U.S. Operators Facing Fines As Sports Betting Expands

October 6, 2022
Although dollar figures have yet to approach the eight-figure fines in international jurisdictions, U.S. regulators continue to be active when it comes to sanctions for operators in the rapidly expanding sports-betting market.


Although dollar figures have yet to approach the eight-figure fines in international jurisdictions, U.S. regulators continue to be active when it comes to sanctions for operators in the rapidly expanding sports-betting market.

State gaming regulators in Iowa, Indiana, and South Dakota handed out hundreds of thousands in fines last week, with South Dakota also revoking the license of one casino operator for accepting proxy wagers on sports events through an employee.

The South Dakota Commission on Gaming revoked the retail gaming license and the sports wagering license of Mustang Sally’s, a sports bar in the town of Deadwood where casino gaming is permitted in South Dakota.

“Starting on or about September 2021, Toby Keehn, owner of Mustang Sally’s, has placed and had others place on his behalf numerous sports wagers on multiple occasions,” the complaint against the facility read. “Additionally, Toby Keehn has extended credit to at least one individual.”

Keehn admitted to the violations during a hearing held by the commission last week, where they also apologized to the commission, according to South Dakota TV station KELO.

In neighboring Iowa, the Iowa Racing and Gaming Commission reached stipulated agreements last week with three more operators who accepted credit card deposits as part of a failure that affected nine sports-betting operators overall.

BetMGM and ELITE Sportsbook were both fined $60,000, while Hard Rock Sportsbook was fined $20,000, over a failure to prevent players from depositing into their accounts through credit card transactions that involved payment providers Sightline Payments and Worldpay.

Caesars and FanDuel were both fined over the same issue in July and August.

“In July of 2021, two different Iowa advance deposit sports wagering operators reported to the commission that their payment technology provider, Sightline, allowed deposits into its system via credit card,” according to the commission’s stipulation agreements.

“Sightline stated that Worldpay, Sightline's acquirer who controls their credit restrictions, failed to properly restrict credit transactions due to incorrect coding in their system.”

Separately, the Indiana Gaming Commission imposed more than $293,000 in fines on 16 different companies for a variety of infractions that included failure to withhold winnings for delinquent child support, underage gambling, occupational licensing violations, self-exclusion violations, and accepting wagers on unauthorized sporting events.

During a webinar presented by SBC on Wednesday (October 5), Ron Kammerzell, a former regulator with the Colorado Division of Gaming who now runs his own consulting firm, highlighted a June fine for Worldpay in Colorado where the company operated without a license for 13 days because its vendor license had expired.

Worldpay was fined $130,000 accordingly and Kammerzell said that simple compliance mistakes like that were more common than many would expect.

“It really highlights that, you know, companies have single points of failure, and for routine types of compliance issues, sometimes there's not very high visibility within the organization, particularly at the management level, and that needs to change,” Kammerzell said.

For Maria Cobos, head of compliance for USAbility, it is essential that companies use technology properly to help avoid administrative missteps.

“It also is important to have a centralized tool to control these activities as the company grows and is expanding [into] more and more jurisdictions meaning more and more licenses need to be maintained,” Cobos said.

“So there must be an automated, collaborative like a single source of truth document control repository for the whole organization that's transparent and visible to the management who can support those activities.”

“This is basic compliance 101, the minor fines that we’re talking about, but if you can’t get those right at the early stages of regulatory introduction, then you really are probably going to struggle as we go down the line,” added Peter Murray, head of gaming for identity verification company Veriff.

The panel also pointed to advertising regulations in Ontario, Canada, as an example that some North American regulators are looking to be more proactive than reactive, as some had in the past.

“In the old days, it would be we're going to wait until we get a complaint from a patron, and then we're going to investigate it and we might expand that investigation,” Kammerzell said.

“But I think now there are tools for the regulator to be monitoring that much more easily in a proactive sense, so you're starting to see more and more proactive monitoring, and that might also be driving some of these fines that we're seeing because the regulators are out there looking for this,” he added.

“I look at it from the point of view that the reason the regulators are now engaged on it is a failure at sort of our end,” Murray said. “There's a level of responsibility that comes with the industry, from an operator's perspective.”

Murray added that the heavy advertising climates present a negative image that will ultimately lead to tighter regulation.

“The U.S. is just a great example at the moment of, let’s look at all the mistakes of all the areas that have been laser-like focused from everywhere else and completely ignore it,” Murray said.

“I think there's a level of responsibility and a level of restraint, because we've seen it time and time again that if we don't head down that route of taking control of this ourselves, it will be taken from us, we will get the regulation we deserve if we don't put some sort of brakes on this,” he added.

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