J&J Ventures Gaming, LLC v. Illinois Gaming Board , 2024 IL App (5th) 230255 ( 2024 )

NOTICE
2024 IL App (5th) 230255Decision filed 11/13/24. The
text of this decision may be NO. 5-23-0255
changed or corrected prior to
the filing of a Petition for
IN THE
Rehearing or the disposition of
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
J&J VENTURES GAMING, LLC, an Illinois ) Appeal from the
Limited Liability Company; ACTION GAMING ) Circuit Court of
LLC, an Illinois Limited Liability Company; and ) Marion County.
ILLINOIS GAMING INVESTMENTS, LLC, an )
Illinois Limited Liability Company, )
)
Plaintiffs-Appellants, )
)
v. ) No. 21-MR-88
)
THE ILLINOIS GAMING BOARD, an Administrative )
Agency in the State of Illinois; )
ACCEL ENTERTAINMENT GAMING, LLC; )
A.C. PITSTOP, INC.; DENNIS PETERSON, d/b/a )
Caddyshack; WHITLOCK CHIEFS, INC., )
d/b/a Chiefs II; CHOPS FAMILY INN, INC., )
d/b/a Chops Family Inn, f/k/a TJ’s )
Tavern II Inc.; CHOPS FAMILY INN II, )
f/k/a Big Al’s Place; CENTRALIA )
LODGE #493, d/b/a Elk’s - Centralia )
BPOE #493; INDUSTRIAL TAVERN INC.; )
KING TUT’S LLC, n/k/a I Khodal, LLC; )
PROGRESSIVE CLUB, INC.; TOM BISHOP, )
d/b/a Rank and File Lounge; SKIPPER )
INN, INC.; DARLA P. RUSHING, d/b/a )
Rush Inn 2 Jolly’s; VERNOIS POST )
NO. 1376; VETERANS OF FOREIGN WARS )
OF U.S., d/b/a VFW Post 1376-Mt. Vernon; )
DuQUOIN POST #513; VETERANS OF )
FOREIGN WARS OF U.S., d/b/a VFW Post 513- )
DuQUOIN; JOHN M. SCHIEPPE, d/b/a )
Schiappa’s-Lebanon; FOE, AERIE #2791, )
INC., d/b/a Fraternal Order of Eagles 2791; )
and TED MILLER, d/b/a Ted E. Bear’s Club, Inc., )
n/k/a Lil Bit’s Saloon, Inc., ) Honorable
) Mark W. Stedelin,
1
Defendants-Appellees. ) Judge, presiding.
______________________________________________________________________________
JUSTICE CATES delivered the judgment of the court, with opinion.
Presiding Justice Vaughan and Justice Welch concurred in the judgment and opinion.
OPINION
¶1 The plaintiffs, J&J Ventures Gaming, LLC (J&J Ventures), Action Gaming, LLC (Action
Gaming), and Illinois Gaming Investments, LLC (Illinois Gaming), petitioned the Illinois Gaming
Board (Gaming Board) for a determination that the plaintiffs’ exclusive location agreements with
the defendant gaming establishments (hereinafter Contested Locations) 1 were valid and
enforceable agreements to place video gaming terminals within the Contested Locations and that
their agreements predated and had priority over similar agreements between the defendant, Accel
Entertainment Gaming LLC (Accel), and the Contested Locations. The Gaming Board denied the
plaintiffs’ petition, and the circuit court of Marion County affirmed that decision. On appeal, the
plaintiffs claim the Gaming Board went beyond the scope of its authority and misapplied contract
law in its analysis of the plaintiffs’ petition to determine the validity and the enforceability of the
competing exclusive location agreements and that the Gaming Board’s rules governing such
1
Defendants, A.C. Pitstop, Inc.; Dennis Peterson, doing business as Caddyshack; Whitlock Chiefs,
Inc., doing business as Chiefs II; Chops Family Inn, Inc., doing business as Chops Family Inn (formerly
known as TJ’s Tavern II Inc.); Chops Family Inn II (formerly known as Big Al’s Place), Centralia Lodge
#493, doing business as Elk’s-Centralia BPOE #493; Industrial Tavern, Inc.; King Tut’s LLC (now known
as I Khodal, LLC); Progressive Club, Inc.; Tom Bishop, doing business as Rank and File Lounge; Skipper
