Borgata Hotel Casino & Spa in Atlantic City has agreed to pay the New Jersey Division of Gaming Enforcement (DGE) $75,000 to settle a regulatory infraction incurred by the casino’s iGaming partner, BetMGM. The payment resolves issues related to an audit that revealed BetMGM underpaid taxes due to overstating its promotional gaming credits (PGCs).
The DGE’s investigation, covering the period from October 2023 to May 2024, found that BetMGM overstated the qualified credits issued to online casino players by $4,564,515. This miscalculation led to an underpayment of gaming taxes totaling $365,161. In addition to the overdue amount, Borgata was instructed to pay interest and a tax penalty amounting to $33,272. Given that this was the second such infraction within 18 months, a civil financial penalty was deemed necessary by the DGE.
Mary Jo Flaherty, the DGE’s Interim Director, clarified that PGCs qualify for tax exemption only when they are provided for free online slot machine play, with any resultant winnings immediately available for cashing out after one-time wagering. In 2023, an audit revealed that BetMGM had incorrectly included promotional credits for interactive table games as qualified tax deductions. This previous infraction showed overstated promotional deductions exceeding $9.8 million, resulting in a tax underpayment of more than $787,000. BetMGM addressed the oversight by paying the back taxes along with $127,345 in interest and penalties.
Flaherty emphasized the seriousness of BetMGM’s repeated violations within such a short time frame. She noted, “The fact that this conduct was repeated less than 18 months after the Division warned an additional violation of this type could result in a civil penalty is also to be considered. The Division notes that the underpayment of taxes was remedied quickly in each case, and software fixes were deployed to correct the reporting errors with regard to PGCs.”
The DGE accepted Borgata’s proposal to settle the matter with a $75,000 civil penalty. Regulatory guidelines permit civil penalties of up to $100,000 per violation for casino licensees.
This settlement unfolds against a backdrop of disparity between in-person and online gaming revenues. While the nine brick-and-mortar casinos in Atlantic City have experienced a decline in physical play, iGaming revenue has surged. Borgata’s online operations ranked third in New Jersey’s iGaming market through the first half of the year, generating $257 million. BetMGM accounted for the majority with $132.57 million.
BetMGM’s earnings from interactive slots and table games amounted to nearly $130.7 million, alongside almost $1.9 million from online poker via rake. These figures exclude revenue from internet sports betting. Borgata’s online casino partners also include Borgata Casino, Party Casino, Wheel of Fortune Casino, and Stardust Casino, highlighting the diversified digital portfolio aiding in their revenue growth.
In contrast, Borgata’s physical casino remains Atlantic City’s top performer, with retail gaming wins totaling $351.8 million between January and June. Hard Rock trailed in second place with $262.2 million.
