Monarch Casino, a publicly traded casino operator with two properties in Colorado and Reno, agreed to pay a $400,000 fine for multiple violations of Colorado sports betting law.
The company self-reported an incident on June 20, 2022, involving three employees of the Monarch Sportsbook including the manager, Nicholas Epstein. The following investigation uncovered 79 proxy bets placed by the three employees at the company’s in-person and mobile Colorado sportsbooks between Jan. 7, 2021, and June 15, 2022.
Monarch, trading under the ticker MCRI, agreed to the fine at Thursday‘s meeting of the Colorado Limited Gaming Control Commission. Neither Monarch nor vendor Stadium Technology responded to requests for comment.
Colorado sports betting violations
The two former sportsbook leads, Brian Lopez and Ted Kilgore, combined to place 19 in-person proxy bets. Kilgore wrote six of those bets, including the June 15 incident triggering the investigations.
The other 60 bets were placed by Epstein by logging into the bettors’ mobile BetMonarch accounts and placing the wagers, according to the documents included in Colorado’s meeting agenda. The 79 illegal bets totaled $60,769.45 in handle.
One particular customer accounted for 50 of those online proxy bets. In one instance, the customer was in Florida and deposited $1,000 into his BetMonarch account at 8:58 pm. They sent Epstein their login email and password and by 9:01 pm, Epstein had logged in and placed a bet on the Tampa Bay Buccaneers.
Where bets actually were placed
Geolocation data proved the device used to place the bet was Epstein’s work cell phone from his home address. Multiple other instances where the customer shared screenshots with Epstein to show what they wanted to bet included timestamps that were two hours ahead of Mountain Time, further showing the customer was not located in Colorado.
Monarch also failed to follow its internal controls of requiring a manager, assistant manager or supervisor to always be present in the sportsbook. Instead, Epstein shared login data with others to let them access systems they otherwise could not.
Monarch talks new commitment to compliance
The interim general manager for Monarch Black Hawk, Michelle Shriver, said the company was “utterly disappointed” by the actions of their three former employees. Whether those employees were fired or resigned was not specified.
Most commissioners praised Monarch for self-reporting the issues and for their compliance with the investigations.
“I wanted to have the opportunity to assure the commission that compliance is an integral part of our work at Monarch as is maintaining the highest ethical standards,” Shriver said.
How it will change
Shriver noted multiple internal changes coming from this issue, including contracting with GeoComply for geolocation services.
“The issues highlighted at today’s Commission meeting underscore that operators must thoroughly consider and address all the critical compliance risks associated with running a regulated online sportsbook,” said Lindsay Slader, GeoComply’s senior VP of compliance. “GeoComply is pleased to now work with BetMonarch and act as its geolocation service provider.
“Our anti-fraud tools are purpose-built to analyze data in real-time and stop suspected proxy betting and other fraud. BetMonarch joins our other customers in Colorado that utilize our solutions to provide complete geolocation compliance assurance.”
Entain involved in geolocation failings
Monarch decided to launch its own sportsbook platform in Colorado using experience and vendors from its Nevada operation. That includes using Stadium Technology, owned by 50/50 partner in the BetMGM joint venture Entain, as a vendor.
Stadium was the vendor that checked geolocation data for online bets. It failed, however, to do so for other key activity, according to the violation paperwork:
The Division learned through its investigation and discussion with [Monarch] that Stadium did not perform geolocation checks when patrons logged on, deposited money, or withdrew money through their BetMonarch mobile account.
Stadium did not analyze geolocation transactions to detect the use of multiple device IDs and unrealistic location “jumping” in order to identify potential proxy bets for out of state (sic) patrons. [Monarch] acknowledges that they have an ongoing responsibility to ensure that systems operated by them need to conform to all applicable Colorado sports betting regulations.
Colorado sports betting fine details
Monarch agreed to pay $400,000. That was calculated as a $5,000 fine for each proxy bet and another $5,000 for the additional violations. The max fine for each violation is $25,000, and could have included suspension or revocation of its license.
The company has to pay $200,000 within 10 days of the commission accepting the settlement. Another $200,000 will be held for two years.
Should Monarch violate other rules in that two-year window, that $200,000 will be due along with any other potential fines.
Monarch upgraded its online geolocation services, which were re-certified by a test lab. The company also agrees to have a key licensee on site at the sportsbook during hours of operation. Monarch also has 90 days to show proof of upgrades to various internal control policies.