J&J VENTURES GAMING, LLC, an Illinois Limited Liability Company, and ACTION GAMING, LLC, an Illinois Limited Liability Company, Plaintiffs-Appellees and Cross-Appellants, v. WILD, INC., d/b/a Wild Country, an Illinois Corporation, Defendant (Accel Entertainment Gaming, LLC, Intervenor-Appellant and Cross-Appellee).
No. 5-14-0092
Appellate Court of Illinois, Fifth District
August 7, 2015
2015 IL App (5th) 140092
JUSTICE STEWART delivered the judgment of the court, with opinion. Justices Goldenhersh and Schwarm concurred in the judgment and opinion.
Appeal from the Circuit Court of Madison County, No. 13-MR-85; the Hon. Donald M. Flack, Judge, presiding. Judgment vacated; motion denied; appeal dismissed.
Christopher A. Koester and Aaron C. Jones, both of Taylor Law Offices, P.C., of Effingham, for appellee J&J Ventures Gaming, LLC.
Corey M. Shapiro, William M. Gantz, and Irina Dashevsky, all of Dentons US LLP, of Chicago, and Paul P. Waller III, of Walker & Williams, P.C., of Belleville, for appellee Action Gaming, LLC.
¶ 1 This case involves a conflict between two companies claiming to have exclusive contractual rights for the placement of video gaming terminals in an establishment owned by the defendant, Wild, Inc., doing business as Wild Country, pursuant to the Video Gaming Act (Act) (
¶ 2 Under the language of the Act, a terminal operator‘s right to place video gaming terminals in a particular location must be established by a “written use agreement” with the owner of the establishment.
¶ 3 J&J Ventures Gaming filed a lawsuit against Wild Country requesting the court to enter a declaratory judgment establishing that it had the exclusive right to be the video gaming terminal operator for Wild Country‘s establishment until the expiration of the term of its use agreement. The circuit court granted Accel Entertainment‘s request to intervene in the lawsuit over J&J Ventures Gaming‘s objection. After a hearing, the circuit court concluded that J&J Ventures Gaming had a valid, binding, and enforceable use agreement with Wild Country that preceded Accel Entertainment‘s use agreement. The court, therefore, enjoined Accel Entertainment from operating video gaming terminals within Wild Country‘s establishment and ordered it to remove any video gaming terminals it had installed at the establishment.
¶ 4 Accel Entertainment appeals the circuit court‘s judgment, arguing that J&J Ventures Gaming‘s contract is not a valid and enforceable use agreement under the Act. J&J Ventures Gaming cross-appeals the circuit court‘s order allowing Accel Entertainment to intervene in the lawsuit. For the following reasons, we vacate the circuit court‘s judgment and dismiss this cause for a lack of subject matter jurisdiction.
¶ 5 ¶ 6 The legislature enacted the Act on July 13, 2009. Pub. Act 96-34 (eff. July 13, 2009). The Act legalized the use of video gaming terminals for gambling purposes for the first time within the State of Illinois. This new video gaming industry is subject to extensive regulations under the statute‘s comprehensive regulatory scheme. The Act requires the Illinois Gaming Board (the Gaming Board) to license all entities having video gaming terminals installed in their establishments (licensed establishments) and license all entities seeking to place and operate video gaming terminals (licensed terminal operators) within licensed establishments.
¶ 7 When the legislature enacted the video gaming statute in 2009, video gaming did not begin immediately. Instead, there was a three-year start-up period before actual video gaming began. Video gaming terminals did not go “live” until October 9, 2012. During this start-up period, unlicensed persons and entities entered into agreements with establishments that hoped to become licensed establishments under the Act. These agreements purported to grant the unlicensed party the exclusive right to place video gaming terminals in the other party‘s establishment upon each party obtaining its respective licenses under the Act.
¶ 8 The dispute in the present case stems from such an agreement initially entered into between Wild Country and another entity that is not a party to this lawsuit, Action Amusement Company (Action Amusement). Wild Country entered into the agreement with Action Amusement on August 17, 2009. This agreement purported to be an “Exclusive Location And Video Gaming Terminal Agreement” (exclusive location agreement, or agreement) granting Action Amusement the exclusive right to place video gaming terminals in Wild Country‘s establishment.