Inn, Inc.; Darla P. Rushing, doing business as Rush Inn 2 Jolly’s; Vernois Post No. 1376; Veterans of
Foreign Wars of U.S., doing business as VFW Post 1376-Mt. Vernon; DuQuoin Post # 513; Veterans of
Foreign Wars of U.S., doing business as VFW Post 513-DuQuoin; John M. Schieppe, doing business as
Schiappa’s-Lebanon; FOE, Aerie #2791, Inc., doing business as Fraternal Order of Eagles 2791; and Ted
Miller, doing business as Ted E. Bear’s Club, Inc. (now known as Lil Bit’s Saloon, Inc.), were collectively
referred to as the “Contested Locations” in the pleadings before the circuit court and that reference is
retained in this disposition for consistency. These establishments operated bars, lounges, and veterans or
fraternal establishments.
2
petitions violated their rights to procedural due process. For the following reasons, we affirm the
decision of the Gaming Board.
¶2 I. BACKGROUND
¶3 This case involves a decade-long dispute between entities who have competing exclusive
location agreements for the placement and operation of video gaming terminals within the
Contested Locations. The litigation history has been documented in prior appeals to this court (J&J
Ventures Gaming, LLC v. Wild, Inc., 2015 IL App (5th) 140092) and the Illinois Supreme Court
(J&J Ventures Gaming, LLC v. Wild, Inc., 2016 IL 119870) and will not be recounted in its
entirety. An overview of the factual and procedural history pertinent to the issues in this appeal
follows.
¶4 In July 2009, the Illinois legislature enacted the Video Gaming Act (Gaming Act) (230
ILCS 40/1 et seq. (West 2010)), and thereby legalized the use of video gaming terminals as a form
of commercial gambling within certain licensed entities, such as bars, veterans organizations, and
fraternal organizations. See J&J Ventures, 2016 IL 119870, ¶ 3. In enacting the law, the legislature
created “a comprehensive statutory scheme, creating rights and duties that have no counterpart in
common law or equity.” J&J Ventures, 2016 IL 119870, ¶ 32.
¶5 In enacting the Gaming Act, the legislature granted the Gaming Board exclusive authority
to supervise all video gaming operations governed by the Gaming Act and all powers necessary to
fully and effectively execute its provisions. 230 ILCS 40/78 (West 2016); J&J Ventures, 2016 IL
119870, ¶ 27. The Gaming Board’s authority includes the power to investigate applicants, to
determine the eligibility of applicants for licenses, to select those applicants who best serve the
interests of Illinois residents, and to determine the validity and enforceability of use agreements.
230 ILCS 40/78(a) (West 2016). The Gaming Board’s authority also includes the power to adopt
3
rules and regulations for the purposes of administering the Gaming Act, preventing “practices
detrimental to the public interest,” and providing for “the best interests of video gaming.” 230
ILCS 40/78(a)(3) (West 2016); J&J Ventures, 2016 IL 119870, ¶ 28. Pursuant to its authority, the
Gaming Board adopted emergency regulations to administer the Gaming Act in 2009 (33 Ill. Reg.
14793 (eff. Oct. 19, 2009)), codified under Title 11, part 1800, of the Illinois Administrative Code
(11 Ill. Adm. Code 1800). The Gaming Board adopted a complete set of regulations in 2010 (34
Ill. Reg. 2893 (eff. Feb. 22, 2010)). 2 Following a three-year period of preparation, video gaming
operations commenced in Illinois in October 2012. J&J Ventures, 2016 IL 119870, ¶ 3.
