In a highly unusual move, the Nevada Gaming Commission (NGC) on Thursday refused to accept a stipulated settlement as proposed by the Nevada Gaming Control Board (GCB) to resolve troubled sports betting operator CG Technology.
The five-member commission unanimously rejected a proposed settlement presented by GCB, the investigatory arm of the NGC, to punish CG Technology over multiple statutory violations.
While not a rubber-stamp, the Gaming Commission usually accepts the Gaming Control Board’s proposal with only minor adjustments and often a severe public reprimand of the offending licensee.
In rejecting a proposed $250,000 fine and requirement that the company outsource its bookmaking technology within six months, the commission balked at the offer’s sufficiency, noting the cost of the investigation, pegged at about $1 million by Commissioner John Moran, was far more than the proposed fine.
Three Visits to the Principal’s Office
As a bookmaking company, CG Technology has been in hot water before, paying fines of $5.5 million in 2014 and $1.5 million in 2016 for transgressions that including accepting illegal wagers and assisting an illegal online sports betting operation. In 2016, the NGC strongly considered license revocation for the company and required CEO Lee Amaitis to be removed.
On Thursday, Commissioner Deborah Fuetsch reminded CG Technology CEO Parikshat Khanna, “You’ve been called to the principal’s office three times. When do we draw the line? When does this kid not get to come back to school?”
NGC Chairman Tony Alamo said the fine should be at least the size of the $1.5 million fine imposed on CG Technology in 2016, if not a “multiple” higher. “I have zero appetite to move forward on this agreement,” Alamo said.
These gaming violations included illegal actions such as accepting out-of-state wagers, taking bets on games after the games were complete, and either underpaying or overpaying winners. The company also took improper bets at a Super Bowl party when the wrong lines were displayed on a terminal.
The only saving grace that most believe accounted for the proposed wrist-slap of a fine was that CG Technology, ordered to hire a compliance official in 2016, was that the company self-reported the latest round of offenses.
The rejected settlement additionally required CG Technology to “maintain and implement” new internal controls and quarterly employee training, both monitored by regulators to prevent future violations.
Time to Sell the Company?
CG Technology operates sportsbooks in Las Vegas at The Venetian, Palazzo, Cosmopolitan, Palms, Hard Rock, Tropicana, Silverton, and M Resort, and also accepts wagers through its mobile app anywhere in Nevada. The Las Vegas-based company is a subsidiary of Cantor Fiztgerald, a major, worldwide financial services firm headquartered in New York City.
CG Technology did not comment on the settlement rejection, and now has 30 days to rework the settlement agreement with the GCB.
Speaking on the condition of anonymity, a veteran industry observer with many years of legal experience in Nevada and numerous appearances before both the board and the commission told 997655.com, “The rejection of the earlier settlement is a clear message to CG Technology to sell the company.”
He called the settlement rejection “very surprising” and even if a new, multi-million dollar fine is part of a new agreement, the GCB may still prefer CG Technology find a buyer.