¶ 9 The parties entered into the exclusive location agreement before the Gaming Board had established any rules for implementing the Act. Therefore, the Gaming Board had not licensed either party when they entered into this agreement. However, the agreement states that Action Amusement “is or shall become” a licensed terminal operator under the Act and that Wild Country “is or shall become” a licensed establishment under the Act. The stated purpose of the contract is for “placing and operating video gaming terminals” in Wild Country‘s establishment for a period of 60 months, beginning when the first video gaming terminal begins operating in the establishment. The agreement states that Action Amusement “shall have the exclusive right to place video gaming terminals” in Wild Country‘s establishment during the term of the agreement and that the agreement “shall be binding upon and inure to the benefit of the representative legal representatives, successors and assigns of the parties hereto.”
¶ 10 The Act does not specify any requirements that an agreement must meet in order to be a valid “use agreement” for the placement of video gaming terminals. However, rules promulgated by the Gaming Board after the effective date of the Act (and after the date of the exclusive location agreement) set out minimum standards for use agreements, including that they must be between a licensed terminal operator and a licensed establishment. See
¶ 11 On October 5, 2010, Action Amusement assigned its rights under various exclusive location agreements, including its rights under its agreement with Wild Country, to another entity, Action Gaming, LLC (Action Gaming). Action Amusement never became a licensed
¶ 12 At the time that Action Gaming entered into this assignment with Action Amusement, it was also not a licensed terminal operator under the Act, but it intended to obtain the necessary licensing. However, as explained below, the Gaming Board later denied Action Gaming‘s request for a license.
¶ 13 On January 12, 2012, while Action Gaming‘s application for a terminal operator‘s license was pending before the Gaming Board, Wild Country and Action Gaming signed a document purporting to be an amendment to the exclusive location agreement. In the amendment, the parties acknowledged that Action Gaming, rather than Action Amusement, was now a party to the exclusive location agreement. The parties also noted that amendments to the exclusive location agreement were necessary in order for the contract to comply with the Act “and the rules and regulations promulgated thereunder.”
¶ 14 The rules promulgated by the Gaming Board after the enactment of the Act “[p]rohibit any assignment [of use agreements] other than from a licensed terminal operator to another licensed terminal operator.”
“Assignment of Agreement by Terminal Operator: Prior to Terminal Operator being licensed as a ‘terminal operator’ pursuant to the Act and the rules and regulations promulgated thereunder (collectively, the ‘Video Gaming Law‘), Terminal Operator may freely assign and/or transfer this Agreement and its rights and/or obligations hereunder, subject to the Video Gaming Law. After Terminal Operator becomes a licensed terminal operator, Terminal Operator may not assign and/or transfer this Agreement and its rights and/or obligations hereunder except: (i) to another licensed terminal operator; or (ii) as may otherwise be permitted by the Video Gaming Law.”
¶ 15 The amendment to the contract also included a provision concerning approval of the Gaming Board as follows:
“The parties acknowledge that this Amendment and the Agreement are subject to and contingent upon the Illinois Gaming Board‘s (the ‘IGB‘) review of, and to the extent required by the IGB, consent to the use of this Amendment. To that end, the parties agree to submit this Amendment to the IGB with any licensing application and to cooperate with each other in obtaining the IGB‘s consent, if required. The parties agree to modify or amend this Amendment to comply with the requirements of the IGB or any change in the Illinois Video Gaming Act or the rules and regulations promulgated thereunder.”
¶ 17 Action Gaming petitioned the Gaming Board for a hearing. See
¶ 18 On August 24, 2012, while Action Gaming‘s request for hearing was pending before the Gaming Board, Action Gaming entered into an asset purchase agreement with J&J Ventures Gaming in which Action Gaming assigned its rights, title, and interest in all of its exclusive location agreements, including the agreement with Wild Country, to J&J Ventures Gaming. Prior to this assignment, the Gaming Board had approved J&J Ventures Gaming as a licensed terminal operator under the Act.
