Borgata Settles BetMGM iGaming Platform Violations With New Jersey Regulator

Posted on: August 22, 2024, 08:32h. 

Last updated on: August 22, 2024, 09:44h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Borgata Hotel Casino & Spa in Atlantic City has agreed to pay the New Jersey Division of Gaming Enforcement (DGE) $75K to settle a regulatory infraction incurred by the casino’s iGaming partner BetMGM.

Borgata Atlantic City BetMGM promo
BetMGM signage in the New Jersey Transit Secaucus train station. BetMGM and its partnered casino in Atlantic City, Borgata, have agreed to a $75K settlement to resolve regulatory violations regarding promotional credits. (Image: NJ.com)

The DGE told the casino operated by MGM Resorts International that a recent audit into BetMGM’s operations determined that the iGaming platform underpaid taxes due to overstating its promotional gaming credits, or PGCs.

The regulatory agency said that between October 2023 and May 2024, BetMGM overstated the amount of qualified credits it issued to online casino players by $4,564,515. That resulted in the internet casino underpaying its gaming taxes by $365,161.

Borgata was told it must pay the DGE the $365,161, plus an interest and tax penalty amounting to $33,272. Because this was the second time in 18 months that BetMGM overstated its PGCs, the DGE also concluded that a civil financial penalty was warranted.

$75K Settlement?

DGE Interim Director Mary Jo Flaherty told Borgata and BetMGM that PGCs only qualify for tax exemption when the credits are provided for free online slot machine play. Any associated winnings from the promotional credit must be available for immediate cashing out after the bonus is wagered one time.

In 2023, the DGE found that BetMGM had included promotional credits issued for interactive table games as qualified tax deductions.

In that audit, the DGE discovered that BetMGM overstated its promotional deductions by more than $9.8 million, which resulted in a tax underpayment of more than $787K. BetMGM paid the back tax and $127,345 in interest and penalties.

Flaherty said BetMGM’s second regulatory violation regarding PGCs in a year and a half is a matter the DGE views as “serious.” ?

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. The Division notes that the underpayment of taxes was remedied quickly in each case, and software fixes were deployed to correct the reporting errors with regard to PGCs,” Flaherty wrote in her action in lieu of complaint letter.

Flaherty said the division accepted Borgata’s offer to pay a civil penalty of $75K to settle the matter. DGE rules permit a civil penalty of up to $100K per violative instance against a casino licensee.?

iGaming Boom

While in-person play in Atlantic City has slowed this summer for the nine brick-and-mortar casinos, iGaming revenue continues to experience record growth.

Through six months, Borgata’s online casino operations ranked third in New Jersey’s iGaming market. The casino’s iGaming partners combined to win $257 million during the six months, with BetMGM accounting for the lion’s share at $132.57 million.

BetMGM has won nearly $130.7 million this year from its interactive slots and table games, and almost $1.9 million from online poker players via rake. The online haul doesn’t include revenue generated from internet sports betting.

Borgata’s online casino partners additionally include Borgata Casino, Party Casino, Wheel of Fortune Casino, and Stardust Casino.

Borgata’s physical casino floor is the richest in Atlantic City. Between January through June, Borgata’s retail gaming win totaled $351.8 million. Hard Rock was second at $262.2 million.