Latest Gambling News: FinCEN Fines California Cardroom $900,000, and more

Catch up on six of the stories our gambling compliance analysts have covered lately, and stay up-to-date on the latest news.

FinCEN Fines California Cardroom $900,000

A 22-table cardroom in southern California has agreed to a $900,000 civil penalty issued by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) for violations of the Bank Secrecy Act (BSA).

As part of its resolution with FinCEN, Lake Elsinore Casino admitted to violating BSA regulations, including failing to implement and maintain an effective anti-money laundering (AML) program, and failing to file currency transaction reports (CTRs) and suspicious activity reports (SARs).

According to a consent order released Wednesday (October 23), Lake Elsinore’s AML violations continued for more than four and a half years and were the result of decisions made by the card club’s management.

“Lake Elsinore operated for years without the most basic AML controls, putting its customers and the U.S. financial system at risk and denying law enforcement information on suspicious activity,” said FinCEN’s director Andrea Gacki in a statement.

Gacki also said the action was a reminder that all financial institutions must comply with their obligations under the BSA and FinCEN’s regulations. Lake Elsinore Casino is located in a city some 75 miles southeast of downtown Los Angeles.

The consent order was the first resolution of the charges alongside those of the California Department of Justice Bureau of Gambling Control, according to FinCEN.

Tennessee Sanctions Bovada Over Illegal Betting

The Tennessee Sports Wagering Council (SWC) has imposed a $50,000 fine against Bovada after the offshore sportsbook operator failed to comply with a cease-and-desist order delivered to its registered address in Curaçao.

Regulatory officials were subsequently able to place wagers with Bovada from within Tennessee on three separate occasions, resulting in the accumulation of $50,000 in applicable penalties, the SWC said in a statement published on Wednesday (October 23).

The Tennessee regulator also said it was “working closely with its network of law enforcement at the state and federal level to eradicate illegal sportsbooks such as Bovada and others”.

Bovada has recently withdrawn from around a dozen U.S. states, most recently Massachusetts, after receiving cease-and-desist notices. Tennessee is the first state to announce a penalty against the operator for non-compliance with such an order.

Live! Casino Philadelphia Fined $50,000

The Pennsylvania Gaming Control Board (PGCB) approved a consent agreement and $50,000 fine for Live! Casino and Hotel in Philadelphia on Wednesday (October 23) for allowing four individuals on the board’s self-exclusion list to gamble in the casino.

According to state gaming regulations, a casino must identify self-excluded patrons and refuse to allow them to gamble, as well as other gaming-related activities such as the cashing of checks or cash advances.

John Crohe, senior enforcement counsel for the PGCB, said among the four incidents was an individual identified as “HE” who was able to gamble for 55 minutes between December 15 and December 16, 2021, buying in for a total of $36,900 at an undisclosed game.

Crohe said the incident was discovered during an internal report process following the creation of a duplicate players club account. While on the exclusion list, Crohe said, “HE” received a players club card and comps in the form of $3,000 in matched play coupons and tickets to a Philadelphia Eagles football game.

Tom Diehl, vice president of legal affairs for Live! Casino in Philadelphia, confirmed the four incidents but told board members that there was also a “list of remedial actions that we have taken since these events occurred in 2021 and 2022.”

Diehl said the casino had also changed the system used for signing up new players to club accounts and implemented a new duplicate report that helps the casino identify any inadvertent duplicate accounts.

Sportradar Acquires XLMedia’s North American Assets

Sportradar has agreed to acquire XLMedia’s North American business for up to $30m in cash.

XLMedia, a London-based digital media company, said Monday (October 21) that following the deal’s completion, which is expected shortly after the company’s shareholder meeting on November 7, it will become a cash shell entity focused on distributing the proceeds from the North America and previously announced Europe and Cana asset disposals.

The deals generated $72.5m in cash before costs and liabilities.

“While it was confident that the U.S. market would provide long term success for a larger organization, the board believes XLMedia’s current scale on a standalone basis could impact its ability to compete in the evolving U.S. market,” the company said in a statement.

The company’s North America business generated $27.5m in revenue for 2023 and $5.5m in estimated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). XLMedia will receive $20m in cash and an extra $10m payable in April subject to performance.

“In an ongoing commitment to maximize shareholder value, following the Europe disposal, the board is pleased to have reached an agreement to sell the North America business to Sportradar pending shareholder approval,” said Marcus Rich, chairman of XLMedia.

Rich said the company anticipates an initial distribution from the net proceeds to shareholders before the end 2024.

Montenegro Hails Tax Reforms

Following a change in Montenegro’s gambling tax rates, the country’s budget revenues from gambling rose by some 81.7 percent year-on-year to reach more than €24.2m for the period of January to September 2024, the Administration for Games of Chance said in a statement.

The agency said that the improved revenues confirm the logic behind the amendments introduced to the Montenegrin law on games of chance from January 1.

“Please note that, owing the amendments to the law on games of chance from January 1, 2024, the application of the taxation of the variable part of the concession fee for the organisation of games of chance via the Internet and other telecommunication means has been initiated, and total revenues in this segment alone amount to €8,632,760.82, as of September 2024,” according to the statement.

During the same period, the Montenegrin state’s tax revenues from casinos rose by a robust 107.9 percent, reaching close to €3.87m.

In addition to this, between January and September the state secured tax revenues of around €7.12m from bookmakers. This result represented an increase of around 5.9 percent compared with the same period a year earlier.

Brazil Supreme Court Set To Rule On State Lottery Restrictions

Brazil’s Federal Supreme Court (STF) is likely to strike down specific provisions of a December 2023 online betting law that aim to restrict state-authorised betting or lottery offerings, based on a non-binding opinion published on Friday (October 18).

The governors of São Paulo, Rio de Janeiro and five other states filed a legal challenge in May to contest two provisions that prevent operators of fixed-odds betting or other lottery games from obtaining a licence or concession from more than one state, or from advertising beyond the borders of the state where they are licensed.

In a 26-page opinion, presiding judge Luiz Fux said both provisions violated were unconstitutional, in part because they improperly restrict the ability of states to compete with the federal government in the operation of lottery games.

The full bench of 11 justices did not get the opportunity on Friday to vote on whether to adopt Fux’s opinion, as one judge requested a postponement. A final ruling is now expected on October 25, according to the STF's website.

The case is one of several pending with Brazil’s top court related to online betting.

A leading Brazilian retail association is separately challenging the entirety of Law 14.790 of December 2023, while the state of Rio de Janeiro and the federal government are contesting Rio's authority to authorise operators to accept bets beyond the state's borders.

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