Thursday, February 22, 2024

Could Jake Paul lose his Ohio sports betting license?

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CINCINNATI — Ohio sportsbook investor Jake Paul could face some licensing problems after a run-in with the U.S. Securities and Exchange Commission.

Paul, a social media star and professional boxer, was granted a provisional license in Ohio as a “key sports gaming employee” for Betr, an online sports book he co-founded.

This week, Paul agreed to pay $101,887 to settle the SEC’s charge that he violated securities laws by promoting a cryptocurrency investment on Twitter in 2021 without disclosing that he was paid to do so.

Ohio Casino Control Commission spokeswoman Jessica Franks said the settlement will be among the factors considered when the commission decides whether to finalize Paul’s three-year license in the next few months.

“Suitability is an ongoing requirement for all commission licensees and applicants, and the commission has the authority to reopen a licensing investigation at any time,” Franks said. “The commission is aware of the recent action taken by the SEC against Mr. Paul and will follow our standard process in reviewing the allegations and settlement. The commission will not prejudge any outcome, and any action taken by our agency will be done in accordance with Ohio laws, rules and the administrative hearing process.”

What this means for the company isn’t clear. Ohio administrative rules require sports books to have licenses for all employees who are considered “persons in control.” The code also gives the commission the authority to “limit, condition, restrict, suspend, or revoke any license” for noncompliance with Ohio sports gaming laws.

Betr CEO Joey Levy has not returned an email seeking comment.

Betr is a Miami, Fla.-based startup company that aims to be a national leader in microbetting, which are in-play bets that allow gamblers to wager on dozens of events within games, like whether the next football play will be a run or pass. Paul is the company’s co-founder and president, bringing his promotional skills to the table as a social media influencer, with nearly 70 million followers on Instagram, YouTube, TikTok and Twitter.

One member of the Massachusetts Gaming Commission voted against Betr’s license approval in January, citing “concerns about the social media audience” that Paul and Betr have accumulated as part of their marketing strategies. Commissioner Eileen O’Brien questioned whether young followers were being primed to “jump into” sports betting when they turned 21. The company said it has rigorous policies to prevent underage betting and deposit limits on bettors aged 21 to 25. The commission voted 4-1 to approve Betr’s license.

The SEC charge also involves Paul’s use of social media to promote a crypto asset security offered by Tron Foundation founder Justin Sun, who allegedly used “bounty programs” to compensate celebrities who promoted his crypto assets Tronix (TRX) and BitTorrent (BTT). Paul was one of eight celebrities — including Lindsay Lohan and porn star Kendra Lust — who allegedly received compensation for promoting these securities to their social media followers, according to an SEC press release.

Paul’s charge centers on a Twitter post on Feb. 12, 2021.

SEC records

“Tron, through an intermediary, paid Paul in crypto assets, valued at approximately $25,019, for this promotion and provided Paul with the specific language to include in the Tweet,” the SEC alleged. “Paul did not disclose that he had been paid by Tron, or the amount of compensation he received from Tron and Sun for promoting the TRX offering on Twitter.”

Paul did not admit or deny the charge, but agreed to pay the SEC $25,019 plus interest, along with a civil penalty of $75,057.

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