MOUNT VERNON – Disputes over profits from video gaming belong at the Illinois Gaming Board rather than in courts, Fifth District appellate judges ruled on Aug. 7.
On their own motion they dismissed a Madison County suit for lack of jurisdiction, after both sides told them the suit belonged in court.
“The parties cannot convey subject matter jurisdiction to a court by stipulation, consent, or waiver,” Justice Bruce Stewart wrote.
Stewart wrote that the Video Gaming Act gives the Gaming Board exclusive jurisdiction over all agreements purporting to control the placement of gaming terminals.
“There is no common law right in Illinois to operate, profit from, or assign profits from video gaming terminals,” he wrote.
“Under the common law, gambling contracts are void,” he wrote.
Justices Richard Goldenhersh and Gene Schwarm concurred.
They declined to follow colleagues at the Third District in Ottawa, who ruled that jurisdiction belonged in the courts.
Stewart wrote that the Third District usurped the Gaming Board’s jurisdiction.
That case awaits action at the Illinois Supreme Court, and a decision there will affect 27 other suits pending in 10 courts statewide.
Legislators passed the Video Gaming Act in 2009, providing for the governor to pick five Gaming Board members and for the Senate to confirm them.
Owners of establishments and operators of terminals applied to the Gaming Board for licenses and rushed to sign agreements.
Owners of Wild Country, a Collinsville club, agreed to give terminal operator Action Amusement an exclusive right to place terminals there for five years.
The agreement stated that Action Amusement “is or shall become” a licensed operator and Wild Country “is or shall become” a licensed establishment.
In 2010, Action Amusement assigned its rights under the Wild Country agreement and other exclusive agreements to Action Gaming.
Action Gaming applied for a license.
Next, Wild Country amended the original agreement to identify Action Gaming as a party rather than Action Amusement.
In 2012, the Gaming Board notified Action Gaming that it would deny the license.
Board members found that employees and owners Nicky Nichols and Jason Rowell associated with convicted gambler James Koehler.
They further found that Nichols engaged in questionable transactions with convicted felons Tim Whitmer and Tim Coulon.
Action Gaming petitioned for a hearing and assigned the rights under all its agreements to J&J Ventures Gaming, which had obtained a license.
Wild Country then entered into a new agreement with Accel Entertainment, which had obtained a license.
The Gaming Board then denied Action Gaming’s request for a hearing.
J&J Ventures and Action Gaming sued Wild Country in Madison County in 2013, for declaratory judgment establishing an exclusive right of placement.
Accel Entertainment petitioned to intervene, and associate judge Donald Flack granted the motion.
Accel Entertainment argued that its agreement was the only one Wild Country had signed with a licensed operator.
Third District judges made up Flack’s mind for him, finding precursor agreements were valid and could be freely assigned and transferred prior to licensing.
In 2014, Flack ordered Accel Entertainment to remove any terminals it had installed at Wild Country.
Accel Entertainment appealed.
J&J Ventures Gaming and Action Gaming filed a cross appeal of the order granting Accel Entertainment’s petition to intervene.
Stewart, Goldenhersh and Schwarm held that enforcement of assignments could allow entities to profit in a manner contrary to the legislature’s intent.
“The passage of the Act created a new industry in Illinois, which is governed by new rules and procedures, and video gaming contracts that do not conform to the regulatory requirements are void,” Stewart wrote.
He wrote that Flack’s decision undermined the Gaming Board by validating the transactions upon which J&J Ventures Gaming made its claim.
“No reasonable interpretation of the Act and its regulatory scheme of this new industry, taken as a whole, can lead to a conclusion that the legislature intended the courts to make such decisions,” he wrote.
Stewart wrote that whether the law prohibits the assignments is an issue that could directly impact the integrity and security of video gaming in the state.
He wrote that the regulatory scheme might be frustrated if courts allow a person lacking good character, honesty and integrity to circumvent it.
Former federal judge Patrick Murphy of Marion, wife Patricia Murphy, and Chicago lawyers Steven Blonder and Marissa Downs represented Accel Entertainment.
Christopher Koester and Aaron Jones of Effingham represented J&J Ventures Gaming.
Paul Waller of Belleville represented Action Gaming, along with Chicago lawyers Corey Shapiro, William Gantz, and Irina Dashevsky.