¶ 19 Under the terms of the asset purchase agreement with J&J Ventures Gaming, Action Gaming would profit from J&J Ventures Gaming‘s future video gaming operations by receiving future monetary compensation from J&J Ventures Gaming in exchange for the exclusive right to place and operate video gaming terminals in the locations included in the agreement, including Wild Country‘s establishment. The amount of compensation Action Gaming is to receive under the asset purchase agreement has been redacted from the copy of the agreement that is included in the record on appeal. It is apparent from the unredacted portions of the asset purchase agreement, however, that the compensation that Action Gaming will receive under the contract is dependent on the extent to which J&J Ventures Gaming operates video gaming terminals in the licensed establishments that had been under contract with Action Gaming, including Wild Country.
¶ 20 On August 29, 2012, Wild Country entered into a new use agreement with the intervenor, Accel Entertainment, that granted Accel Entertainment the exclusive right to place video gaming terminals in Wild Country‘s establishment. At the time of this agreement, the Gaming Board had granted Accel Entertainment a license to be a terminal operator.
¶ 21 On September 20, 2012, the Gaming Board denied Action Gaming‘s request for a hearing on its application to become a licensed terminal operator. The Gaming Board‘s denial of the request for hearing was its final decision, and the denial of licensure became the final order on
¶ 22 On March 18, 2013, J&J Ventures Gaming (along with Action Gaming as a coplaintiff) filed a complaint against Wild Country seeking a declaratory judgment from the circuit court establishing that J&J Ventures Gaming has the exclusive right to place video gaming terminals in Wild Country‘s establishment. At that time, the Gaming Board had not yet granted Wild Country‘s application to be a licensed establishment. The Gaming Board granted Wild Country‘s application to become a licensed establishment on October 24, 2013.
¶ 23 Accel Entertainment filed a petition for leave to intervene in the lawsuit, which the circuit court granted over J&J Ventures Gaming and Action Gaming‘s objection. Accel Entertainment alleged in its counterclaim that the original exclusive placement agreement between Wild Country and Action Amusement was not an enforceable use agreement under the Video Gaming Act because the agreement was not signed by a licensed terminal operator, but was between Wild Country and an unlicensed entity, Action Amusement. Accel Entertainment maintained that its use agreement with Wild Country was the only valid use agreement because it was the only agreement signed by a licensed terminal operator. J&J Ventures Gaming, however, argued that its assignment of the original exclusive location agreement was valid under common law contract principles and was not prohibited by either the terms of the Act or the rules for implementing the statute promulgated by the Gaming Board.
¶ 24 While the present case was pending in the circuit court, on July 26, 2013, the Third District of the appellate court issued an opinion in Triple 7 Illinois, LLC v. Gaming & Entertainment Management-Illinois, LLC, 2013 IL App (3d) 120860, 992 N.E.2d 1251, in which the court addressed the validity of an agreement similar to J&J Ventures Gaming‘s exclusive location agreement in the present case. The Triple 7 court held that a “precursor” agreement for the placement of video gaming terminals, entered into between an unlicensed entity hoping to become a licensed terminal operator and a proposed licensed establishment, was valid and could be freely assigned and transferred among unlicensed entities prior to the parties to the agreement becoming licensed under the Act. Id. ¶ 23. The court stated, “The agreement is not invalid; it simply cannot be enforced under the Act until the parties’ applications are approved by the Gaming Board.” Id. “Once the parties are licensed,” the court continued, “the terms of the agreement can be fulfilled under the Act and the agreement cannot be assigned” except to other licensed terminal operators. Id.
¶ 25 In Illinois, decisions of an appellate court are binding precedent on all circuit courts regardless of locale. People v. Carpenter, 228 Ill. 2d 250, 259, 888 N.E.2d 105, 111 (2008). When conflicts arise between appellate court districts, the circuit court is bound by the decisions of the appellate court of the district in which it sits. Aleckson v. Village of Round Lake Park, 176 Ill. 2d 82, 92, 679 N.E.2d 1224, 1229 (1997).
