Cook County Record

Monday, December 16, 2019

Appellate panel: Second look needed at challenge to the way IL Gaming Board makes video gambling rules

Lawsuits

By Scott Holland | May 29, 2019

Video gaming
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CHICAGO — A state appellate panel has ruled the state's video gambling law is constitutional. But they said a Cook County judge needs to take another look at the way the Illinois Gaming Board makes its rules to regulate video gambling in the state.

Cook County Judge Neil Cohen had dismissed the challenge to the state's video gambling law and rules brought in an April 2017 complaint from Illinois Café & Services Company and Laredo Hospitality Ventures. 

The two businesses operate more than 100 video gambling parlors in Illinois, including nearly 50 in Cook County, all branded as Dotty’s Café, for Illinois Café and Services, and Stella’s Place and Shelby’s, by Laredo Hospitality.


Illinois First District Appellate Justice Eileen Burke | Illinoiscourts.gov

The operators had challenged two provisions of the Illinois Video Gaming Act — one prohibiting certain businesses from being involved in multiple video gambling industry aspects, and another requiring an equal split of post-tax profits between machine and parlor operators — as well as to invalidate an Illinois Gaming Board policy on advertising.

Broadly agreeing with Judge Cohen's ruling, in an opinion issued May 23, Justices Eileen Burke, Margaret McBride and Robert Gordon affirmed Cohen’s dismissal of everything related to the constitutionality of the video gambling law and three counts related to the policy document, but said two counts warrant further proceedings.

Burke wrote the opinion, saying the justices found the two challenged Video Gaming Act provisions are constitutional because the state has a legitimate interest in enacting those policies and regulating video gambling in Illinois. She further allowed Cohen’s dismissal of the operators’ policy document claims to stand, because the Gaming Board had removed the policy from its website, rendering that aspect of the litigation moot.

However, the justices said the Cook County court should take another look at two aspects of the challenge.

In the complaint, the operators of the Dotty's and Shelby's chains said the Gaming Board improperly made rules under the Illinois Administrative Procedure Act when it posted the advertising policy on its website. They also alleged the board lacked the statutory authority to enact a rule dictating expense sharing between operators and establishments. Under both counts, the companies wanted the court to issue an injunction preventing enforcement of the policy.

In addition to taking the policy off the website, Burke wrote, “the Board has established by affidavit that it will not rely on the policy or repost it.” She pointed to a 2017 Third District Appellate Court opinion in Windy City Promotions v. Illinois Gaming Board, in which the court rejected a similar mootness argument and “concluded that the Board had the authority to attempt to adopt the policies contained in the document, but failed to follow the appropriate rulemaking procedures during its attempt.”

Although most of the claims concerning the policy related to its substance, Burke wrote, the surviving two counts address the board’s adoption process. As such, the operators’ “challenge to the implementation of the policy and the Board’s statutory authority to do so still remains and still affects their rights and the Board’s duties.”

The panel pointed to a January Gaming Board meeting at which members approved submitting a proposed advertising rule to the Illinois Secretary of State’s index department, which Burke wrote “demonstrates that the Board’s statutory authority to enact specific rules, regulations, or policies regarding inducements is still an active issue.”

If a circuit court judge rules against the board, Burke explained, the result could be significant changes in how the board approves rules and policies. Further, it would allow the operators to purse compensation for their costs in bringing the complaint.

According to Cook County court records, the plaintiffs have been represented in the action by attorneys with the firm of Winston & Strawn LLP, of Chicago.

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Illinois First District Appellate CourtIllinois Gaming BoardCircuit Court of Cook CountyWinston & Strawn LLP

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