A software glitch has resulted in BetMGM being assessed a $146,000 fine by the Maryland Lottery and Gaming Control Commission, dwarfing the previous largest fine of $5,000.
BetMGM agreed to pay the Maryland fine on Thursday as part of a consent agreement with the state regulatory authority after admitting to an error that saw it inadvertently accept 146 live sports bets totaling just over $2,000 during a three-hour, pre-launch test on November 16.
Because the bets were allowed to be placed a week before the operator was officially granted a mobile license on November 23 for sports betting in Maryland to go live, BetMGM was liable for accepting wagers without a license.
In a video call with the Commission, Rhea Loney, BetMGM’s chief compliance officer, explained that a failure in the BetMGM app allowed bettors to enter the legal sports betting app and place wagers after completing their registration.
The app was supposed to re-direct customers to another web page containing a message that the online sports betting site would soon be taking bets on the site.
Loney said that once the company discovered the software error, the sportsbook was able to block further wagering and immediately began troubleshooting to correct the issue in cooperation with Maryland regulators.
The wagers were subsequently canceled, and the money was refunded to the customers' accounts, according to John Mooney, the Commission's chief regulator.
"This appears to be an inadvertent mistake, and it’s also the largest penalty we’ve issued to anyone," said Randy Marriner, chairman of the Commission, who also added that the snafu needed to "be taken seriously" nonetheless. Previously, the body had never levied a fine higher than $5,000.
The fine comes as an embarrassment to BetMGM, which was one of seven sportsbooks awarded mobile sports wagering licenses by Maryland on November 23.
The only commissioner who voted against approval of the fine and consent agreement, Harold Hodges, asked for the vote to be delayed pending further investigation.
“Even though it may be the largest penalty [ever assessed], I see that as no more powerful than a slap on the hand or wrist, frankly," said Hodges.
News of the $146,000 fine will do nothing to diminish the resounding success of mobile sports wagering in Maryland, however, which saw operators take in over $186 million in bets during the first eight days following the launch.
This amount was more than five times the total of $33 million in wagers that Maryland bettors placed at retail outlets during the entire month of November.
This is a reflection of the tremendous pent-up demand for online wagering that saw the state Sports Wagering Application Review Commission (SWARC) slow-walk the regulatory proceedings in spite of several complaints by outgoing Gov. Larry Hogan.
Pennsylvania also slaps BetMGM with fine
A day earlier on Wednesday, BetMGM also came in for added punishment from the Commonwealth of Pennsylvania, which levied a $7,500 fine against the sportsbook.
The fine was handed out 15 months after BetMGM accepted and paid out on wagers placed by users of its sportsbook app on the September 11, 2021, boxing match between Victor Belfort and Evander Holyfield. The bout was co-sponsored by former U.S. president Donald Trump who also served as a TV commentator during the fight, which saw Holyfield lose by TKO at 1:47 of Round 1.
Two days prior to the bout. the Pennsylvania Gaming Control Board (PGCB) had notified all operators licensed in the state that all bets on the fight were prohibited, largely due to the last-minute substitution of Holyfield for Oscar de la Hoya, who withdrew after contracting COVID. In spite of the ban, BetMGM mistakenly accepted a total of 76 wagers.
The fine assessed BetMGM marked the first violation by a sportsbook for unapproved wagers since legal sports wagering first launched in Pennsylvania four years ago. BetMGM officials attended the PGCB meeting in Harrisburg, PA, on Wednesday and apologized for the error.
Previous BetMGM violations in New Jersey and Ontario
The Maryland and Pennsylvania fines come on the heels of a previous $25,000 levy assessed BetMGM in New Jersey in March for accepting bets on college sports in violation of state rules.
BetMGM was fined for taking bets on a Metro Atlantic Athletic Conference tournament game between Niagara University and Marist College that was to be played in Atlantic City the next day and also for accepting bets on a Rutgers University game.
In addition, BetMGM was assessed a $48,000 penalty by Ontario's AGCO for violating marketing standards alongside rival operator PointsBet which was handed a C$30,000 fine.
U.S. and UK regulators have dished out far worse punishments in past
Fines dished out to sportsbooks are part of the cost of doing business when it comes to violations involving underage casino entrants or failure to reign in chronic gamblers. However, these fines pale in comparison to multi-million penalties that have previously been assessed against major sportsbooks and also against other companies in connection with the gaming industry.
In the U.S., the largest fine on record involving the gaming industry was the $31.5 million settlement that Microsoft, Google, and Yahoo reached with the federal government in relation to their promotion of illegal, offshore gambling in 2009,
In addition, The Sporting News agreed to pay a $7.2 million fine to the Department of Justice in order to settle charges related to accepting advertising from offshore books.
But as far as sportsbooks are concerned, DraftKings and FanDuel set a record when they each paid $1.3 million in fines as a settlement of a Massachusetts lawsuit brought by then-Attorney General and now Governor-elect Maura Healey. The fines were punishment for what was described as unfair and deceptive practices affecting fantasy sports consumers.
Entain hit with all-time record UK fine in August
U.S. sportsbooks might, however, consider themselves lucky that they are not subject to far sterner UK gaming regulations.
In August, Entain, which coincidentally owns 50% of BetMGM as a joint venture with MGM Resorts, was hit with the largest fine in British gambling history when the UK Gambling Commission levied a £17m penalty against the global gaming giant for regulatory failings across its online and retail businesses.
The operator has also had conditions added to its license and has been ordered to implement an improvement plan. The penalty comes in the wake of previous UK sportsbook fines that include 888 (£9.4m), LeoVegas (£1.32m), and Sky Bet (£1.17m).
