BUSINESS

CG Technology underpaying scandal costs CEO Amaitis his job, company $1.5m

TAGs: cg technology, Lee Amaitis, Nevada, Nevada gaming control board, sports betting

cg-technology-nevada-settlement-amaitis-resignsNevada sportsbook provider CG Technology (CGT) has agreed to pay a $1.5m fine and say goodbye to its CEO after being caught ignoring software glitches that underpaid bettors around $700k.

In May, the Nevada Gaming Control Board (NGCB) filed a formal complaint against CGT, accusing it of (a) failing to fix a known glitch in its Cantor Sports Book software that both underpaid and overpaid parlay bettors, and (b) attempting to interfere with the NGCB’s investigation into the matter.

On Wednesday, the NGCB released a copy of a settlement it has reached with CGT, which has agreed to pay a fine of $1.5m to make the problem go away. Furthermore, CGT CEO Lee Amaitis (pictured) will resign effective Aug. 31, 2016. CGT has appointed an unidentified interim CEO to take the wheel during the transition.

CGT copped to most of the NGCB’s charges, although CGT denied that it had “any intent to profit” from its dodgy software. CGT also denied that it failed to cooperate with the NGCB’s investigation. However, it admitted there was “sufficient basis contained in the allegations to warrant settlement.”

CGT has also agreed to place $25k into escrow to pay claims of bettors who can prove that they were underpaid by CGT between August 2011 and March 2015. Bettors will have 12 months in which to submit a claim. The settlement doesn’t preclude individuals from pursuing civil actions against CGT.

CGT had miscalculated around 20k wagers over the period in question, underpaying a total of $700k while overpaying around $100k. While that $25k escrow fund appears insufficient, CGT said it had taken steps following the May complaint to identify and repay “the vast majority” of underpaid bettors.

However harshly CGT may feel it was treated in the settlement, the company dodged a major bullet. The NGCB’s complaint made some ominous noises about the future of CGT’s gaming license, but the settlement contains only a requirement that CGT hire third parties to review all its software and product-development for a one-year period.

This is the second major fine for CGT, which powers the sportsbooks in eight Nevada casinos. In January 2014, the company paid $5.5m for their involvement with an illegal messenger betting ring back when they were still known by their pre-scandal name Cantor Gaming.

Outgoing CEO Amaitis has an equally checkered past. A former Wall Street bond trader in the go-go 1980s, Amaitis pled guilty to cocaine possession as part of a plea bargain for his involvement in what the New York Times called “a multimillion-dollar drug ring that was peddling cocaine at Wall Street firms.”

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