¶6 Under the Gaming Act, all video gaming terminal operators and all video gaming
establishments must be licensed by the Gaming Board. 230 ILCS 40/25(c), (e) (West 2016). The
Gaming Act specifically provides, “No video gaming terminal may be placed in any licensed
establishment *** unless the owner or agent of the owner of the licensed establishment *** has
entered into a written use agreement with the terminal operator for placement of the terminals.” 3
230 ILCS 40/25(e) (West 2016). Pursuant to its authority, the Gaming Board established minimum
standards for use agreements. See 11 Ill. Adm. Code 1800.320(a), amended at 38 Ill. Reg. 14275(eff. June 30, 2014). Under the Gaming Board’s definitions, a “ ‘[u]se agreement’ ” is
2
Since 2010, the Gaming Board’s regulations have been amended periodically to address arising
issues in the video gaming industry.
3
Definitions for many of the specific terms used in the video gaming industry are included in the
Gaming Act (230 ILCS 40/5 (West 2016)), and in Title 11 of the Illinois Administrative Code (11 Ill. Adm.
Code 1800.110, amended at 40 Ill. Reg. 8760 (eff. June 14, 2016)). “ ‘Video gaming terminal’ ” is defined
as “any electronic video game machine that, upon insertion of cash ***, is available to play or simulate the
play of a video game, *** in which the player may receive free games or credits that can be redeemed for
cash.” 230 ILCS 40/5 (West 2016). “ ‘Terminal operator’ ” is defined as “an individual, partnership,
corporation, or limited liability company that is licensed under this Act and that owns, services, and
maintains video gaming terminals for placement in licensed establishments.” 230 ILCS 40/5 (West 2016).
“ ‘Licensed establishment’ ” is defined as “any licensed retail establishment where alcoholic liquor is
drawn, poured, mixed, or otherwise served for consumption on the premises, whether the establishment
operates on a nonprofit or for-profit basis.” 230 ILCS 40/5 (West 2016).
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“[a] contractual agreement between a licensed terminal operator and a licensed video
gaming location establishing terms and conditions for placement and operation of video
gaming terminals by the licensed terminal operator within the premises of the licensed
video gaming location, and complying with all of the minimum standards for use
agreements contained in Section 1800.320.” 11 Ill. Adm. Code 1800.110, amended at 40
Ill. Reg. 8760 (eff. June 14, 2016).
¶7 Shortly after the effective date of the Gaming Act, and prior to the implementation of the
Gaming Board’s emergency regulations, Action Amusement Company, an unlicensed terminal
operator and a nonparty to this litigation, entered into an “Exclusive Location and Video Gaming
Terminal Agreement” (exclusive location agreement) with each of the Contested Locations. Under
the exclusive location agreements, Action Amusement Company had the exclusive right to place
and operate video gaming terminals within the Contested Locations. In October 2010, Action
Amusement Company assigned its rights under the exclusive location agreements to plaintiff
Action Gaming, who was also unlicensed. Subsequently, Action Gaming applied for a terminal
operator’s license.
¶8 In July 2012, the Gaming Board notified Action Gaming that its application for a terminal
operator’s license had been preliminarily denied. The Gaming Board found that Action Gaming
failed to meet the requirements of the Gaming Act because certain employees and owners of
Action Gaming had been personally and professionally associated with people who had been
convicted of illegal gambling or other felony offenses. Action Gaming requested a hearing before
the Gaming Board regarding the denial of its license application.
¶9 On August 24, 2012, while its hearing request was pending, Action Gaming and J&J
Ventures entered into an asset purchase agreement. According to the terms of the agreement,
5
Action Gaming agreed to assign its interests under the exclusive location agreements to J&J
Ventures, a licensed terminal operator, 4 and J&J Ventures agreed to compensate Action Gaming
based upon the number of Contested Locations that hosted a J&J Ventures video gaming terminal.
