BetMGM Mishap Leads to $25k in New Jersey Fines

Posted on: March 24, 2022, 09:11h. 

Last updated on: March 24, 2022, 09:30h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Last year, BetMGM took a small amount of wagers on New Jersey college basketball teams. But the state prohibits bets on games involving local universities, leading to a fine for the gaming operator.

BetMGM New Jersey
The BetMGM sporstbook at the Borgata Atlantic City. The operator is being fined $25,000 for taking bets on New Jersey college games. (Image: Covers.com)

State law prohibits sportsbook operators from accepting wagers on colleges located there, as well as NCAA games taking place in the state. Recently released documents from the New Jersey Division of Gaming Enforcement (NJDGE) indicate that in March 2021, BetMGM ran afoul of that regulation to the tune of less than $100 in accepted bets, leading to a $25,000 penalty.

NJDGE says the gaming company accepted a bet on a game involving Rutgers University, which is located in New Jersey. It also took two small wagers on March 10, 2021 on a Metro Atlantic Athletic Conference tournament game between Niagara University and Marist College that was played in Atlantic City.

The regulatory agency also noted that MGM Resorts International blamed Entain Plc for the mishap. That company is the technology provider for BetMGM, and as such, is supposed to check things such as the location of Rutgers. MGM and Entain are 50/50 partners on BetMGM.

Human, Tech Errors

NJDGE adds that Entains trading unit didn’t spot the mistake, even though those staffers are required to verify game locations when wagers come in. BetMGM has an automated system for that, but it was supposedly down at the time the aforementioned wagers were placed.

After the bets were offered, a BetMGM employee caught the error on the Marist/Niagra game, voided the wagers, and returned cash to bettors.

The Rutgers game misstep stems from BetMGM offering a pre-made parlay involving the Scarlet Knights to New Jersey. That mistake was caught and rectified after just $30 in bets came in on that offering. NJDGE said the error was made by an Entain staffer working in Australia who likely wasn’t familiar with Rutgers and the school’s location.

It’s not clear if the fine is a source of tension between MGM and Entain. However, it’s widely known that the casino operator would like to gain full control of BetMGM. Additionally, Entain overtly said its relationship with BetMGM was one of the reasons why merger talks with DraftKings fell apart last year.

Still Potential Issue in New Jersey

New Jersey had a chance to avoid similar issues from popping up down the road. Last November, a ballot question that would have allowed betting on colleges in the state was put to voters. It was resoundingly defeated by a 57% to 43% margin.

Currently, 17 of the 30 states with regulated sports betting permit wagers on in-state universities. Delaware and New York, which border New Jersey, do not. But Maryland and Pennsylvania do.

With New Jersey ranking as one of the top states in terms of sports betting handle, it’s hard to say allowing bets on local colleges is needed to boost revenue. Conversely, with St. Peter’s — a New Jersey university — on a surprising NCAA Tournament run, it’s safe to say the state and sportsbook operators are missing out on some revenue due to the aforementioned ban on betting on universities in the state.