Ya Done Messed Up A-A-Ron
BetMGM took more than 15,000 illegal wagers in Massachusetts and regulators have questions. Is FanDuel (partly) responsible for a Jaguars employee to gambling away stolen funds?
The Bulletin Board
NEWS: BetMGM faces regulatory scrutiny after accepting 15,000 illegal bets in Massachusetts.
QUICK HITTER: DraftKings accuses its former VIP Head of stealing secrets and running off to Fanatics ahead of the Super Bowl.
LEGISLATIVE ROUNDUP: Movement in Mississippi; Amended NY iCasino bill; Sports betting and poker on the table in Hawaii.
NEWS: Competing legislation in Virginia pits skill games vs. VGTs.
VIEWS: Who’s at fault? Jaguars want FanDuel to reimburse them for an employee’s theft to cover gambling losses.
AROUND the WATERCOOLER: The online poker legend that is Isildur1.
STRAY THOUGHTS: Room for everyone.
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BetMGM Finds Itself In Hot Water With MA Regulators
The Massachusetts Gaming Commission is known for its willingness to discuss the mundane. It seemed like it was occurring during a meeting on Thursday when the regulatory body looked at a $10 and a $2 SGP where one leg involved in-state schools, which violated Massachusetts sports betting law.
And then the third case came up. According to the MGC, BetMGM booked 15,000 SGPs that included college football player props, which is also illegal under Massachusetts law. The total amount wagered was over $200,000.
Not only is this the biggest violation to date, but unlike previous violations, BetMGM didn’t self-report the error. It was discovered during an audit by the MGC’s Sports Wagering Division.
“Hats off to our sports wagering team for some auditing work that caught this, as opposed to some self-reporting,” Commissioner Eileen O’Brien said. O’Brien called for an adjudicatory hearing due to the breadth (15,000 wagers totaling over $200,000) and because it is a statutory violation and not a violation of a regulatory rule.
It will be interesting to see how the MGC handles this. It could issue a small, large, or gigantic fine, temporarily suspend BetMGM’s license, or even permanently revoke the license. So far, sportsbooks have received slaps on the wrist for violations from the MGC, but there haven’t been any violations of this magnitude.
Quick Hitter: DraftKings Accuses Former-VIP Exec of Stealing Secrets
In one of the wilder court filings I’ve seen in this space, DraftKings has filed a civil suit against its now-former head of VIP operations, Michael Hermalyn, alleging he violated his non-compete agreement and “hatched a secret plan over the past year to steal and use confidential information, solicit customers and employees and join a key competitor, Fanatics.”
The story was broken by Front Office Sports and is a must-read, and stick around until the end for a separate lawsuit with similar allegations against Fanatics filed by Panini America. Panini alleges Fanatics “launched a raid of Panini employees and tortiously interfered with those employees’ contracts with Panini.”
Hermalyn has filed a suit of his own over what it claims are illegal restrictive covenants that “improperly constrain Mr. Hermalyn from pursuing a lawful profession of his choosing with Fanatics VIP in California and to improperly restrict Fanatics VIP from employing him.”
I’ll offer up some thoughts on VIP services in this week’s feature column.
Legislative Roundup: MS Mobile Bill Advances; NY’s Amended iCasino Bill; HI Considers Sports and Poker
The Mississippi Mobile Sports Wagering Act passed the House in a lopsided 97-14 vote on Thursday. The bill will now head over to the Senate, likely facing stiffer opposition.
New York State Sen. Joseph Addabbo isn’t giving up on legalizing online casinos. As reported by Play NY, there are several new amendments to his bill, including a required affidavit from operators to use union employees and the ability to enter into interstate online poker agreements.
Sports betting and online poker are both on the table in Hawaii. HB 2765 would legalize mobile betting in the state. SB 3376 would create an online poker and sports betting monopoly. This is not the first time Hawaii has considered removing itself from the ranks of non-gambling states. Previous efforts have gone nowhere, and 2024 isn’t expected to be different.
Virginia Has a Skill Game and a VGT Bill
In October, the Virginia Supreme Court overruled a lower court decision and reinstated a 2020 Virginia law that prohibits skill games. Following the negative ruling, skill game supporters have returned to the drawing board and are backing a new bill to legalize the machines.
Skill games is a term for a slot-like gambling device with a skill component. These machines are typically placed in convenience stores and bars and often reside in a legally gray area. That has led several states, including Virginia, to address their legality.
The new bill (SB 212) was introduced by State Sen. Aaron Rouse and is co-sponsored by Louise Lucas, the chair of the Senate Finance Committee. It also has the support of Pace-O-Matic, which produces and distributes the machines, and small businesses where the devices are or would be located.
Per Rouse, the measure would produce up to $200 million in tax revenue.