¶ 26 On February 11, 2014, the circuit court entered an order granting J&J Ventures Gaming and Action Gaming‘s request for declaratory judgment. The Triple 7 decision was the only appellate court case addressing the validity of precursor agreements purporting to control the placement of video gaming terminals. Therefore, the circuit court held that, based on the Triple 7 court‘s holding, it was “compelled to find that the Agreement between J&J [Ventures Gaming] and Wild [Country] is valid, binding and enforceable.” The court concluded that J&J Ventures Gaming “possesses the exclusive rights to serve as terminal operator and operate video gaming terminals at Wild [Country] until the expiration of that Agreement, which is 60
¶ 27 The circuit court denied Accel Entertainment‘s motion to reconsider, and Accel Entertainment timely filed a notice of appeal. J&J Ventures Gaming and Action Gaming filed a cross-appeal of the circuit court‘s order allowing Accel Entertainment to intervene in the proceeding.
¶ 28 ¶ 29 During oral arguments in this appeal, we sua sponte raised the issue of whether the circuit court has jurisdiction over the controversy raised in the plaintiffs’ complaint or whether the Gaming Board has exclusive or primary jurisdiction over the controversy. We directed the parties to submit supplemental briefs on this issue. Both parties maintain that the circuit court has jurisdiction over this controversy. However, upon review of the supplemental briefs and after further consideration of this jurisdiction issue, we believe that the Gaming Board has exclusive jurisdiction over the parties’ controversy.
¶ 30 The central issue in this case concerns whether the exclusive location agreement, entered into between unlicensed entities, can control the placement of video gaming terminals once the agreement is assigned to a licensed terminal operator. Resolution of this controversy necessarily involves a determination of whether the original contract along with the series of subsequent assignments constitute a valid “use agreement” under the Act and under the regulations enacted by the Gaming Board.
¶ 31 The assignments at issue purport to convey to unlicensed assignors the right to receive compensation that is directly tied to the future video gaming operations of the assignee. Enforcement of the exclusive location agreement and subsequent assignments as a use agreement, therefore, potentially allows entities that are unqualified for licensure under the Act to, nonetheless, profit from the legalization of video gaming in Illinois in a manner that appears to be contrary to the Act‘s legislative intent. As explained more fully below, the legislature granted the Gaming Board all powers necessary and proper to fully and effectively execute the provisions of the Act to further the Act‘s legislative purpose. We believe that these powers are exclusive and not concurrent with the circuit court‘s jurisdiction.
¶ 32 Under the Act, the Gaming Board‘s broad powers include the power to regulate who may and may not profit from video gaming through a strict licensing procedure and the regulation of the required terms of use agreements. Under this statutory and regulatory scheme, we believe that the legislature intended for the Gaming Board to have exclusive jurisdiction over all agreements purporting to control the placement of video gaming terminals within a licensed establishment, particularly when the agreements involve the potential distribution to unlicensed entities of monetary compensation that is directly linked to video gaming operations under the Act. These are issues that fall squarely within the Gaming Board‘s exclusive authority to supervise all video gaming operations.
¶ 34 Illinois courts have jurisdiction over all justiciable matters. Employers Mutual Cos. v. Skilling, 163 Ill. 2d 284, 287, 644 N.E.2d 1163, 1165 (1994). In administrative actions, however, the legislature may also vest exclusive original jurisdiction in an administrative agency. People v. NL Industries, 152 Ill. 2d 82, 96-97, 604 N.E.2d 349, 355 (1992). “Where the legislature enacts a comprehensive statutory scheme, creating rights and duties which have no counterpart in common law or equity, the legislature may define the ‘justiciable matter’ in such a way as to preclude or limit the jurisdiction of the circuit courts.” Board of Education of Warren Township High School District 121 v. Warren Township High School Federation of Teachers, Local 504, 128 Ill. 2d 155, 165, 538 N.E.2d 524, 529 (1989). “However, if the legislative enactment does divest the circuit courts of their original jurisdiction through a comprehensive statutory administrative scheme, it must do so explicitly.” Skilling, 163 Ill. 2d at 287, 644 N.E.2d at 1165.
