In this week’s GME3, Ontario’s regulator serves up one of its biggest fines yet as the AGCO penalizes FanDuel over suspicious table tennis betting and spotlights sports integrity as the next enforcement frontier; California’s attorney general turning the spotlight on xAI as Grok faces growing scrutiny over deepfake abuse; and, in New York, a post–City Hall crypto saga as allegations swirl that Eric Adams’ “NYC Token” hype may have ended in a classic rug-pull-style wipeout. Read the full stories below!
Gambling
Turning the Table (Tennis)
The AGCO’s recent $350,000 penalty against FanDuel – tied to several weeks of suspicious betting on Czech table tennis in 2024 – is one of the largest fines issued to an online gaming operator since Ontario’s regulated market launched in April 2022, matching the fine previously imposed on Great Canadian Entertainment. More importantly, it is the first AGCO penalty for a sports integrity failure, rather than the more typical issues like advertising violations or player protection shortcomings.
AGCO officials framed the decision as part of a broader push to keep Ontario sportsbooks from being exploited by insiders or match-fixers and to support the global fight against match-fixing. The regulator has shown heightened sensitivity to integrity risks in recent years, including previous actions such as banning betting on UFC events in 2022 over insider-betting concerns and restricting markets on WBA events in 2024. Scrutiny has intensified across North America amid high-profile scandals, including the Jontay Porter case and other incidents affecting major leagues.
The AGCO emphasized that sportsbooks are the first line of defence, with obligations to monitor wagering in real time, work with independent integrity monitors, and promptly report suspicious activity – areas where the regulator’s dissatisfaction with FanDuel centred. FanDuel, however, maintained that its monitoring program helped it proactively identify, investigate, and report the activity. The OPP’s Investigation and Enforcement Bureau has launched a criminal investigation, and FanDuel can appeal the fine until late January.
Media
Deepfakes to Deep Trouble
California’s attorney general, Rob Bonta, has announced an investigation into Elon Musk’s company xAI over the outputs of Grok, its AI chatbot and image generator. The investigation follows a wave of reports that Grok is being used to create and spread sexually explicit deepfake images of women and girls on X and other platforms. Bonta said the volume and nature of the reports are alarming, and his office is looking into whether and how xAI may have violated California law. He also urged xAI to take immediate steps to stop the problem from escalating.
The controversy has drawn attention from other officials as well. California Governor Gavin Newsom called for an investigation, accusing the platform of enabling the spread of abusive content, including material involving children. Musk has denied these claims, though Grok itself reportedly acknowledged generating such images when prompted by users.
The backlash has spread internationally. U.S. senators have called on Apple and Google to remove X and Grok from their app stores, while countries and regulators in places such as Indonesia, Malaysia, India, the UK, France, and the EU have moved to block access, demand removals, open inquiries, or preserve documents related to Grok.
Entertainment
Times Square Token Scare
Former New York City Mayor Eric Adams is being accused of promoting a crypto scam shortly after leaving office, specifically involving a new meme coin called “NYC Token.” According to the report, Adams held a press conference in Times Square to promote the token and suggested it would be used to “fight antisemitism and anti-Americanism,” but provided few concrete details about how it would work or who else was backing it. With Adams as the public face, investor interest surged, and the token’s market capitalization reportedly climbed as high as $580 million.
The allegations focus on a potential “rug pull,” a scheme where insiders attract buyers, then withdraw liquidity and drain value from the token. Blockchain data cited in the story allegedly shows a wallet linked to the token’s deployment removed $2.5 million in liquidity after the price rose. About $1.5 million was later added back after the token’s value dropped, while roughly $900,000 was not restored. Experts quoted describe rug pulls as a form of insider-driven pump-and-dump behaviour that can leave late investors holding near-worthless assets.
While pump-and-dump schemes are illegal, prosecution in the crypto space can be inconsistent, and the regulatory landscape is described as especially murky after shifts in U.S. oversight and new legislation aimed at stabilizing certain crypto assets. Adams has not publicly commented on the allegations.
GME Law is Jack Tadman, Daniel Trujillo, and Will Sarwer-Foner Androsoff. Jack’s practice has focused exclusively on gaming law since he was an articling student in 2010, acting for the usual players in the gaming and quasi-gaming space. Lindsay brings her experience as a negotiator and contracts attorney, specializing in commercial technology, SaaS services, and data privacy.
At our firm, we are enthusiastic about aiding players in the gaming space, including sports leagues, media companies, advertisers, and more. Our specialized knowledge in these industries allows us to provide tailored solutions to our clients’ unique legal needs. Reach out to us HERE or contact Jack directly at jack@gmelawyers.com if you want to learn more!
Check out some of our previous editions of the GME3 HERE and HERE, and be sure to follow us on LinkedIn to be notified of new posts, keep up to date with industry news, and more!
