The New Jersey Division of Gaming Enforcement (DGE) has fined Borgata Casino $75,000 following an audit that revealed significant overstatements of iGaming promotional gaming credits (PGCs) on the BetMGM platform. This recent violation, identified between October 2023 and May 2024, resulted in the casino understating its gross revenue by over $4.5 million, leading to an underpayment of $365,161 in gross revenue taxes.

Borgata’s second major violation in 18 months:

This marks the second time in less than 18 months that Borgata has been found in violation of the DGE’s regulations concerning PGCs. In March 2023, the DGE uncovered a similar issue where Borgata had overstated its promo credits by nearly $10 million, resulting in a substantial underpayment of over $787,000 in taxes. The recurrence of such a significant error has prompted the DGE to take more stringent action against the casino.

In the DGE’s July 10, 2024 audit report, it was noted that the overstatement of PGCs in the latest case was due to a software upgrade on the BetMGM platform. This upgrade inadvertently allowed for the deduction of promo credits in amounts exceeding the bonuses awarded to players. The DGE emphasized that claiming PGCs in excess of the actual bonus amount is a direct violation of New Jersey’s gaming laws, specifically N.J.S.A. 5:12-38a, which mandates that such credits can only be reported if they were issued and received as a wager by the patron, as stated in NJDGE director actions on August 15 (pdf).

In a letter to Borgata’s Senior Vice President and Legal Counsel, Patrick Madamba, DGE Interim Director Mary Jo Flaherty expressed serious concerns over the repeated nature of these violations, as SBC Americas reports. “The Division views this matter as serious. “The original violation was an understatement of gross revenue by almost $10 million. This second understatement of gross revenue was in an amount of over $4.5 million. These understatements resulted in the assessment of additional taxes, tax penalties and interest of over $1.3 million. The fact that this conduct was repeated less than 18 months after the Division warned an additional violation of this type could result in a civil penalty is also to be considered,” Flaherty wrote.

Flaherty highlighted that while the underpayments were corrected promptly in both instances, the recurrence of such errors so soon after the previous violation could lead to additional regulatory actions. The DGE’s audit findings from July 10, 2024, make it clear that further violations could result in more severe penalties, including higher fines or other sanctions.

Broader enforcement actions by the DGE:

Borgata and its iGaming partner BetMGM are not the only operators to have faced penalties from the DGE in recent months. In July 2024, DraftKings was fined $100,000 for significant reporting errors that led to incorrect sports betting tax returns over a three-month period. These errors involved overstating parlay bets and understating other wager categories, which resulted in inaccurate tax filings.

Additionally, earlier in August 2024, the DGE ordered bet365 to pay over half a million dollars to New Jersey bettors. This directive followed an investigation that found the sportsbook had been altering odds on events without notifying the DGE, affecting 199 winning wagers placed between December 2020 and November 2022. The DGE labeled these actions as part of a “prolonged and unacceptable course of conduct.”