Category Archives: Court Case/Decision

Missouri Prosecutors Advance Lawsuit to Shutdown Illegal Gambling Machines Popping Up Across the State

Casino Watch Focus has reported on a recent gambling expansion proposal in Missouri that would legalize slot machines outside of casinos. Currently, legalized gambling in Missouri is limited to a set number of licensed and regulated casinos that exist along the Missouri and Mississippi rivers. The proposal would be an unprecedented expansion in gambling, as it would allow slot machines virtually anywhere in the state. However, the state is currently seeing similar expansion due to illegal gambling machines that operate exactly as these proposed slot machines would. These machines are popping up all over Missouri and the manufacture claims they are not slot machines because the reveal the result of the next spin to the player. These machines act exactly like the pre-reveal machines Florida had to deal with recently and the courts quickly called them out as illegal slot machines. It’s very clear that even though the initial spin shown is your outcome, it’s the spin after that the gambler is paying to see. Players are simply paying in advance and the subsequent outcomes are all a matter of chance. It is a slot machine through and through and a Platte County prosecutor is cracking down on these machines through a new lawsuit that seeks to get clarification by the court. An online source explains:

They look like slot machines, but they aren’t inside a casino.

Video gambling machines have been popping up across Missouri, including in St. Joseph, which has led one prosecutor to file criminal charges to stop their spread. Integrity Vending LLC, based in Kansas, currently faces one felony county of promoting gambling in Platte County.

“In Missouri, games of chance are illegal,” Eric Zahnd, the Platte County Prosecuting Attorney said. “These machines, according to the manufacturer, reveal whether or not you’ll win the next round of the game so they allege that it’s not a game of chance.”

“However to continue to play you have to play through those losing rounds,” Zahnd said.

The legal question that a judge must resolve is whether or not the machines constitute a game of chance, like a slot machine or video poker game. According to Zahnd, the company who distributed the machines, Integrity Vending LLC, has agreed to remove the machines if they’re determined to be illegal. 

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UPDATE: Court Strikes Down DOJ’s Wire Act Ruling – Appeal Likely to Follow

Casino Watch Focus has reported on the Department of Justice’s Wire Act interpretation as it relates to online gambling. Prior to the Obama Administration, the Wire Act was always interpreted to apply to all online gambling. During the Obama Administration, the DOJ decided the wire act only applied to sports betting, thereby legalizing all other forms of online gambling. Its been argued that their decision wasn’t grounded in the plain language and clear intent of Congress when the act was passed in the 1960’s. Never the less, it opened the floodgates to online gambling. Recently, the DOJ produced a memorandum that said they planned to reinterpret the wire act to apply to all gambling as it was for so many years prior. Naturally many groups opposed the ruling and the DOJ delayed its enforcement to allow time for the court process to take place. Now, the first ruling has been made and unsurprisingly, it upholds the Obama Administrations ruling. An online source reports:

In a memo dated June 12, 2019, US Deputy Attorney General Jeffrey Rosen instructed all US attorneys to hold off on implementing the Wire Act opinion until the end of the calendar year. The last date given had been June 14, 2019, but the decision by the US District Court last week makes any enforcement of that Wire Act opinion illegal as it pertains to any forms of gambling other than sports betting.

[E]veryone will wait to see if the DOJ decides to appeal that decision or let it stand. It is unlikely that the DOJ will not appeal, as even Judge Barbadoro fully expected the case to head to the US Supreme Court, as noted during the oral arguments phase.

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Greyhound Industry Seeks to Overturn Florida’s Amendment 13 that Bans Live Races

Casino Watch Focus has reported on the recent attempts to ban dog racing in Florida. Voters passed Amendment 13, which banned live greyhound races. The issue was anything but straight forward, as many voters wanted to eliminate the gambling that goes along with dog racing as well. However, the bill simply decoupled the live racing requirement from the gambling that took place at the tracks. The bill allows gambling on races that are simulcast and leaves open the possibility for existing slot machine gambling to be allowed even though the track doesn’t support live racing. However, Florida voters also passed Amendment 3, which requires voter approval for any expansion of gambling. This would seemingly mean new “tracks” couldn’t go up that are essentially just mini slot machine casinos that offer simulcast dog races. The true decoupling implications and the actual landscape of how slot machine gambling will expand as a result is uncertain until such mini casinos attempt to be built or expanded and all the legal posturing takes place. However, the seemingly clear issue of live dog races being banned in Florida may not be as certain either. It has been announced that a new group has been formed with the goal of legally challenging Amendment 13. Orlando Weekly reports:

Amendment 13, which passed with a 69 percent “yes” vote last year, banned betting on greyhound races in Florida. Now, the head of a pro-greyhound racing group says they’re fighting to bring the so-called sport back.

In a public Facebook post last week, Jennifer Newcome, chairman of the Committee to Support Greyhounds, announced the group’s intention to move forward with challenging the amendment in court.

Newcome said the group plans to file the case in July. The group adds on their website: “Greyhound Nation did not back down before, and we refuse to stop until the last judge says ‘NO.'”

