The future of Nevada sportsbook operator CG Technology was thrown into disarray Thursday after the Nevada Gaming Commission took an unusual move and unanimously rejected a stipulated agreement that would have settled disciplinary action with the troubled company.
Commissioners said during an hour-long hearing in Las Vegas that the $250,000 fine agreed upon with the Gaming Control Board was “too low” and the four-count complaint – the third such disciplinary action against the company in five years – amounted to a potential license “revocation.”
CG Technology CEO Parikshat Khanna (center at podium) answers questions from the Nevada Gaming Commission Thursday.
CG Technology operates the sportsbooks at seven Las Vegas Strip and Las Vegas-area casinos. The company will now have to renegotiate a settlement with the Gaming Control Board that could lead to a seven-figure fine or face a disciplinary hearing in front of the Gaming Commission, which could cost the company its license to operate in Nevada.
Senior Deputy Attorney General Michael Somps said it had been “eight or nine years” since the commission rejected a stipulated settlement between the control board and a licensee.
“I have zero appetite to move forward with this settlement with CG Technology,” Gaming Commission Chairman Tony Alamo said at the hearing, which was being viewed nationally because of the growth of legal sports betting.
“My comfort level with CG Technology is zero,” Alamo said before the commission voted 5-0 to reject the settlement. “The country is watching. Frankly, we are the gold standard. Our licenses go out and do the job in every state. They have to be perfect.”
CG Technology paid multi-million-dollar fines for previous disciplinary actions; $5.5 million in 2014 and $1.5 million in 2016, which led to the ouster of former CEO Lee Amaitis.
In a four-count complaint, CG Technology was accused between 2016 and 2017 of accepting multiple wagers on the company’s mobile betting application placed by customers outside Nevada – including from Maryland, Texas, Arizona and California; accepting bets on games and events that had already concluded, miscalculating payouts on single game and round robin parlay wagers, and incorrectly setting up a satellite sports betting station at an undisclosed casino’s Super Bowl party.
The Control Board said a mitigating circumstance for the amount of the fine was the company’s self-reporting of the missteps.
“I’m not at all impressed that they self-reported,” said Gaming Commission Member Philip Pro, a former federal judge. “That’s not a mitigating factor in my view. That’s what you’re supposed to do.”
Pro suggested the fine be at least $1.5 million “as a starting point.”
Gaming Commission Member John Moran Jr., who, along with Alamo, participated in all the CG Technology disciplinary settlements, said, “This is not a fine issue. It’s a revocation issue.”
Gaming Commission Member Deborah Fuetsch likened a third disciplinary complaint as being “called into the principal’s office three times.” Commission Member Sandra Morgan had “a lot of unanswered questions” and wasn’t willing to accept the settlement as written.
Following the hearing, Gaming Control Board Chairwoman Becky Harris said the commission was within its rights to make “an independent evaluation of what they think is appropriate.” She said the board would most likely reopen settlement discussions with CG Technology, based on the recommendations commissioners made during the hearing.
“I understand that it is not uncommon for the commission to disagree with the board’s settlement agreement,” Harris said. “While it was not unexpected, they are their own independent decision-making body and are free to do what they want.”
In the stipulated settlement, CG Technology agreed to transition within six months “to an unaffiliated third party’s sports pool wagering system.” All components that make up the company’s Cantor Sport Book have been “deemed permanently disapproved… and will not be considered for future approval” by gaming regulators.
Harris said CG Technologies is no longer bound to the settlement agreement.
The company will continue to operate the sportsbooks at the Venetian, Tropicana, Cosmopolitan of Las Vegas, M Resort, Palms, Hard Rock and Silverton.
CG Technology CEO Parikshat Khanna declined comment while leaving the hearing room after the vote. An employee of CG Technology since 2010, he became interim CEO following the departure of Amaitis and permanent CEO a year later.
Board members questioned Khanna on why a fix in the company’s technology was not utilized after the glitches were discovered that allowed bets from customers outside Nevada.
“It was deployed but it wasn’t properly deployed,” he said.
Attorney Mark Clayton, CG Technology’s outside legal counsel, told the commission there were changes in the “culture of the company” when the new CEO came aboard, a compliance officer was added, and a decision to move to a new wagering system was made “six to seven months before the disciplinary complaint was filed.”
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
