Regulators in Pennsylvania have signed off on a settlement with BetMGM after uncovering a series of fraud-related failures tied to how the company verified its customers. The agreement, approved March 25, comes with financial penalties and the removal of credit cards from the BetMGM platform starting March 31.
The decision follows a detailed review of multiple cases where fraudulent users were able to open accounts, move money, and withdraw funds using stolen or fabricated identities. State officials said those incidents exposed gaps in the company’s safeguards, particularly around its Know Your Customer processes.
Fraud cases and regulatory findings
Investigators described a pattern of control failures that stretched across multiple years. According to Senior Enforcement Counsel John Crohe, the case involved “four incidents of interactive gaming know your customer requirement violations” that allowed fraudulent behavior to persist.
One scheme stood out because of its scale and duration. Crohe said that between late 2021 and early 2024, “a fraud ring created 1,567 accounts on the BetMGM interactive gaming platform.” From there, the operation expanded quickly. Of those accounts, “1,173 made deposits totaling $13,761 using stolen or fraudulent payment devices,” while “481 withdrawals totaling [approximately $28,680.48] were made to bank accounts controlled by the perpetrators.”
Across all four cases, regulators said thousands of accounts were created and used to move money through the system. Their conclusion was that BetMGM “failed to have sufficient procedures to prevent the fraudulent behavior,” with particular concern focused on identity verification gaps.
“Insufficient ‘know your customer’ protocols allowed for the creation, access, and use of multiple accounts by individuals,” Crohe said, pointing to repeated use of stolen personal data and fake payment methods.
To resolve the case, BetMGM agreed to pay a $100,000 civil penalty along with a $2,500 administrative fee. Regulators indicated that the monetary penalty was only part of the response, with operational changes viewed as equally important.
BetMGM response to fraud cases as it confirms banning credit cards
Company representatives stressed that fraud prevention is an ongoing challenge rather than a problem that can be fully eliminated. Speaking before the board, Senior Legal Counsel Joseph Caputi said, “BetMGM takes compliance extremely seriously.” He added, “Compliance has a seat at the executive table and every department at BetMGM has compliance as part of its core function.”
Caputi pointed to the increasing sophistication of fraud schemes as a key difficulty for operators. “There’s no system that can fully eliminate the threat of fraud… but BetMGM has committed significant investment into our fraud tools, policies, and fraud prevention aspects to address and to stay ahead of these sophisticated bad actors,” he said.
He also made clear the company is continuing to refine its systems rather than treating compliance as a finished task. “We’re comfortable now, but we are not sitting and waiting. We’re actively working to continue to improve. It’s an ongoing, everyday matter.”
The Pennsylvania case comes as BetMGM faces scrutiny in other states as well. In Massachusetts, regulators have been examining allegations that the company sent marketing emails that may have reached underage individuals. The inquiry raised additional questions about how effectively operators screen users, not just for fraud risk but also for age compliance and marketing practices.
Operators are increasingly expected to show that their systems can prevent problems before they happen, rather than simply respond after the fact.
Credit cards and industry shift
One of the outcomes from the Pennsylvania proceedings is BetMGM’s decision to move away from credit cards. During the hearing, a company representative stated: “As of March 31, we will no longer be allowing credit cards—new credit cards—to be added to the accounts for individuals.” The representative added, “It is a phasing out of credit card usage on the BetMGM platforms.”
There have been wider concerns among regulators about credit-based gambling, which is often linked to higher fraud exposure and potential consumer harm. Limiting access to borrowed funds is seen as one way to reduce both financial risk and opportunities for abuse.
BetMGM is not alone in making that move. Earlier this year, FanDuel said it would halt credit card deposits nationwide beginning March 2. The parallel decisions suggest companies are responding to a wider regulatory climate that favors tighter restrictions on payment methods.
Board members in Pennsylvania also questioned BetMGM about how it handles underage gambling and account security. Rhea Loney, the company’s Chief Compliance Officer, said internal teams are focused on identifying and preventing those risks. “We take underage very seriously at BetMGM,” she said. “We’re constantly reviewing the data and analyzing it to determine how we can ensure that does not occur.”
She pointed to technology as a key part of that effort, explaining that the company is “Using AI to ensure that individuals with fake IDs are caught early [and] detected early.”
Regulators stressed that underage gambling, whether done directly or through another person’s account, is treated as fraud. BetMGM agreed with that view, stating: “Absolutely. Yes, we consider that fraud.”
The Pennsylvania Gaming Control Board approved the agreement unanimously, though some details remain confidential due to their sensitive nature, but officials said the public record reflects a consistent focus on consumer protection and stronger compliance.
Featured image: Sarah Stierch via WikiCommons / CC BY 4.0