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UPDATE: Seminole Tribe Ends Payments to Florida After Failed Compact Negotiations: Special Legislative Session Talks Begin

Casino Watch Focus has reported on the recent news that the Florida legislative session would end with no gambling deal in place. The failure to renegotiate a deal has been an ongoing issue. At the core of the problem is that the Seminoles have exclusive rights to table games and certain gambling. Florida has not been enforcing this exclusivity and the courts sided with the Seminoles. However, the Seminoles have been acting in good faith, providing the state with the estimated $300 – $350 million annual payments the original agreement set up for such exclusivity. But now that the legislature has once again failed to stop others from offering designated card games, which is expanding gambling in the state, the Seminole tribe has decided to now stop providing the good faith payments. The Sun Sentinel reports:  

The tribe had warned it would halt the payments, which totaled nearly $330 million last year, because of controversial designated-player card games offered by many of the state’s pari-mutuel cardrooms. The Seminoles — and a federal judge — say the games violate part of a 20-year gambling deal by the tribe and the state in 2010. That deal, in part, gave the tribe exclusive rights to “banked” card games. 

The Seminole Tribe of Florida made good on threats Tuesday by telling Gov. Ron DeSantis it is quitting a long-standing revenue-sharing agreement with the state after negotiations on a new gambling deal went nowhere this spring. 

In a July 2017 settlement between the Seminoles and former Gov. Rick Scott, the state agreed to drop its appeal of Hinkle’s decision and to take “aggressive enforcement action” against pari-mutuels operating banked card games that violate state law. In exchange, the Seminoles agreed to continue making payments to the state until the end of this month. “Unfortunately, there has not been aggressive enforcement against those games, which have expanded since Judge Hinkle’s decision,” Osceola wrote.

Florida lawmakers considered this possible outcome, and mad adjustments the budget, but some believe the financial contribution, and the gambling restriction that comes from Seminole exclusivity, too import to not make an attempt to resolve the issue.   An online source explains:

State Representative Evan Jenne called for negotiations with the Seminole Tribe of Florida to reinstate the annual payments of an estimated $350 million suspended by the tribe after a failure to reach an agreement about the future of gambling in the state. “That’s just too much money to be left out there unaccounted for in our budget,” said the legislator.

Jenne, a Democrat who represents 99th District which include most of Hollywood and Southern Broward, said the suspension of payments from the tribe could have been avoided. “It was something that was a long time coming, it’s been talked about for quite some time it’s been nearly a decade since the compact would, should have been signed,” he said.

“They had a promised of exclusivity when it came to games like that and the state has not done their part in holding up that part of the bargain,” said Jenne.

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DOJ Seeks to get State Online Lottery Lawsuit Dropped

Casino Watch Focus has reported on the Department of Justice’s reversal of the Wire Act and that decision’s impact on online gambling. Many said lawsuits would be the deciding fact as to whether or not they could reverse the out of place Obama Administration’s reinterpretation of the wire act, which lead to the massive expansion of online gambling. One area of concern for states has been the impact on state lotteries, specifically where those state offer online access to their lotteries. The DOJ recently extended the deadline as they wanted to more closely examine the full range of its ruling. The DOJ is now seeking a motion to dismiss a lawsuit brought by New Hampshire claiming they don’t have standing to sue yet and that the state hasn’t proven that the ruling would even impact them. The Associated Press explains: 

The U.S. Justice Department says in a federal court brief that the New Hampshire Lottery Commission has failed to demonstrate that it wouldn’t be immune from 1960s law enacted to crack down on the mob.

On Thursday, the Justice Department filed the brief in Concord, New Hampshire, in response to a judge’s order for it to clarify its interpretation of the Wire Act. States fear losing at least $220 million annually in lottery profits if the Wire Act is determined to apply to all forms of gambling that crosses state lines.

The department also affirmed any early promise to not prosecute state lotteries or their vendors while it continues to review whether the Wire Act applies to lotteries.

The concern goes beyond the state of New Hampshire. Several states offer online access to their lotteries and some lotteries extent to multiple states. Some believe the intent of the DOJ isn’t to stop lotteries, as Powerball and Mega Millions are too engrained as a societal norm, but the actual transactions might very well fit the original 1960 Wire Act. An online source explains: 

The states are anxiously waiting on a clarification from the Justice Department about its opinion that, if strictly interpreted, would outlaw lottery tickets sold online and prohibit all lottery-related activities that use the internet. Legal experts say Powerball and Mega Millions are at risk if the opinion is read to the letter, which would cost the states billions. 

Seven states now sell lottery tickets online and others offer residents internet-based lottery subscription services.

When state lotteries use the internet to transmit data for online ticket sales, the network signal can cross state lines, and games that are played in multiple state s, like Powerball and Mega Millions, transmit data to a central database out of state, according to the North American Association of State and Provincial Lotteries.

