Video Gambling Operator Faces Multi-Million Fine from Illinois Regulator over DraftKings Deal

Illinois’s gambling regulator is seeking to fine a video gambling machines operator over an agreement the company has entered in with an online sportsbook operator in order to pay commissions to business owners that host its devices at their establishments.

Accel Entertainment could be slapped with a $5 million fine by the Illinois Gaming Board, if the regulator proves that its advertising agreement with sports betting company DraftKings violates state rules and regulations.

Based in Bolingbrook, a southwest Chicago suburb, Accel is one of the largest video gambling operators in the US. The company obtained its license from the Illinois Gaming Board in 2012 and has grown its operations to more than 10,000 video gambling terminals across more than 2,000 licensed establishments since then.

In a complaint filed this past Friday, the Illinois gambling watchdog alleges that Accel has entered into an agreement with DraftKings to pay commissions to owners of bars, restaurants, and other establishments to install its machines.

Under state gambling law, video gambling operators are not permitted to offer “inducements” in a bid to bolster their business. According to the Illinois Gaming Board’s complaint, Accel has paid more than $21,000 in commissions as part of its deal with DraftKings.

What Did the Deal Include?

The Gaming Board said in its filing that as part of their deal, Accel offered DraftKings advertising space on its video gambling terminals. The company would get $200 from the sports betting operator for each new customer it drove for the latter, provided that certain conditions were met.

The deal also allowed Accel to share the payments with the establishments hosting the machines. The Illinois regulator quoted in its complaint an email from Accel’s CCO who asked for the agreement to specify that Accel would be sharing some of the payments it received from DraftKings with business owners.

The email said that Accel wanted the agreement to specify that so the state gambling watchdog “can see that we are operating as a pass through for the commissions.” A separate email noted that the wording of the agreement should make it clear that Accel was passing funds to video gambling establishments as it was not allowed to provide compensation to its partners since that violated state inducement rules.

The Illinois Gaming Board argued that Accel actually had complete control over the commissions and planned to use the money to lure potential business partners.

Accel President and CEO Andrew Rubenstein said that the deal was inked between two public companies “that absolutely knew what they were doing and following the law.” DraftKings went public this past spring through a merger with a special purpose acquisition company.

This is not the first time Accel is facing scrutiny from the Illinois Gaming Board in the past year. In March, ProPublica Illinois published a report claiming that the company had taken advantage of connections at the state gaming regulator at a time when regulations for the provision of video gambling services were being created.

The company allegedly gained access to internal documents about its competitors which too sought video gambling licenses. The Gaming Board launched an investigation into the matter, but declined to provide information on its progress.

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