Add A Fine To What The Now-Defunct AAF League Has Cost MGM

Posted on September 17, 2019

MGM Resorts International’s affiliation with the failed Alliance of American Football (AAF) continues to cost the company money.

The latest AAF bill it is now required to pay is a $500 fine levied against Borgata Atlantic City.

The NJ Division of Gaming Enforcement (DGE) levied the fine against Borgata for taking bets on the league without DGE approval.

According to a letter the DGE sent to Borgata VP and General Counsel Patrick Mandamba, the DGE gave various sportsbooks notice in February it had not yet authorized AAF wagering. This included Borgata.

You can read the full letter here.

Borgata took AAF bets prior to DGE approval

However, Borgata has since admitted to taking seven bets worth $89 total on the fledgling football league before the DGE approved. Four were parlay wagers and three straight bets.

Borgata ultimately voided the wagers and closed its AAF markets until the DGE gave it the thumbs up. Borgata claimed it was human error that led to it opening and reopening the markets prior to approval.

Parent company Bwin had correctly advised Borgata not to take AAF bets until DGE approval came in. However, an employee created the AAF markets in anticipation of DGE approval and activated the markets thinking they had been approved.

The employee even reactivated the markets after another employee closed them. Borgata accepted the $89 in bets during these times.

Borgata eventually closed the markets and voided the bets.

However, the DGE said Borgata’s actions still represent a failure to comply with the regulations regarding sports wagering on unauthorized and prohibited sporting events. It levied the $500 fine as a result.

AAF bets were available (briefly) at NJ sportsbooks

The first game of the short AAF regular season took place on Feb. 9. DraftKings Sportsbook announced it was taking bets on the fledgling league two weeks later.

At that point, DraftKings along with five other NJ sports betting apps had lines available, including PlayMGM Sports (now BetMGM).

Once DGE approval was granted to take bets on the AAF, New Jersey sportsbooks were quick to offer the odds. But the odds were on the board for only a month before the AAF ceased operations.

In any case, Borgata offered odds on Feb. 11, prior to regulatory approval. Bwin is now maintaining a list of markets pending DGE approval to avoid making the same mistake again.

$500 fine just a drop in the AAF bucket

Of course, the $500 is just a drop in the bucket of what this failed football league has cost MGM.

MGM originally invested $7 million in the AAF in exchange for a piece of its proprietary in-play sports betting app.

The software promised to introduce biometrics, instant data collection, and play-by-play wagering to football betting, but it never delivered. Then, the AAF folded at the end of March, barely two months into its first season.

As part of Chapter 7 bankruptcy proceedings, MGM agreed to pay $125,000 for the sports-betting asset. Plus, it agreed to reduce its claim as a creditor from its original $7 million investment to just $5 million.

There is still no word on what MGM is planning to use the AAF betting app for.

However, it’s hard to see the NFL Players Association ever agreeing to let it be used in the NFL. Particularly the wearable devices required for the biometrics.

Nor is it likely the next-play betting activity the app once promised will rise above niche level. The speed required from both users and the app to employ it makes it almost impossible to implement anywhere.

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Martin Derbyshire

Martin Derbyshire has more than 10 years of experience reporting on the online poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.

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