Meanwhile, in late August and early September 2012, each of the Contested Locations entered
into new agreements with defendant Accel. At the time those agreements were entered into, Accel
had a valid terminal operator’s license. 5 Under the terms of the agreements, Accel was given the
exclusive right to place and operate video gaming terminals in each of the Contested Locations.
Subsequently, Accel began operating video gaming terminals in the Contested Locations.
¶ 10 Thereafter, J&J Ventures and Action Gaming filed several declaratory judgment actions
against the Contested Locations in Illinois circuit courts. J&J Ventures and Action Gaming sought
judgments declaring that they had the exclusive right to place and operate video gaming terminals
within the Contested Locations until the expiration of their exclusive location agreements.
Ultimately, the cases reached the Illinois Supreme Court. The supreme court reviewed the terms
of the subject agreements and noted that the agreements require each party to obtain the requisite
license and that “the agreements specifically provide that they take effect when the first video
gaming terminal first operates in the licensed establishment—a circumstance that cannot occur
unless and until the parties are licensed and the Board has approved the agreements.” J&J
Ventures, 2016 IL 119870, ¶ 38. The supreme court held that the Gaming Board had the exclusive
authority to determine the validity and the enforceability of the parties’ competing agreements
because the agreements purported to control the placement and operation of video gaming
4
J&J Ventures’ application for licensure as a terminal operator was approved on January 19, 2012.
5
Accel’s application for licensure as a terminal operator was approved on March 15, 2012.
6
terminals within licensed establishments and affirmed the dismissal of the declaratory judgment
actions for lack of subject matter jurisdiction. J&J Ventures, 2016 IL 119870, ¶¶ 38, 42.
¶ 11 On June 9, 2017, J&J Ventures filed a petition with the Gaming Board pursuant to section
1800.320(b) of the Illinois Administrative Code (11 Ill. Adm. Code 1800.320(b), amended at 38
Ill. Reg. 14275 (eff. June 30, 2014)). Therein, J&J Ventures sought a declaration (a) that the
agreements it had acquired from Action Gaming were valid and enforceable and (b) that the
subsequent agreements between Accel and the Contested Locations were invalid and
unenforceable. J&J Ventures also asked the Gaming Board to order Accel to remove all video
gaming terminals from the Contested Locations and to declare that the parties may pursue lawsuits
regarding issues other than the validity and the enforceability of the competing exclusive location
agreements. In its petition, J&J Ventures claimed that its exclusive location agreements were “first-
in-time” and, therefore, had priority over Accel’s agreements. Action Gaming was granted leave
to intervene and made arguments similar to those advanced by J&J Ventures.
¶ 12 On July 20, 2017, Accel filed a response to J&J Ventures’ petition. Accel claimed that J&J
Ventures did not have a superior right to place and operate video gaming machines in the Contested
Locations. Accel also challenged Action Gaming’s assignment to J&J Ventures. Accel pointed to
the Gaming Board’s prior finding that Action Gaming was unsuitable for licensure and argued
Action Gaming could not have a financial interest in or profit from an Illinois gaming contract.
