The New Jersey Division of Gaming Enforcement imposed a $50,000 civil penalty against Golden Nugget Online Gaming on May 27, as revealed in the most recently published set of actions taken by DGE Director David Rebuck. The iGaming operator was fined for failing to comply with an assortment of straightforward procedural requirements.
“In particular,” the notice read, “GNOG has violated N.J.A.C. 13:69C-8.1 by failing to submit meeting minutes of the board of directors and committees, as well as meeting schedules for said board and committees, for holding company Golden Nugget Online Gaming, Inc. (GNOGI). In addition, GNOG and GNOGI have violated N.J.A.C. 13:69C-8.5 by failing to submit GNOGI’s tax return filings and N.J.A.C. 13:69C-8.6 by failing to submit copies of all filings submitted to Federal and state regulatory authorities regarding GNOGI’s securities.”
DraftKings purchased GNOG in 2021 in a $1.56 billion all-stock deal, but the compliance failures date to before the closing date of the DraftKings deal, when GNOG was still owned by Fertitta Entertainment. According to the DGE, a written warning about the violations was sent on Oct. 21, 2021, and it is Fertitta Entertainment that has to pay the fines.
Golden Nugget revenue dwarfs fine
Compared to the revenue produced by Golden Nugget Online month after month in New Jersey, a $50K fine is a drop in the proverbial bucket.
For most of the run of legal online casino gaming in the state, GN has been the leader, although so far in 2022, it has slipped to a very close second behind Borgata. Through April, GNOG had accrued $38.1 million in online gaming win, up 17.6% over the same time period in 2021 but 4.5% behind Borgata’s $39.9 million over the first four months of this year.
With the exception of third place Resorts Digital, which has reported $29.1 million in iGaming win, all other online casino operators in the state are under $10 million in revenue through April,
Specifics of the violations
Casino licensees in New Jersey are required to submit “copies of the minutes of all meetings of its board of directors or equivalent governing authority,” according to Rebuck’s notice, “within 45 days of the meeting regardless of their formal adoption.” New Jersey also requires licensees to file on an annual basis a schedule of their board and committee meetings.
Additionally, operators are required to file with the DGE copies of federal and state tax returns at the same time those returns are submitted to the relevant authorities. The same goes for “all filings submitted to Federal and state regulatory authorities regarding any of its securities, either in existence or proposed.”
The key sentence in the notice:
“Prior to the closing date of the GNOGI-DraftKings transaction, GNOG and GNOGI violated the above-cited regulations by failing to make the delineated submissions as required by the Division’s regulations.”