NGCB hits CG Technology with 6-count complaint

May 19, 2016 11:58 AM

Nevada gaming regulators have accused CG Technology (CGT) of a series of violations, including underpaying winners, accepting bets after a match and knowingly withholding information even after authorities warned them two years ago to stay out of trouble following a record $5.5 million settlement involving a separate illegal sports betting case.

The company was hit with a six-count complaint filed by the Nevada Gaming Control Board on Monday. It has 30 days to formally respond to the state.

CGT runs seven area sportsbooks, including at the Cosmopolitan, Venetian and Tropicana casinos on the Strip, as well as the M, Hard Rock, Palms and Silverton casinos.

State regulators began investigating CGT's operations in March 2015, after a Silverton Casino patron reported he had been underpaid on a winning round-robin parlay wager. He said he had been eventually paid in full after he complained to the operator but it was the fifth time he had experienced such an error.

Silverton is not subjected to the disciplinary complaint.

State regulators say they discovered that that incident represented a known, "recurring and company-wide error" that could be traced back to August 2011, when the company began using its "Cantor Sports Book" computerized bookmaking system.

Software glitches could miscalculate winnings, but CG Technology expanded the system's use in 2014. The state said that move resulted in an increase of incorrect payouts, including 20,000 underpaid winning bets totaling $700,000, and 11,000 overpayments totaling $100,000. The state was also underpaid in associated gambling taxes and fees as a result of the overpayments.

The state's complaint also said CGT "effectively ignored" the thousands of bettors who were shortchanged on their winning bets but weren't aware or didn't complain about it, adding: "Only after the (regulators) initiated its investigation did (the company) take steps to identify all parlay wagers and patrons affected" by its software issue. The company took steps to correct the problem after the initial Silverton report in March 2015.

Also noted were instances of CG Technology accepting bets after a sports event was over, including for a mixed martial arts match in January 2016 and a boxing match in May 2015.

During the investigation, the state also reports the company and its leaders didn't fully cooperate. CG Technology's conduct, the state says, "constitutes a failure to comply with ... all federal, state and local laws and regulations" for licensed gambling in Nevada.

The state's Gaming Control Board acts as both the regulators and prosecutors who investigate and file complaints for disciplinary action against gambling operation license holders. The cases are brought to the Nevada Gaming Commission, whose members serve as the judge and jury in determining action, including license revocation.

In 2014, the Commission fined CG Technology $5.5 million, the largest settlement of its kind in state history, for failing to adequately supervise its former sportsbook director Mike Colbert, who was involved in a nationwide illegal sports betting ring. CG Technology, known then as Cantor Gaming, didn't directly admit guilt to the charges, but acknowledged regulators could have proved them and said at the time it had improved its internal checks and balances.

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