Borgata’s Recurring Issues with Promo Credit Reporting
The New Jersey Division of Gaming Enforcement (DGE) has imposed a $75,000 fine on Borgata Casino following an audit that uncovered significant discrepancies in the reporting of iGaming promotional gaming credits (PGCs) on the BetMGM platform. The audit, covering the period from October 2023 to May 2024, revealed that Borgata had overstated its PGCs by over $4.5 million, leading to an underpayment of $365,161 in gross revenue taxes.
This fine marks the second time in less than 18 months that Borgata has faced penalties for similar violations, raising concerns over the casino’s compliance with state regulations.
Second Violation in 18 Months
Borgata’s latest infraction echoes a previous issue in March 2023, when the DGE discovered that the casino had overstated its iGaming promo credits by nearly $10 million, resulting in an underpayment of over $787,000 in taxes. The recurrence of such a significant error within a short timeframe has led the DGE to take more stringent action.
In a letter addressed 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. “The Division views this matter as serious,” Flaherty wrote, emphasizing the gravity of the situation. The DGE’s July 10, 2024, audit report pointed out that the overstatement was due to a software upgrade on the BetMGM platform, which inadvertently allowed for the deduction of promo credits in amounts exceeding the bonuses awarded to players. The DGE stressed that such discrepancies are a clear violation of New Jersey’s gaming laws.
Despite Borgata’s swift correction of the underpayments, the repeated violations have prompted the DGE to consider additional regulatory actions. Flaherty noted that the original violation resulted in the assessment of additional taxes, penalties, and interest totaling over $1.3 million. The DGE’s audit findings make it clear that further violations could lead to more severe penalties.
Wider Enforcement 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. Additionally, earlier in August 2024, the DGE ordered bet365 to pay over half a million dollars to New Jersey bettors following an investigation that found the sportsbook had been altering odds on events without notifying the DGE.
The DGE’s actions reflect a broader effort to enforce strict compliance with gaming regulations, particularly in the rapidly growing online gambling sector. As the industry continues to expand, operators are under increasing scrutiny to ensure accurate reporting and adherence to state laws.
The recurring issues with Borgata and other operators highlight the challenges the industry faces in maintaining compliance and the significant financial consequences of failing to do so.
