PlayUp pauses capital raise after regulator suspends company operations in New Jersey

PlayUp Sportsbook has been ordered to halt all wagering activity in New Jersey by the state's Division of Gaming Enforcement (DGE). The regulatory body is currently investigating issues surrounding tax payments made by the embattled sportsbook. The Australian operator has now decided to pause an AUD 10 million capital raise until it can sell its business in the United States, reports Australian Financial Review.

According to the DGE, PlayUp has failed to provide the required financial documentation regarding payments to the state, particularly related to payroll taxes. The DGE says it has repeatedly requested the documentation but has not received the necessary information. As a result, the DGE has revoked PlayUp's transactional waiver, effectively preventing it from accepting bets in New Jersey.

The investigation centers on potential violations concerning tax payments, employment counts, and potential fraud. PlayUp Sportsbook and its CEO, Daniel Simic, acknowledged that they are working with regulators to address the issue. However, they insist that the decision to suspend betting activity was made voluntarily as part of their effort to upgrade and improve the site.

"During this time, you will be able to access your account and withdraw funds, should you wish to do so," PlayUp's NJ site states. "The reason for this change is our strong commitment to transforming our product offering and streamlining our services into an unparalleled sports betting experience."

PlayUp's financial situation has been problematic as of late, exacerbated by a failed partnership with collapsed crypto exchange FTX and reports of laid-off staff and failures to pay its employees on time. The Australian-based operator has been seeking to exit the market and sell its business in the United States, reportedly reaching a deal with an un-named publicly traded company.

However, its regulatory issues could pose further challenges to the company's plans. PlayUp previously had a deal with IG Acquisitions for the sale of its business, but that agreement fell apart due to financial documentation issues.

According to PlayUp, the lack of a dedicated US finance department has caused delays in obtaining the necessary documents. The company claims to use third-party services to secure the required US documents.

In addition to having suspended operations in New Jersey, PlayUp is set to shutter its Colorado sportsbook. The operator requested for it to be closed for maintenance, although it is worth pointing out that the company is also having regulatory issues there as well.

The DGE's investigation into PlayUp's financial practices could potentially result in penalties for the sportsbook. Regulators do not discuss active investigations, but the outcome could have implications for PlayUp's future in the US market.

As of now, PlayUp is unable to accept bets or deposits from customers in New Jersey. However, the company is obligated to pay out any pending wagers. If PlayUp or its potential new owner wants to resume operations in New Jersey, they will need to submit their entire platform for a compliance review by the regulator.