“Our bill will re-establish the ABC [Virginia Alcoholic Beverage Control Authority] as the regulatory authority, limit the number of machines to five in ABC licensed facilities and 10 in truck stops, and set a 15% tax rate for skills games,” Rouse said.
There is also a second piece of legislation (SB 307) that would legalize VGTs in Virginia - slot-like games that do not possess a skill component.
The VGT bill, sponsored by State Sen. Jeremy McPike, is more expansive but doesn’t have the high-level support of Rouse’s skill game bill. It’s still worth keeping an eye on.
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Jags Want FanDuel To Pay Up
The Jacksonville Jaguars are pointing the finger at FanDuel. The team believes FanDuel should compensate them after allowing a former Jaguars employee to gamble away more than $20 million he stole from the team’s virtual credit card program.
Per ESPN’s reporting:
The source familiar with the situation said discussions are ongoing among FanDuel, the Jaguars and the NFL on what the source called "a settlement." However, the source said, "The way they see it ... we got this money fair and clear. It's not our problem that we have to forfeit it back to you."
For me, this is one of those cases where everyone shares the blame.
The Jaguars clearly didn’t have the appropriate safeguards in place.
FanDuel should have been more diligent on their end, as someone losing eight figures isn’t a typical bettor.
To their credit, it was FanDuel that first raised concerns about Patel. Per ESPN, FanDuel contacted the NFL in January 2023 when Patel placed a traditional sports bet in Tennessee - most of his losses were playing DFS games. “The Jaguars had no knowledge of the embezzlement scheme or Patel’s extensive daily fantasy habit until they were notified by the NFL, team, and league,” according to ESPN sources.
But that might be a case of too little, too late.
According to Davis Catlin, the managing partner of Discerning Capital, “I think there is likely some liability here. I’m from Jax & my dad is a lawyer - and I tried to convince him to pursue this angle months ago. Any real KYC checks would have shown he didn’t have $20M to spend & he allegedly bet from FL.”
Dillon Borgida, a former VIP/Growth employee at FanDuel and DraftKings, explained how these companies are supposed to verify the “source of funds” for large bets:
“What is a source of funds checks?” Borgida tweeted.
“Simply put - making sure the player can actually afford the amount that they’re depositing is one of the main reasons why I support legalization even though I’m a strong advocate for responsible gambling. Those of us in the industry who have the “Empathy” feature turned on in our brains take this shit seriously, especially in a customer-facing role. As you might expect tho, there is plenty of incompetency and scumbaggery in this world, so it doesn’t always happen. Many times you’re in the dark about a player’s true financial situation as a VIP host, but if someone is losing 20m, you should be pretty damn sure they can afford it.”
ESPN sources doubt FanDuel will end up paying, and public sentiment seems to agree:
Around the Watercooler
Social media conversations, rumors, and gossip.
It’s a blast from the past courtesy of Phil Galfond, who released an excellent video on Viktor Blom, AKA Isildur1—the young online poker phenom who took the online poker world by storm in 2009. The video is not only great, it’s nostalgic, as there are so many names I remember crushing the games back in the day: Ilari “Ziigmund” Zahamies, Di “Urindanger” Dang and his brother Hac “trex313”, and of course Phil’s “OMGClayAiken” screen name.
This was easily the biggest story of the time and one of the biggest in poker history. Record-setting pots day after day, and nobody even knew his real identity. It was the peak of online poker, and those types of games will never be played again.
Stray Thoughts
Sticking with poker, a feud brewing among the owners of poker training sites. Without getting into the specifics (you can find them here if you want to go down a rabbit hole), it reminds me of the martial arts community. This school is no good. That instructor is a fraud. That style doesn’t work.
It all stems from fear. The fear that someone will take one of your students. The truth is that both poker and martial arts need choice and competition. It’s good for everyone involved.
My school isn’t the right fit for everyone. I tell people to try a few schools (take advantage of the free trials) and see which one is the best fit. It might be us, it might be another school. If someone comes in because they are interested in combat sports, I will encourage them to check out a nearby school that focuses on that.
We are on friendly terms with most of the local martial arts schools. Looking for a traditional karate school? I know a good place. Thinking of driving 45 minutes to come here? I know a good school closer to your home. You’re a high-level, competitive BJJ practitioner? Our students are all new to BJJ, but I know a great place a town over.
These are all recent examples.
My son takes private lessons from pro-fighter Gabriel Varga because I don’t have the skill set to take him in that direction. I’ve done a private lesson with Gabriel to make sure my basics are up to snuff for the level of students I teach. If someone gets beyond that point, I will recommend they go elsewhere.
There are enough students for everyone. Offer a good product and know your target audience, and you’ll be fine. More importantly, you’ll get along with your peers.