¶ 35 With respect to administrative agencies, the term “jurisdiction” is not strictly applicable to an administrative body, but Illinois courts have used the term to designate the authority of the administrative body to act. Byington v. Department of Agriculture, 327 Ill. App. 3d 726, 730, 764 N.E.2d 576, 579-80 (2002). An administrative agency is different from a court because an agency only has the authorization given to it by the legislature. Business & Professional People for the Public Interest v. Illinois Commerce Comm‘n, 136 Ill. 2d 192, 243, 555 N.E.2d 693, 716 (1989). “Since an administrative agency *** is a creature of statute, its jurisdiction or authority must be found within the provisions of the statute by which it acts.” Byington, 327 Ill. App. 3d at 730, 764 N.E.2d at 580. An agency may adopt a rule and regulate an activity to the extent that a statute empowers the agency to do so. Popejoy v. Zagel, 115 Ill. App. 3d 9, 11, 449 N.E.2d 1373, 1374 (1983).
¶ 36 The operation of video gaming terminals for gambling purposes is not an activity that is recognized in Illinois except by virtue of the Act. There is no common law right in Illinois to operate, profit from, or assign profits from video gaming terminals. Under the common law, gambling contracts are void. Tomm‘s Redemption, Inc. v. Park, 333 Ill. App. 3d 1003, 1009, 777 N.E.2d 522, 527 (2002); Semb‘s, Inc. v. Gaming & Entertainment Management-Illinois, LLC, 2014 IL App (3d) 130111, ¶ 21, 12 N.E.3d 223 (Schmidt, J., dissenting). The passage of the Act created a new industry in Illinois, which is governed by new rules and procedures, and video gaming contracts that do not conform to the regulatory requirements are void. In our analysis, we must turn to the statutory framework of the Act to determine whether the legislature intended for the Gaming Board to have exclusive jurisdiction over the determination of the validity of agreements affecting the placement of and the distribution of income derived from the operation of video gaming terminals. Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp., 2011 IL 111611, ¶ 27, 959 N.E.2d 1133 (“Statutory interpretation is necessary to determine if the legislature intended to divest the circuit court of subject matter jurisdiction.“).
¶ 38 We now turn to the language of the Act to determine the legislature‘s intent with respect to the Gaming Board‘s authority over transactions affecting the placement and operation of video gaming terminals.
¶ 39 The Gaming Board is a five-member board, appointed by the Governor and confirmed by the Senate.
¶ 40 Section 78 of the Act sets out the authority of the Gaming Board with respect to implementing and supervising video gaming in Illinois as follows:
“(a) The Board shall have jurisdiction over and shall supervise all gaming operations governed by this Act. The Board shall have all powers necessary and proper to fully and effectively execute the provisions of this Act, including, but not limited to, the following:
(1) To investigate applicants and determine the eligibility of applicants for licenses and to select among competing applicants the applicants which best serve the interests of the citizens of Illinois.
(2) To have jurisdiction and supervision over all video gaming operations in this State and all persons in establishments where video gaming operations are conducted.
(3) To adopt rules for the purpose of administering the provisions of this Act and to prescribe rules, regulations, and conditions under which all video gaming in the State shall be conducted. Such rules and regulations are to provide for the prevention of practices detrimental to the public interest and for the best interests of video gaming, including rules and regulations regarding the inspection of such establishments and the review of any permits or licenses necessary to operate an establishment under any laws or regulations applicable to establishments and to impose penalties for violation of this Act and its rules.”
230 ILCS 40/78(a) (West 2012).
¶ 41 In order to preserve the integrity of the gaming industry, the legislature outlined strict licensing procedures to prevent unsavory persons or entities from profiting from video gaming. Section 45 of the Act requires the Gaming Board, with the assistance of law enforcement, to conduct a background check of each person seeking and possessing a license under the Act. The Act defines findings by the Gaming Board, which require denial of a license as follows:
“(d) No person may be licensed *** if that person has been found by the Board to:
(1) have a background, including a criminal record, reputation, habits, social or business associations, or prior activities that pose a threat to the public interests of the State or to the security and integrity of video gaming;
(2) create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of video gaming; or
(3) present questionable business practices and financial arrangements incidental to the conduct of video gaming activities.”
230 ILCS 40/45(d) (West 2012).
¶ 42 Section 15 of the Act directs the Gaming Board to “adopt rules” and establish “criteria to preserve the integrity and security of video gaming in this State.”
