July 21, 2016 - 3:28 pm
CG Technology, a sports book manager at seven Las Vegas casinos, would be fined $1.5 million and required to establish an escrow account to pay bettors who were shorted in the calculation of player winnings under a stipulation agreed to Wednesday by the state Gaming Control Board and the company.
In addition, CG Technology President and CEO Lee Amaitis is being forced to resign, effective Aug. 31, under terms of the settlement.
The settlement must be approved by the five-member Nevada Gaming Commission, which is expected to take up the matter at its July 28 meeting.
CG Technology, formerly known as Cantor Sports Book, was accused in a Control Board complaint in May of underpaying bettors by more than $700,000 on an estimated 20,000 wagers.
CG admitted the company’s software miscalculated payouts, and that they failed to notify patrons and the board of the miscalculations in a timely manner, but they denied not cooperating in the Control Board’s investigation, admitting there was sufficient evidence to warrant a settlement.
“Public confidence and trust can only be maintained by strict gaming regulation,” Control Board Chairman A.G. Burnett said in a statement. “The board will not tolerate improper or incorrect payments to patrons by gaming licensees, and therefore takes this matter extremely seriously. This settlement contains several harsh punishments and requirements for remediation that reflect those concerns.”
CG Technology also overpaid about 11,000 bets a total of $100,000 because of a computer software glitch that the company didn’t fix for years. The company never notified gamblers of the problem in paying out some parlays.
CG Technology manages race and sports books at the M Resort, the Hard Rock Hotel, Tropicana, The Cosmopolitan of Las Vegas, The Venetian, the Palms and the Silverton. The casinos lease space to CG Technology and have management agreements to split profits but are not subject to disciplinary action.
ESCROW ACCOUNT ADVISED
The stipulation that will be considered by the Gaming Commission orders that CG establish a $25,000 escrow account to pay claims of individuals who can establish that, between August 2011 and March 2015, they were underpaid by the company on a winning single or round-robin parlay wager and who have not already been paid.
CG will be required to notify potential winners with seven consecutive days of newspaper advertising twice in the next year. The claims period will last a year from the commission’s approval and any remaining money in the escrow account would be donated to the Nevada Council on Problem Gambling.
The stipulation also orders that CG hire an independent third party to evaluate the company’s wagering software for a year with written reports from the consultant after two weeks, six months and a year.
The order doesn’t prevent individual bettors from filing civil lawsuits against the company.
Amaitis, 66, has been a driving force for CG, a subsidiary of the Cantor Fitzgerald investment company that developed sports wagering software similar to what stock brokers use for electronic trading. Amaitis is credited with rebuilding Cantor Fitzgerald, which had offices in the World Trade Center when terrorists attacked Sept. 11, 2001, killing 658 Cantor employees.
The state stipulation requires that Amaitis’ successor submit a licensing application within 30 days of the commission ruling.
A spokeswoman for CG had no comment on the naming of a potential successor. The company is terming Amaitis’ departure as a retirement.
The Control Board’s action was the second time the state has sought to discipline the company over failures within its Cantor Sports Book computerized bookmaking system. Two years ago, the Nevada Gaming Commission warned CG Technology that any future complaints could prompt a license revocation.
REPORTS OF REPEATED UNDERPAYMENTS
The Control Board’s six-count complaint said an enforcement division agent responded to a concern at the Silverton in March 2015 from a gambler who said he was underpaid on a winning round-robin parlay wager. The player told the agent he was correctly paid after pointing out the error but that it was the fifth time he had been underpaid on that type of bet.
The board’s investigation found recurring incorrect payments on various winning parlay wagers and that companywide errors occurred for several years because of software issues known by the company.
The company began operating a computerized bookmaking system known as Cantor Sports Book for its mobile sports wagering in August 2011, the complaint said, and the company miscalculated winning parlay bets for several years.
In April 2014 the company expanded the system beyond mobile gaming and began using the software for counter wagers, but gamblers continued to be incorrectly paid. CG Technology only paid the correct amount to gamblers who brought the error to the company’s attention and made no effort to contact bettors about the miscalculated winnings, the complaint said.
The complaint said CG Technology “effectively ignored a group of several thousand patrons who had won their parlay wagers but who had underpaid their winnings and left responsibility to those patrons to bring an underpayment to the attention of (the company).” The complaint said the company took steps to identify all parlay wagers and patrons affected by the software issue only after the board investigation started. The board issued an industrywide notice in February 2010 about the software issue.
The Review-Journal is owned by the family of Sheldon Adelson, chairman and CEO of Las Vegas Sands Corp., which operates The Venetian.
Contact Richard N. Velotta at email@example.com or 702-477-3893. Find him on Twitter: @RickVelotta
FIRST FINE A RECORD
When CG Technology was disciplined by gaming regulators in January 2014, the company settled and paid a $5.5 million fine, the largest ever imposed by Nevada regulators.
In that case, an 18-count complaint said the sports betting company should have known that Michael Colbert, its former director of risk management and vice president, was accepting illegal wagers and acting as an agent to recruit bettors.
Colbert pleaded guilty in New York federal court in August 2013 to a single felony charge of conspiracy in connection with his role in a nationwide illegal bookmaking ring.
Regulators accused the company of failing to supervise an employee sufficiently to prevent criminal activity violating Nevada gaming regulations.
In the settlement, CG Technology neither admitted nor denied the complaint’s first four allegations but agreed the Control Board “could prove by a preponderance of the evidence” that the company might have been found guilty at a hearing.