Posted on: December 19, 2022, 10:43h.
Last updated on: December 19, 2022, 11:35h.
BetMGM has been hit with the first regulatory fine in Maryland for online sports betting operations that allegedly fell outside of the state’s governing conditions.
More than two years ago, Maryland voters passed a ballot referendum that amended the state constitution to allow online and in-person gambling on sports. But internet operations only began last month on Nov. 23.
BetMGM received a state-issued online sportsbook operating license from the Maryland Sports Wagering Application Review Commission (SWARC) on Nov. 22. The license was issued in anticipation of the Nov. 23 launch. But BetMGM’s mobile application allegedly took some bets early.
The Maryland Lottery and Gaming Commission (MLGC) and BetMGM subsequently agreed to a $146,000 fine to settle the discrepancy. Under the consent agreement, BetMGM did not admit or deny fault, but waived its rights to a judicial or administrative review.
“If a licensee violates a provision of the Sports Wagering Law, a regulation promulgated by the Commission, or a directive of the Commission or the Director of the Agency, the Commission is authorized to, after a hearing, take action against a licensee that may include suspension or revocation of a license, and levying a civil penalty for each violation,” the consent order explained about the financial penalty.
Maryland’s sports betting law also provides the MLGC with the power to require licensees found to be non-compliant to take other enforcement actions, including ordering a corrective action plan, a reprimand, or imposition of a condition on a license. But the commission may also agree with a licensee to resolve a violation through a financial settlement, which was the case in the BetMGM early bets matter.
Bets Began on Nov. 16
The MLGC in the consent order said the BetMGM app wrongly began taking live sports bets in Maryland as early as Nov. 16 — a full week before state gaming regulators allowed such remote action to be facilitated.
The Agency notified BetMGM of alleged violations of the Sports Wagering Law for accepting live sports wagers on November 16, 2022, through its mobile platform, without being authorized or licensed to do so. The Notice of Alleged Violations asserted that this conduct violated multiple provisions of the Sports Wagering Law and regulations,” the MLGC order explained.
The MLGC added that the settlement “does not constitute an admission or denial by either party that a violation of law or regulation occurred.”
However, BetMGM users shared on Twitter that their bets placed before Nov. 23 were refunded by the sportsbook and their accounts were issued $50 in credit.
Cost of Doing Business
Few industries are regulated as strictly as gaming. Online sportsbook operators have become accustomed to paying large fines in the event of regulatory shortcomings and operational discrepancies.
The hefty fines — while a drop in the bucket for major casino and sports betting giants like BetMGM and the digital gaming unit’s parent company MGM Resorts — have rendered the emerging sports betting space undesirable for smaller operators. And that could dampen Maryland’s ambition to assure that its sports betting industry is inclusive.
After Maryland’s cannabis licenses went to predominantly white-owned businesses nearly a decade ago, state lawmakers sought to create a more diverse industry through its authorization of sports betting. The initial sports wagering law required that SWARC take steps to give preferential treatment to sportsbook applicants from entities that are owned and/or have diverse leaders in key roles.
But after a third-party disparity analysis dragged on for months, state lawmakers and Gov. Larry Hogan (R) called on SWARC to expedite its process to allow online wagering to begin as quickly as possible.
With the legislature’s blessing, SWARC amended its protocols to exclude an applicant’s diversity makeup from the commission’s review. Instead, each licensed sportsbook must regularly inform the state on an annual basis about its diversity numbers and present plans to increase inclusiveness.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
