Gold Rush Gaming Gets Two Counts Dismissed In Illinois VGT Case

Dispute involving two of Illinois' three largest VGT operators has been going on more than three years
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Gold Rush Gaming secured a victory in November in Cook County Circuit Court in its case against Accel Entertainment, getting two counts against it dismissed.

The dispute between two of the three largest video gaming terminal operators (VGTs) in Illinois has been going on for more than three years, starting in July 2019 when Accel attempted to convert two loans worth $30 million it made to Gold Rush into debt equity. Illinois Gaming Board Administrator Marcus Fruchter rejected Accel’s request last December, and the board unanimously upheld the decision in February.

In July, Gold Rush filed a lawsuit claiming “illegal and tortious” conduct by Accel, which then countersued. Last month’s ruling by Judge Patrick Sherlock allowed Gold Rush to move forward in its claims against Accel alleging it engaged in anti-competitive behavior, most notably in the form of a “bounty” program created by Accel CEO Andy Rubenstein that was designed to lure establishment contracts away from Gold Rush.

Illinois has the highest count of VGTs in the United States with more than 44,000, and play at more than 8,000 establishments statewide creates a substantial form of gaming tax revenue for the state. Operator revenue has totaled $2.2 billion in Net Terminal Income through the first 10 months of the year, resulting in $653 million in state taxes and an additional $112.6 million for local municipalities.

By comparison, the combined state taxes from casino gaming and sports wagering this year have totaled $303 million. Local municipalities statewide have received an additional $69 million in receipts from the two disciplines.

Key parts of the ruling and highlights

Arugably the most important part of Sherlock’s 21-page ruling is the court agreeing that Gold Rush did not breach Accel’s debt conversion rights because the IGB’s decision to prohibit the conversion made it either impossible or illegal for Gold Rush to act upon it.

“The IGB is an independent body tasked with ensuring the video gaming community and public at large is protected,” Sherlock wrote. “It made its independent decision and by operation of law, Gold Rush cannot comply with the term of contract. The performance is rendered objectively impossible due to destruction of the subject matter of the contract or by operation of the law. The contract is unenforceable as to the conversion shares.”

The ruling also means Gold Rush’s claims that Accel breached the contract between the parties by refusing a partial pre-payment and engaged in anticompetitive misconduct will proceed to discovery.

Accel’s remaining claim of unjust enrichment for Gold Rush that was allowed to proceed must be amended in a more narrow sense covering the balance of the loan and interest accrued, because there is no dispute the two sides currently have an executed contract.

The court denied Accel’s request to dismiss counts of tortious interference and consumer fraud, noting it disagreed with Accel’s argument that the foundation of the claims came in alleged defamatory statements and thus are subject to a one-year statute of limitations. Sherlock ruled that each cause of action had its own statute of limitations that fell within the timeline of being able to proceed.

For the count of tortious interference with prospective economic advantage, Sherlock noted Gold Rush “adequately alleges the element of its Count” and also adequately pled “actual malice and unfair competition” to overcome Accel’s claim to dismiss on the grounds of the privilege of competition.

On the count of consumer fraud, the court again found Gold Rush’s arguments adequate to proceed, noting the “alleged numerous statements made by Accel representatives that can be construed as disparaging of Gold Rush’s ability to provide services going forward and the quality of those services.”

Photo: Shutterstock

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