Wednesday, July 20, 2016 | 5 p.m.
CG Technology has agreed to pay a $1.5 million fine in a settlement over charges that the sports book operator underpaid or overpaid certain bettors by hundreds of thousands of dollars.
A stipulation for settlement from the Nevada Gaming Control Board filed Wednesday also states that Lee Amaitis, CG Technology’s president and CEO, has resigned effective Aug. 31. The state Gaming Commission still needs to approve the settlement and will likely take up the issue at its meeting next week.
The settlement comes two months after the control board filed a six-count complaint alleging that CG Technology underpaid winning parlays by about $700,000 on more than 20,000 occasions from August 2011 to March 2015. The complaint also accused CG Technology of overpaying winning parlays by about $100,000 on more than 11,000 occasions.
Those incorrect payments arose because of “systemic problems” with CG Technology’s computerized bookmaking system, according to the complaint. The company did not “properly investigate, correct, and completely and accurately report” the issues to the board, the complaint said.
CG Technology operates race and sports books at the M, Hard Rock, Tropicana, Cosmopolitan, Venetian, Palms and Silverton resorts.
In the settlement, the company made multiple admissions related to the complaint, without addressing specific circumstances.
CG Technology admitted that its computerized bookmaking system miscalculated winning single and round-robin parlay wagers under specific circumstances, and that it failed to notify bettors of those miscalculations in a timely fashion. The company also admitted that it did not “timely disclose to the board the nature and scope of the issues causing the miscalculations."
The company denied that it neglected to cooperate with the board’s investigation, though it agreed that “there is a sufficient basis contained in the allegations to warrant settlement.” The settlement agreement further said that CG Technology denied all allegations that it “had any intent to profit from (computerized bookmaking system) errors that resulted in miscalculated payments.”
The error that caused the incorrect payments has not recurred since CG Technology fixed it in March 2015, the agreement said.
The company said it already paid patrons whom its “forensic audit” determined had been underpaid. Per Wednesday s settlement, the company also agreed to put $25,000 in an escrow account to address any remaining underpayments.
CG Technology also agreed to retain “one or more independent third parties” to review its software- and product-development processes for one year. That review will make sure the company’s processes are compliant with the Nevada Gaming Control Act, regulations of the commission and policies of the board, according to the agreement.
Gaming Control Board Chairman A.G. Burnett said in an emailed statement that the public’s “confidence and trust” could only be upheld by strict regulation of gambling.
“The Board will not tolerate improper or incorrect payments to patrons by gaming licensees, and therefore takes this matter extremely seriously,” Burnett said. “This settlement contains several harsh punishments and requirements for remediation that reflect those concerns.”
But Burnett noted that while CG Technology would “pay a high price,” it had already taken steps to pay bettors back.
A spokeswoman for CG Technology declined to comment.