Pennsylvania remains months away from rolling out the state’s first online gambling platforms.
Yet, already, one provider might have some questions to answer.
In a complaint dated June 28, 2018 that became public earlier this month, Rush Street Interactive incurred a fine from the New Jersey Division of Gaming Enforcement for an underage online gambling incident.
Rush Street operates PlaySugarHouse NJ online casino and expects to roll out its Pennsylvania online casino when the state green-lights the industry this summer.
Of course, this transgression occurred in another state. Doug Harbach, spokesman for the Pennsylvania Gaming Control Board, said in an email that “it would be presumptuous for us to comment on any violation out of our jurisdiction and its effect on an iGaming license (in Pennsylvania), particularly since we have yet to launch interactive games.”
Harbach, though, continued with something of a warning.
“The record is clear, however, of how serious the PA Gaming Control Board takes violations of underage gambling when you look at our mature market, casinos. To date, the Board has approved consent agreements encompassing 237 incidents resulting in fines totaling $2,896,500 against casinos that have permitted underage individuals to gain access to the gaming floor and, in most instances, gamble.”
Rush Street’s NJ online gambling violation
Considered the first violation of its kind in the five-year history of NJ online gambling, Rush Street’s transgression resulted in a civil penalty in the amount of $30,000. According to a letter signed by DGE Director David Rebuck, the fine was “agreed to by the parties in the Stipulation of Settlement.”
According to the complaint, underage users made wagers at the online casino between November 2016 and when Rush Street “successfully deployed an emergency fix” on Jan. 30, 2018.
The report noted that, due to a “software defect in RSI code,” 13 patrons between the ages of 18 and 20 years old created online gambling accounts and placed wagers. Three of those users deposited funds into their accounts, while the other 10 used bonus funds, issued at the time of registration, to gamble. Wagers from all 13 accounts totaled $4,977.76.
State regulations require all patrons be at least 21 years old to participate in online gambling.
According to the report, the problem arose from SugarHouse’s Know Your Customer (KYC) age verification system. The process requires a date of birth to verify a user’s age. When properly operating, KYC prevents underage customers from creating an account.
However, rather than using the exact date of birth, the system defect allowed for a three-year variation of the date of birth. Thus, KYC failed to accurately detect underage users.
Rush Street responds
SugarHouse has been part of the New Jersey online casino industry since 2016 thanks to a partnership with Golden Nugget.
With SugarHouse, as well as Betfair NJ, in its corner, Golden Nugget shined in the online gambling market. In December, the license holder reported nearly $10.2 million, an industry record in New Jersey.
Now, though, SugarHouse faces scrutiny.
Earlier this week, Rush Street issued a statement in response to the fine.
“We take this matter very seriously. As soon as our team discovered the misconfiguration, we self-reported it to the gaming commission and took immediate action to correct and prevent recurrence. Responsible gaming is a top priority for us.”
Will this hurt Rush Street’s PA online gambling rep?
It appears likely PA online gambling will not arrive until this summer. Among the 10 interactive gaming providers, SugarHouse expects to enter that industry.
But this New Jersey transgression, while certainly egregious, should not put a damper on its entry.
After all, in the five years of online gambling in the Garden State, this underage incident stands alone. In Pennsylvania, as Harbach noted, other casinos have had similar instances on their gaming floors far more often.
For example, in 2016, Sands Bethlehem incurred its seventh fine for allowing underage gambling. one for every year it was operational.
Just last month, the PGCB levied a combined $210,000 against Mt. Airy Casino and Hollywood Casino at Penn National for the same violation. To date, the PGCB has racked up nearly $2.9 million from 237 incidents involving underage gambling.
While SugarHouse’s transgression is a bad look for online gambling, the industry still has a much better track record than land-based casinos.
SugarHouse seems to have identified the issue and is ready to move on. Hopefully the lessons learned means this will not be an issue when the property launches in Pennsylvania.