¶ 13 On December 15, 2020, the administrator of the Gaming Board issued a recommended
decision to deny the plaintiffs’ petition. Citing to J&J Ventures, 2016 IL 119870, ¶ 26, the
administrator noted that there is “no common law right in Illinois to engage in or profit from
gambling” through contract or otherwise, and consequently, that video gaming contracts that do
not conform to the applicable regulatory requirements are considered illegal gambling contracts
7
and void. The administrator further noted that the Gaming Act and the rules of Gaming Board
required video gaming terminal operators and establishments to be licensed. The administrator
found that the Gaming Board would not recognize the validity and enforceability of an agreement
between a terminal operator and an establishment until both entities were licensed and “any
additional conditions parties to an agreement have imposed upon themselves materialize.” Next,
the administrator referred to the exclusive location agreements at issue and found that all
agreements contained a similar, if not identical section titled, “Term of Agreement.” The “Term
of Agreement” provided that the agreement’s initial term would “commence upon the date the first
video terminal described herein first operates in the Licensed Establishment.” The administrator
found that the agreements contained express conditions precedent to the enforceability of the
agreements requiring licensure of the Contested Locations and the operation of video gaming
terminals within those Contested Locations. The administrator also found that Accel was licensed
at the time it executed its agreements with the Contested Locations and that the Contested
Locations subsequently obtained licenses and thereafter permitted Accel to place and operate video
gaming terminals within their establishments. Thus, the administrator concluded that the Contested
Locations effectively withdrew from the agreements assigned to J&J Ventures. The administrator
determined that Accel was the licensed terminal operator who first placed and operated video
gaming terminals within licensed establishments; that Accel satisfied the necessary contingencies
under the agreements and the rules of the Gaming Board; and that there was no basis upon which
to order Accel to remove its machines from the Contested Locations “absent any evidence of fraud,
duress, or other misconduct.” The administrator recommended that the Gaming Board deny all
relief requested by J&J Ventures, except the request for a declaration that a lawsuit may proceed
8
in the circuit court to determine any issue other than the validity and the enforceability of the
disputed video gaming terminal agreements.
¶ 14 On December 29, 2020, J&J Ventures filed exceptions to the administrator’s recommended
decision. J&J Ventures argued that under Illinois law, its “first-in-time” exclusive location
agreements had priority over Accel’s “second-in-time” agreements. J&J Ventures also alleged, for
the first time, that Accel and/or its agent, Jason Rowell, engaged in “purported fraud” to obtain the
exclusive location agreements with the Contested Locations. On April 21, 2021, the Gaming Board
issued its final order. Therein, the Gaming Board recognized that the legislature had enacted a
comprehensive statutory scheme that created rights and duties that had no counterpart in common
law or equity, citing to the Illinois Supreme Court’s decision in J&J Ventures, 2016 IL 119870,
¶ 26. The Gaming Board noted that contrary to the petitioners’ arguments, “the jurisprudence of
contract law is not binding in this matter.” The Gaming Board further noted that without a
counterpart in common law or equity, “contract law serves as guidance” in resolving the pending
dispute. After careful review and consideration of the entire record, the Gaming Board adopted the
recommended decision of the administrator and determined that J&J Ventures did not prove the
allegations in its petition by clear and convincing evidence. The Board denied the requested relief
but issued a declaration that the parties may proceed with various civil lawsuits involving any
issues “other than the enforceability and validity of the disputed video gaming terminal
agreements” in a manner consistent with the supreme court’s holding in J&J Ventures, 2016 IL
119870.
¶ 15 On May 21, 2021, the plaintiffs filed a complaint for administrative review in the circuit
court of Marion County. In the first amended complaint, the plaintiffs alleged that the Gaming
Board’s final order included an analysis and a conclusion that went beyond the Gaming Board’s
9
authority under the Gaming Act or the holding in J&J Ventures. The plaintiffs also alleged that
the Gaming Board misapplied contract law and failed to properly analyze the exclusive location
agreements in accordance with the provisions of section 1800.320, of Title 11, of the Illinois
Administrative Code and that the Gaming Board’s procedures for reviewing exclusive location
agreements violated their rights to procedural due process. The plaintiffs requested a stay of
enforcement of the Gaming Board’s final order pending a ruling on the merits of the complaint, an
order reversing the Gaming Board’s final order in its entirety, and an award of costs and attorney
fees. On March 23, 2023, the circuit court affirmed the final order of the Gaming Board. This
appeal followed.
¶ 16 II. ANALYSIS
¶ 17 On appeal, the plaintiffs claim the Gaming Board’s decision to validate and enforce Accel’s
“second-in-time” exclusive location agreements rather than J&J Ventures’ “first-in-time”
agreements was reversible error. Judicial review of the Gaming Board’s decision is governed by
the Administrative Review Law (735 ILCS 5/3-102 (West 2016)). See 230 ILCS 10/17.1(b) (West
2016). In administrative review cases, the appellate court reviews the decision of the administrative
agency, not the decision of the circuit court. Medponics Illinois, LLC v. Department of Agriculture,
2021 IL 125443, ¶ 28; AFM Messenger Service, Inc. v. Department of Employment Security, 198
Ill. 2d 380, 390 (2001). The applicable standard of review depends upon whether the question
presented is one of fact, one of law, or a mixed question of fact and law. Medponics Illinois, 2021
IL 125443, ¶ 29; AFM Messenger Service, 198 Ill. 2d at 390.