“1) A person of good character, honesty and integrity;
2) A person whose background, including criminal record, reputation and associations, is not injurious to the public health, safety, morals, good order and general welfare of the people of the State of Illinois; [and]
3) A person whose background, including criminal record, reputation and associations, does not discredit or tend to discredit the Illinois gaming industry or the State of Illinois[.]”
11 Ill. Adm. Code 1800.420(a)(1)-(3) , amended at 36 Ill. Reg. 18550 (eff. Dec. 14, 2012).
¶ 43 In the context of the controversy in the present case, section 45 of the Act and the Gaming Board‘s licensing regulations are insightful in assessing the Gaming Board‘s authority, because the agreements at issue purport to allow unlicensed entities to receive compensation that is directly linked to video gaming operations. The Gaming Board specifically found that Action Gaming was unfit for licensing under the Act because Nichols and Rowell have associated both personally and professionally with felons, a person with a gambling conviction, and “others of questionable character.” In addition, the Gaming Board found that Nichols had “engaged in questionable business practices related to business transactions with convicted felon[s]” and that Rowell “failed to disclose portions of his criminal record, and was untruthful with police during the course of one of his arrests.”
¶ 44 The circuit court, however, in following the Triple 7 decision, has usurped the Gaming Board‘s authority and has allowed Action Gaming to profit from video gaming in Illinois outside the regulatory scheme of this newly created industry. The court‘s decision undermines the Gaming Board‘s ability to control who may profit from the newly established video gaming industry by validating the transactions upon which J&J Ventures Gaming makes its claim. No reasonable interpretation of the Act and its regulatory scheme of this new industry, taken as a whole, can lead to a conclusion that the legislature intended the courts to make such decisions.
¶ 45 The rules established by the Gaming Board under the authority of the Act also set out minimum standards for use agreements. In section 1800.110, the Gaming Board defines the
¶ 46 Section 1800.320 requires that use agreements:
“a) Only be between:
1) a licensed terminal operator; *** and
2) a licensed establishment ***;
b) Contain an affirmative statement that no inducement was offered or accepted regarding the placement or operation of video gaming terminals in a licensed establishment ***;
c) Contain an indemnity and hold harmless provision on behalf of the State, the Board, and its agents relative to any cause of action arising from a use agreement;
d) Prohibit any assignment other than from a licensed terminal operator to another licensed terminal operator;
e) Contain a provision that releases the video gaming location from any continuing contractual obligation to the terminal operator in the event that the terminal operator has its licensed revoked *** or surrenders its license.”
11 Ill. Adm. Code 1800.320 , amended at 36 Ill. Reg. 18550 (eff. Dec. 14, 2012).
Semb‘s, Inc., 2014 IL App (3d) 130111, ¶ 25, 12 N.E.3d 223 (Schmidt, J., dissenting).
¶ 47 These rules are meant to control who may or may not profit from the legalization of video gaming (licensed establishments and licensed terminal operators) and are meant to regulate contracts (use agreements) affecting entities operating in and profiting from the video gaming industry in Illinois. This regulatory framework concerning minimum requirements of use agreements stems from the Gaming Board‘s authority to regulate the “conditions under which all video gaming in the State shall be conducted.”
¶ 48 Nothing within this regulatory framework evidences a legislative intent that the circuit courts have concurrent jurisdiction over matters directly relating to what may or may not constitute a valid use agreement for placing machines in a licensed establishment. Instead, the regulatory scheme is an explicit declaration by the legislature that the Gaming Board has authority over the placement and operation of video gaming terminals. This regulatory scheme may be frustrated if the courts allow a person lacking “good character, honesty and integrity” to circumvent the regulatory framework by entering into agreements for the exclusive placement of video gaming terminals and assign the contracts to a licensed entity in return for compensation directly linked to video gaming operations. Whether this contractual scheme violates the Act and the Gaming Board‘s regulations concerning use agreements and licensing requirements is an exclusive question for the Gaming Board.
¶ 50 Section 5 of the Riverboat Gambling Act grants the Gaming Board “all other powers necessary and proper to fully and effectively execute this Act for the purpose of administering, regulating, and enforcing the system of riverboat gambling established by this Act.”
