The gambling affiliate of Wall Street firm Cantor Fitzgerald LP has negotiated to pay more than $5.5 million under a settlement with Nevada gambling regulators to address allegations filed in a civil complaint.
The complaint said the company or Lee Amaitis —chief executive of the Las Vegas-based sports-betting unit known until recently as Cantor Gaming—knew or should have known that one of its top executives, Michael Colbert, was taking illegal bets. According to the complaint, failure to supervise an employee sufficiently to prevent criminal activity violates Nevada gambling regulations. Cantor Gaming's failure to do so "tends to reflect poorly on the reputation of gaming in the State of Nevada" and could hurt the development of the industry, the complaint said.
In the settlement, which was published on the website of the Las Vegas Review-Journal on Monday, Cantor didn't admit that it knew or should have known about alleged illegal bets. But it said in the documents that the board could have proved its case before the Nevada Gaming Commission, which rules on gambling cases for the state. The company did admit guilt for a series of record-keeping infractions, according to the settlement documents. The deal will have to be approved by the gambling commission.
A.G. Burnett, the chief of the Nevada Gaming Control Board, verified the settlement documents Tuesday. The fine is among the highest in state history for a gambling infraction. In 2003, for example, a casino company was fined $5 million for allegedly failing to report currency transactions to regulators.
"This is the culmination of a long investigation, and the result is a harsh penalty," Mr. Burnett said. The penalty will be paid to the State of Nevada.
The state doesn't allege Mr. Amaitis engaged in illegal actions himself. Through a spokesman, he denied doing anything improper. The company has denied wrongdoing beyond the actions of Mr. Colbert, and it said no other executives were involved in any wrongdoing. Mr. Colbert pleaded guilty in federal court last year to knowingly accepting illegal wagers on behalf of Cantor Gaming. His attorney declined to comment.
"We are glad to be able to reach resolution on this matter and look forward to this being behind us," a spokesman for Cantor Fitzgerald and its gambling affiliate said.
The gambling unit recently changed its name from Cantor Gaming to CG Technology. It was started with funds from Cantor Ventures, the venture-capital arm of Cantor Fitzgerald, the company disclosed recently. It said Cantor Ventures now has no equity interest in the gambling business, without disclosing the identities of its current owners. The former Cantor Gaming says it handles more than 30% of Nevada's sports-wagering market.
Cantor Fitzgerald CEO Howard Lutnick was listed in the settlement agreement as "member/manager/chairman" of a series of companies that did business as Cantor Gaming.
Through a spokesman, Mr. Lutnick declined to comment.
As previously reported, the complaint involves allegations Cantor employees knowingly accepted bets from runners working on behalf of an allegedly illegal gambling organization known in law-enforcement circles as the "Jersey Boys." Knowingly accepting sports bets from runners—a practice known as "messenger betting"—is illegal in Nevada.
Write to Alexandra Berzon at alexandra.berzon@wsj.com