2025 IL App (1st) 241076-U
Ill. App. Ct.2025Background
- Midwest Electronics Gaming, LLC (Midwest) entered into a use agreement in 2015 to operate video gaming terminals (VGTs) at a licensed establishment; the agreement included an automatic renewal clause and a provision to adopt future regulatory changes.
- In 2018, the Illinois Gaming Board (the Board) issued a new rule prohibiting automatic renewal clauses in use agreements.
- Midwest sought a declaratory judgment that the amended rule should not apply to agreements formed before the rule’s effective date, arguing retroactive application was unconstitutional and ultra vires.
- The trial court found the rule applied only prospectively and held Midwest’s agreement was not subject to the amended rule due to its pre-existing status.
- The Board appealed, arguing the agreement’s language expressly subjected Midwest to future regulatory amendments, including the anti-auto-renewal rule.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of amended rule to pre-2018 contract | Rule applies only prospectively, not to pre-existing agreements | Agreement expressly adopts future rule changes | Agreement bound plaintiff to future rule changes; rule applies via contract. |
| Whether Board’s application of rule constitutes unauthorized rulemaking | Board's interpretation is a new, unauthorized rule | Merely recognizes parties’ contractual obligations | Board’s conduct is not improper rulemaking; effect comes from contract, not agency. |
| Constitutionality: Retroactive impairment of contracts | Retroactive application is unconstitutional | No impairment; parties consented to change | No impairment; plaintiff voluntarily agreed to future regulatory changes. |
| Validity of Board’s rulemaking authority over use agreements | Board’s rule exceeds authority granted by Act | Board has broad statutory rulemaking authority | Act provides sufficient standards and delegation, rule is within Board’s authority. |
Key Cases Cited
- J & J Ventures Gaming, LLC v. Wild, Inc., 2016 IL 119870 (Act confers authority on Gaming Board to determine validity of use agreements.)
- Outcom, Inc. v. Illinois Department of Transportation, 233 Ill. 2d 324 (Administrative rules cannot extend or limit legislative scope.)
- Thygesen v. Callahan, 74 Ill. 2d 404 (Legislative power delegations to agency must have intelligible standards.)
- Steenes v. MAC Property Management, LLC, 2014 IL App (1st) 120719 (Unambiguous contracts are enforced as written by courts as a matter of law.)