Company Faced Penalty for 16 consecutive days of failing Geolocation verifications in Colorado with MaximBet
In the thick of Colorado's online sports wagering scene, a slip-up occurred. Operator MaximBet, under the watchful eye of the Colorado Division of Gaming, was hit with an $80,000 fine recently, thanks to a technical blunder that allowed punters from outside the state to place bets during a 16-day window in December.
The incident, outlined in a stipulation agreement filed with the Colorado Limited Gaming Control Commission, occurred when MaximBet's geolocation system malfunctioned, permitting sports bettors to place wagers without being correctly located, thereby flouting state law.
MaximBet swiftly reported the issue to the Division of Gaming on Dec. 23, following a customer's call to their customer service department on Dec. 18. The customer, who found themselves unable to place a wager due to a failed location check, discovered that betting outside Colorado wasn't a problem, something that earlier hadn't been the case.
Questionable Bettors
MaximBet's internal investigation found a total of five questionable bettors, one of whom placed multiple wagers without being geolocated. The investigation made a stark discovery - it was only customers using web browsers who could circumvent the geolocation check, while mobile app users remained unaffected.
An investigation by the Division of Gaming, however, questioned MaximBet's assumptions, stating that the operator had no way to confirm whether these questionable bettors continued to place wagers within Colorado during the system error. It was possible that these bettors could have and did place wagers outside Colorado during the 16-day window.
Out of these five customers, MaximBet's investigation identified four who "could not be ruled out as placing bets outside Colorado." These bettors had addresses hailing from Hickory, North Carolina, Pittsburgh, Pennsylvania, the Bronx, New York, and Portsmouth, New Hampshire. *Alarmingly, the initial bettor who contacted customer support had the North Carolina address, but efforts to contact this individual failed despite "several attempts." Bettors from Pittsburgh and New Hampshire confirmed to Division of Gaming investigators that they were in Colorado at the time they placed their sports wagers, while the New York bettor was unreachable.*
Steps Taken and Future Measures
MaximBet reported that it would close accounts for these suspect customers and retroactively void their wagering activity, refunding their losses. The operator agreed to have its sports betting platform re-certified by an independent testing laboratory approved by the Division of Gaming and to review its user access controls.
The Colorado Division of Gaming's rigorous oversight ensured MaximBet complied with Colorado's laws and regulations going forward, or face the maximum penalty of "revocation or suspension of licensing privileges" and a $25,000 fine for each charge of violation.
The Shifting Landscape of Online Sports Betting Regulation
The regulation of online sports betting is a vital aspect of Colorado's Division of Gaming, ensuring that licensed operators adhere to state laws. Geolocation technology is frequently employed to check that bettors are within Colorado's borders and that betting is limited only to those physically situated within the state. The Division of Gaming also handles the licensing process for casinos, overseeing retail and mobile sports wagering, to ensure adherence to state regulations.
Incidents such as the one encountered by MaximBet highlight the importance of stringent regulations, the constant monitoring of operators, and the need for swift action when lapses are detected. As the world of online sports betting continues to evolve in Colorado and beyond, the mantle of responsibility for maintaining the integrity of the industry rests squarely on the shoulders of its regulators.
- The geolocation system malfunction at MaximBet, a sports betting operator in Colorado, led to a technical blunder that allowed sports bettors from outside the state to place bets illegally, resulting in an $80,000 fine.
- In response to the geolocation issue, MaximBet identified five questionable bettors, four of whom had addresses outside Colorado, raising concerns about whether they had indeed placed wagers within Colorado's borders during the system error.
