Triple 7 Illinois, LLC v. Gaming & Entertainment Management - Illinois, LLC
992 N.E.2d 1251
Ill. App. Ct.2013Background
- In June 2010 Da Lee’s owner signed a 10‑year “Exclusive Placement Agreement” with Metro (unlicensed at signing) to place video gaming terminals once licensed under the Video Gaming Act.
- Metro sold most assets, including the Da Lee’s Agreement, to Best Gaming; Best’s license application was pending when it acquired Metro’s assets.
- The Illinois Gaming Board denied Best’s terminal‑operator license; Best requested a hearing, then assigned the Da Lee’s Agreement to GEM (a licensed operator) before the Board denied the hearing request.
- Triple 7 (a licensed operator) later contracted with Da Lee’s for exclusive placement and sued GEM for declaratory relief, arguing GEM’s assigned Da Lee’s Agreement was invalid under the Act and Board regulations.
- The trial court dismissed Triple 7’s complaint; the appellate court affirmed, holding the prelicensure Da Lee’s Agreement was not a regulated “use agreement” and was not invalid under the Act or regulations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Da Lee’s contract is a regulated “use agreement” under the Video Gaming Act/regulations | Da Lee’s Agreement is a use agreement and therefore assignment to an unlicensed transferee violates regulation (assignments only allowed from licensed operator to licensed operator) | The Administrative Code defines a use agreement as between a licensed operator and a licensed location; the Da Lee’s Agreement was executed by unlicensed parties and thus is not a use agreement | Court held the contract is not a use agreement because neither party was licensed when it was executed; regulations governing use agreements do not apply |
| Whether regulations prohibit prelicensure placement agreements | Regulations and Act should be read to forbid prelicensure placement agreements | Application form and regulatory scheme contemplate prelicensure agreements; statute/regulations contain no express prohibition; parties remain free to contract prelicensure with enforceability contingent on licensure | Court held prelicensure placement agreements are not prohibited; they are enforceable once parties obtain required licenses (but not enforceable under Act until then) |
| Whether assignment after denial of license is void under principles invalidating contracts that require unlicensed performance (Timmerman) | Denial of Best’s license voided the agreement and assignment; unlicensed performance makes contract unenforceable | Assignment occurred while Best was still an applicant; agreement requires licensed performance (installation) and thus did not require unlicensed performance; assignment occurred before denial was final | Court distinguished Timmerman and held the agreement did not require unlicensed performance; assignment to GEM before final denial was permissible |
| Whether Gaming Board’s denial of Best’s license immediately released Da Lee’s from obligations under §1800.320 | Denial terminated the agreement and released Da Lee’s per §1800.320 requirement that agreements release locations if operator license revoked or surrendered | Best remained an applicant until denial of hearing; assignment occurred before denial became final; §1800.320’s release condition applies upon revocation/surrender or final termination, not during pendency | Court held the denial became final after Best’s hearing request was denied; because assignment occurred before final denial, the agreement had not yet terminated and Best validly assigned it |
Key Cases Cited
- People ex rel. Birkett v. Dockery, 235 Ill. 2d 73 (2009) (statutory construction—give effect to plain language)
- In re Michelle J., 209 Ill. 2d 428 (2004) (courts should not read into statutes limitations not expressed by legislature)
- Braye v. Archer-Daniels-Midland Co., 175 Ill. 2d 201 (1997) (freedom of contract and limits on impairing contractual obligations)
- Timmerman v. Grain Exchange, LLC, 394 Ill. App. 3d 189 (2009) (contracts requiring licensed activity may be unenforceable after license loss; assignments before loss may bind parties)