¶ 51 Section 5 of the Illinois Riverboat Gambling Act also outlines the duties and responsibilities of the Gaming Board, which include the “administration and enforcement of the Video Gaming Act.”
¶ 52 Section 17 of the Riverboat Gambling Act states that the “Illinois Administrative Procedure Act shall apply to all administrative rules and procedures of the Board under *** the Video Gaming Act.”
¶ 53 Read as a whole, this statutory scheme, which encompasses the provisions of the Riverboat Gambling Act, evidences the legislature‘s explicit intent that the Gaming Board have exclusive power over the gaming industry in order to preserve the integrity of legalized gambling in this State. The legislature intended that video gaming would be conducted in Illinois only under the supervision of and authority granted by the Gaming Board because a lack of public confidence in video gaming would undermine the legislative purpose of legalized gambling, which includes promoting Illinois tourism and increasing revenues available to the State.
¶ 54 Agreements and assignments that potentially allow unlicensed entities to receive compensation directly linked to the placement and operation of video gaming terminals can directly impact the public‘s interest in the video gaming industry. “[T]he authority to determine public interest is vested in the legislature and cannot permissibly be delegated to the judiciary.” Fields Jeep-Eagle, Inc. v. Chrysler Corp., 163 Ill. 2d 462, 478-79, 645 N.E.2d 946, 954 (1994). We believe that the Act, therefore, confers authority to the Gaming Board, not the circuit court, to resolve the controversy in the present case. The controversy falls within the Gaming Board‘s “jurisdiction and supervision over all video gaming operations in this State and all persons in establishments where video gaming operations are conducted.”
¶ 55 J&J Ventures Gaming and Action Gaming argue that we should follow the court‘s decision in Triple 7, 2013 IL App (3d) 120860, 992 N.E.2d 1251. We decline to follow Triple 7 because we believe Triple 7 was wrongly decided; we believe that the court lacked jurisdiction to decide the merits of that case.
¶ 56 In Triple 7, the owner of an establishment called Da Lee‘s Fine Dining signed an agreement with Metro Amusements, which provided Metro the exclusive right to place video gaming terminals in Da Lee‘s establishment. Id. ¶ 2. At that time, Metro was not a licensed terminal operator under the Act. Id. Subsequently, Metro entered into an asset purchase agreement with Best Gaming in which Best Gaming acquired most of Metro‘s assets, including the contract with Da Lee‘s. Id. ¶ 3. At that time, Best had applied to be a licensed terminal operator, but the Gaming Board had not granted it a license. It later denied the request, and Best requested a hearing. Id. ¶ 4. In the meantime, it assigned the contract with Da Lee‘s to GEM, which was a licensed terminal operator; the Gaming Board subsequently denied Best‘s request for a hearing. Id.
¶ 57 Sometime after Best‘s assignment to GEM, Triple 7 entered into a contract with Da Lee‘s that provided that it would have the exclusive right to place and service video gaming terminals at Da Lee‘s establishment. Id. ¶ 5. A dispute arose between Triple 7 and GEM concerning which entity had a valid contract with Da Lee‘s, and Triple 7 filed a complaint for a declaratory judgment. Id. ¶ 7. The circuit court dismissed Triple 7‘s complaint, holding that “the agreement between Da Lee‘s and Metro was not a use agreement and therefore did not violate the Act or the video gaming regulations.” Id. ¶ 8. Triple 7 appealed. On appeal, the Triple 7 court did not analyze its jurisdiction over the controversy. It affirmed the circuit court on the merits of the lower court‘s decision.
¶ 59 In the present case, the circuit court was required to follow the Triple 7 court‘s reasoning, which resulted in a holding that the original exclusive location agreement was not a use agreement under the Act for a period of time and was capable of being freely traded and exchanged between unlicensed entities for profit. The exclusive location agreement then transitioned into a use agreement once it was finally passed into the hands of a licensed entity and, at that time, controlled the placement of video gaming terminals in Wild Country‘s licensed establishment and served as a basis for further compensation directly tied to video gaming operations to be transferred to unlicensed entities.
