BetMGM Early Bets in Maryland Result in $146K Fine

Posted on: December 19, 2022, 10:43h. 

Last updated on: December 19, 2022, 11:42h.

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.

BetMGM fined Maryland sports betting
A letter from BetMGM informs bettors who were wrongly allowed to place sports bets in Maryland before Nov. 23, 2022, that their wager has been refunded and a $50 credit has additionally been applied to the player’s account. BetMGM settled the regulatory infraction with the state for $146K. (Image: BetMGM)

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. Internet operations only began last month on November 23.

BetMGM received a state-issued online sportsbook operating license from the Maryland Sports Wagering Application Review Commission (SWARC) on November 22. The license was issued in anticipation of the November 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 $146K fine to settle the discrepancy. Under the consent agreement, BetMGM didn’t 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. 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 November 16

In its consent order, the MLGC said the BetMGM app wrongly began taking live sports bets in Maryland as early as November 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 Nov. 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.”

BetMGM users shared on Twitter that their bets placed before November 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. 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.

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.