200,000,” Nathan said. “It is not what we want. We want you to be successful.”
Monarch’s fine of $400,000 represents one of the largest penalties issued by U.S. gaming regulators for a sports-betting violation.
On Wednesday (February 15), the Ohio Casino Control Commission (OCCC) approved the largest penalty in the post-Professional and Amateur Sports Protection Act (PASPA) era, with two fines for DraftKings that amounted to a combined $500,000.
DraftKings was fined $150,000, because of advertising that did not contain clear and conspicuous messaging about problem gambling services and mentioned “free” or “risk-free” promotions that involved wagering real money. A larger penalty of $350,000 was applied for mailing ads addressed to residents under 21.
Meanwhile, the fine against Reno-based Monarch is the largest ever issued against a licensed casino operator in Colorado, which legalized land-based gaming in 1991 in the communities of Black Hawk, Central City and Cripple Creek.
Michelle Shriver, corporate vice president of operations and interim general manager at Black Hawk casino, assured the Commission on Thursday that “compliance is an integral part of our work at Monarch.”
Shriver said the company was “shocked and utterly disappointed” with the three employees who violated internal controls, policies and state regulations.
The employees responsible for the proxy betting scheme were Nicholas Epstein, a sportsbook manager, Brian Lopez, a sportsbook lead, and Ted Kilgore, a sportsbook lead. They were all promptly suspended and later terminated, according to the settlement.
Among the incidents documented in the report, agents with the Colorado Division of Gaming finding that Epstein and Kilgore placed a $2,000 proxy bet for an unnamed customer, after the patron texted Epstein stating they forgot their account password and asking Epstein to place the wager on the Boston Celtics.
“Kilgore sent Epstein two unknown photographs and texted ‘done and locked away,’” the report said.
Monarch operates its own sports-betting business at its casinos in Black Hawk (Colorado), and the Atlantis in Reno, Nevada.
As part of the settlement, the company also agreed to upgrade its geolocation systems and internal controls, and to train all employees on anti-money laundering compliance and state regulations.
Shriver noted that the problems occurred with cell phone usage, which has been banned from the sportsbook.
Colorado’s Gaming Director To Retire
Dan Hartman, director of Colorado’s Division of Gaming, announced Thursday that he will retire on May 1 after more than three decades as a state employee.
“I think it’s time to move on,” Hartman told the Commission. “I’m looking forward to the next chapter of whatever I do.”
The state is in the process of conducting a nationwide search to find Hartman’s replacement. The director is responsible for overseeing casino gaming, sports betting, fantasy sports, compliance, licensure and maintaining and developing new regulations.
In addition to casino gaming, retail and mobile sports betting, Colorado has licensed horseracing and off-track betting parlors. Hartman’s retirement will come on the third anniversary of the launch of sports betting in Colorado.
Cashless in Colorado
Also on Thursday, the commission unanimously approved cashless gaming regulations, after agreeing on minor changes to the proposal that is part of Rule 12 of the state’s gaming regulations, which oversees gaming devices and equipment.
The next step is for the regulations to be sent to the state attorney general’s office, which has 20 days to review them before issuing an opinion. That opinion and the regulations will then be forwarded to the secretary of state’s office, where they will be published for 30 to 60 days before becoming official.
Hartman expects the cashless gaming regulations to become official sometime in April.
He said they brought the rules forward in December “because we thought we should.” At that meeting, the proposed regulations were then tabled to allow for additional stakeholder meetings.
“It is one of those things that moves the gaming industry forward here in Colorado,” Hartman said of cashless gaming.
One of the minor changes approved Thursday was to remove the words FinCEN and Bank Secrecy Act from a sentence, and replace them with state and federal.
The new sentence reads: “Licensees that allow players to use a cashless gaming system must establish internal control minimum procedures to comply with ‘state and federal’ requirements [related to anti-money laundering]."
Hartman said he expects additional changes to the regulations over the next few years as cashless technology changes.