¶ 60 We believe that the highly regulated nature of the statutory scheme making video gaming legal in Illinois evidences a legislative intent that the Gaming Board have exclusive authority over the issues decided by the circuit court in the present case and by the appellate court in Triple 7. The legislature intended for the Gaming Board to determine the requirements and limitations for use agreements so that it may preserve the integrity of the video gaming industry. Nothing in the statutory scheme evidences a legislative intent that the courts should have concurrent jurisdiction to regulate use agreements or precursor agreements that would later purport to control the placement and operation of video gaming terminals. We believe the Triple 7 court usurped the Gaming Board‘s authority and decided issues that were within the Gaming Board‘s exclusive authority to decide. Accordingly, we decline to follow Triple 7.
¶ 61 Furthermore, we believe that the legislature intended for the Gaming Board to have exclusive authority over agreements affecting the placement and operation of video gaming terminals because there is an obvious need for uniform application of the gaming laws throughout the State. Allowing the parties in disputes over the placement of video gaming terminals to seek circuit court intervention has the potential of disrupting the Act‘s statutory scheme. There are multiple lawsuits in this court‘s district involving the enforcement of agreements similar to the agreements at issue in the present case and in Triple 7.1 It is likely that similar lawsuits are pending throughout the State. This case was consolidated for oral
¶ 62 Both parties have argued that the Gaming Board has no authority over the validity of the agreements at issue in the present case. We disagree. J&J Ventures Gaming claims to have the exclusive right to place and operate video gaming terminals as a result of the original exclusive location agreement and subsequent assignments. J&J Ventures Gaming is correct only if the agreements constitute a valid use agreement under the Act. There is no question that the Gaming Board has authority to promulgate rules related to and exercise jurisdiction over use agreements. It has already done so by enacting rules pertaining to the minimum standards for use agreements in section 1800.320. We believe its authority over use agreements is exclusive and that this authority, by necessity, includes jurisdiction over the exclusive location agreement and assignments at issue in the present case. The validity of any agreement that controls the placement of video gaming terminals rests exclusively within the Gaming Board‘s authority. Its decision is reviewable under the standards of the Administrative Review Law.
¶ 63 In their brief, J&J Ventures Gaming and Action Gaming argue that the Gaming Board “has acknowledged that it lacks jurisdiction and power to decide the enforceability of pre-licensure agreements.” It cites to statements made by an attorney of the Gaming Board in a correspondence dated September 11, 2013. In the letter, the attorney states that the Gaming Board has consistently said that a contract entered into by two unlicensed parties could not be considered a use agreement pursuant to the rules adopted by the Gaming Board and that the Gaming Board is not concerned with whether or not such an agreement is valid or enforceable under contract law. The attorney further stated that “[w]hether or not that contract can become a valid Use Agreement pursuant to the Adopted Rules of the Illinois Gaming Board is an issue that is decided once the parties to the contract are licensed by the Illinois Gaming Board.”
¶ 64 This correspondence does not control our analysis. “Determining the scope of any agency‘s power and authority is a judicial function, rather than a question for the agency to answer itself.” Gallaher v. Hasbrouk, 2013 IL App (1st) 122969, ¶ 19, 3 N.E.3d 913. The validity of the agreements at issue falls within the Gaming Board‘s authority because J&J Ventures Gaming maintains that it has the exclusive right to place and operate video gaming terminals within Wild Country‘s establishment as a result of the agreements. Whether the agreements collectively constitute a valid use agreement under the Act is a matter for the Gaming Board to decide. The agreements’ purported conveyance of video-gaming-linked monetary compensation to unlicensed entities also brings the validity of the agreements under the exclusive authority of the Gaming Board.
¶ 65 In their cross-appeal, J&J Ventures Gaming and Action Gaming argue that the circuit court erred in allowing Accel Entertainment to intervene permissively. Section 2-408(a) of the Code of Civil Procedure (
¶ 66 Finally, J&J Ventures Gaming and Action Gaming have filed a motion to dismiss Accel Entertainment‘s appeal, arguing that it lacks standing and is not a proper intervenor. For the reasons stated above, this motion is denied as moot.
CONCLUSION
¶ 67 ¶ 68 For the foregoing reasons, we vacate the circuit court‘s judgment and dismiss this appeal.
¶ 69 Judgment vacated; motion denied; appeal dismissed.