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Tribal Casino Sues Video Gaming Company over Illegal Loot Box Gambling

Casino Watch Focus has reported on the ongoing saga of the new gambling mechanic in video games know as loot boxes. This mechanic works by having players purchase boxes full of mystery items in video games. These boxes often cost real world money and the items coming out of the box can be garden variety or fairly useless in game items all the way to very powerful weapons or items that give players a leg up. There have been may instances where these items hold real world value and some examples exist of those items being sold for real money. So the player puts money in the game, pulls the box open lever, gets a random prize of various value and then the player trades those in for real world money, very possibly at a financial gain. Many would argue that the mechanic described is the same as gambling on a slot machine, and that’s the very foundation of for a tribal casino’s lawsuit is video game manufacture.   An online source explains how such a lawsuit could be brought forth: 

The Quinault Indian Nation has filed a lawsuit against Valve, the makers of Steam, claiming that it is running an unlicensed gambling operation and demanding payment for damages.

Okay, this gets a little complicated so settle in. The Quinault Indian Nation owns and operates a licensed casino in the state of Washington, one that is regulated by the Washington Gaming Commission. Valve is also based in Washington.

In its suit against Valve (via Geekwire), the Quinault Nation alleges that “Valve facilitated illegal, unregulated and unlicensed online gambling” when it launched skins for /Counter-Strike: Global Offensive /(/CS:GO/).

Back in 2013, Valve started releasing skins for weapons in /CS:GO/, these upgrades are purely cosmetic. Players would earn crates by playing /CS:GO /and these crates could then be opened with keys which Valve sold in its store. The keys were the only way to open the crates, and it made Valve a tidy bit of cash.

The Quinault Nation says that “the look, feel, sound and experience [of opening a crate] was basically an online slot machine”, providing YouTube footage of players opening crates to back up its claim.

What’s particularly striking in this case, is that seemingly at every level of the transaction, Value, the company being sued by Quinault Indian Nation, had their hand in guiding the process. An online source explains:

It points to the skin gambling sites that were launching and says Valve did nothing to stop them. “Valve had actual knowledge of the identity of the Valve accounts that gambling websites used to effectuate gambling transactions, and chose not to take any action against them,” the court documents state.

It goes on to claim that “Valve allowed gambling websites to use Valve accounts on Valve’s servers and Valve’s computers to effectuate gambling transactions” and that “Valve also provided technical support to gambling websites and real-money cash out websites, despite those websites violating Valve’s Steam Subscriber Agreement, and would return control of gambling websites’ Valve accounts back to the gambling website after being hijacked or hacked by other third parties.”

Despite simply providing an incredibly clear picture for those legislative and consumer protection bodies looking to best understand just how much these loot boxes are no different from gambling, the tribe also outlines exactly how it hurts not only their business with the State, but how doing so illegally without following state regulation further harms those involved. They conclude: 

The Nation has a contract with the State of Washington that means it must remain compliant with the state’s laws if it wants to operate casinos, and that compliance costs money. It has to “engage in responsible gaming, prevent fraud, prevent illegal gaming, and prevent underage gambling”. The Nation also pays 2% of its earnings in Impact Mitigation Funds, which go to paying support services in area around the casino.

If Valve is a gambling operation, like the Nation claims, then it is an unlicensed one and doesn’t incur any of the costs or the risks that come with a gambling license. The Nation is suing for damages, but also the money Valve obtained through gambling transactions.

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Supreme Court Betting Case Lawsuit Against NFL and other Sports Leagues Shot Down by Court

Casino Watch Focus has reported on the New Jersey Monmouth Park lawsuit against the sports leagues in the wake of the Supreme Court legalizing sports betting. For years New Jersey attempted to legalize sports gambling, and for years, the courts shot down all their efforts. In the states most recent attempt however, the managed to get their case before the Supreme Court and they emerged victorious. Most simply moved forward with sports legalization efforts, but New Jersey’s Monmouth part saw an opportunity to sue the sports league. Their claim was that the various leagues had blocked years of sports betting revenue. Unfortunately for Monmouth Park, a court rejected their claim. ESPN reports:

Late Friday, United States District Judge Michael A. Shipp denied a claim filed in May by the New Jersey Thoroughbred Horsemen’s Association (NJTHA) — a group associated with the Monmouth Park racetrack and casino — asking “for judgment on $3.4 million injunction bond plus interest and damages.”

The New Jersey-based group had filed the renewed claim against the NFL, NCAA, NBA, NHL and Major League Baseball within weeks of the Supreme Court’s May 14 decision that opened the door for states to authorize sports betting nationwide.

“The Court … finds NJTHA was not wrongfully enjoined,” wrote Judge Shipp in a just-released nine-page ruling obtained by ESPN. “The Court, accordingly, finds good cause exists to deny NJTHA damages under the injunction bond.”

With the courtroom win, the NFL, NCAA, NBA, NHL and Major League Baseball avoid a ruling that would have allowed other bookmakers to claw-back money allegedly lost during the time between when the five leagues sued to enforce the federal law banning single-game wagering outside of Nevada, and the date the Supreme Court declared the ban to be unconstitutional.

Monmouth Park and the NJTHA could potentially appeal Judge Shipp’s ruling in the coming weeks. The group had previously claimed “that the Leagues acted in bad faith by wrongfully blocking the NJTHA from operating a sports betting venue at Monmouth Park.” Neither current New Jersey Governor Phil Murphy nor former Governor Chris Christie were part of the case.

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