¶ 18 An administrative agency’s factual findings are deemed to be prima facie correct and will
only be reversed if they are against the manifest weight of the evidence. Marconi v. Chicago
Heights Police Pension Board, 225 Ill. 2d 497, 540 (2006) (per curiam). An administrative
10
agency’s determination of questions of law are reviewed de novo. AFM Messenger Service, 198
Ill. 2d at 390. A mixed question of fact and law involves an examination of the legal effect of a
given set of facts. AFM Messenger Service, 198 Ill. 2d at 391. An agency’s determination of a
mixed question of fact and law is reviewed under the clearly erroneous standard. Medponics
Illinois, 2021 IL 125443, ¶ 29; AFM Messenger Service, 198 Ill. 2d at 391. Under the clearly
erroneous standard, the agency’s decision may only be reversed if the reviewing court is left with
the definite and firm conviction that a mistake has been made. AFM Messenger Service, 198 Ill.
2d at 395.
¶ 19 Administrative regulations have the force and effect of law and are interpreted with the
same standards that govern the construction of statutes. People ex rel. Madigan v. Illinois
Commerce Comm’n, 231 Ill. 2d 370, 380 (2008). Administrative agencies have wide latitude in
adopting regulations reasonably necessary to carry out the agency’s statutory duty, and those
regulations are presumptively valid. See generally Medponics Illinois, 2021 IL 125443, ¶ 31;
Hartney Fuel Oil Co. v. Hamer, 2013 IL 115130, ¶ 38. Furthermore, the agency’s interpretation
of its own regulations is entitled to substantial deference and weight because the agency makes
informed judgments based upon its own expertise and experience and acts as a knowledgeable
source in ascertaining the intent of the legislature. Medponics Illinois, 2021 IL 125443, ¶ 31.
¶ 20 Initially, the plaintiffs’ claim that the Gaming Board went beyond the scope of the authority
granted under the Gaming Act and the supreme court’s holding in J&J Ventures in analyzing and
ruling on their petitions to determine the validity and the enforceability of the competing exclusive
location agreements at issue. We disagree.
¶ 21 In this case, the plaintiffs petitioned the Gaming Board to find that their exclusive location
agreements with the Contested Locations predated and had priority over similar agreements
11
between defendant Accel and the Contested Locations. As noted earlier, the Gaming Board was
vested with authority and supervision over all video gaming operations governed by the Gaming
Act and granted “all powers necessary and proper to fully and effectively execute” the provisions
of the Gaming Act. See 230 ILCS 40/78(a) (West 2016); J&J Ventures, 2016 IL 119870, ¶ 27.
The Gaming Act’s comprehensive statutory scheme revealed “the legislature’s explicit intent that
the Gaming Board have exclusive jurisdiction over the video gaming industry and the use
agreements that are a necessary prerequisite of engaging in that industry.” J&J Ventures, 2016 IL
119870, ¶ 32. Section 78(a)(1) of the Gaming Act expressly authorizes the Gaming Board to
investigate and determine an applicant’s eligibility for licensure and “to select among competing
applicants [those who] best serve the interests of the citizens of Illinois.” 230 ILCS 40/78(a)(1)
(West 2016); J&J Ventures, 2016 IL 119870, ¶ 27. Accordingly, the Gaming Board had the
authority to determine the validity and the enforceability of the competing exclusive location
agreements at issue in this case. See J&J Ventures, 2016 IL 119870, ¶¶ 38, 42.
¶ 22 It is important to recognize that the Gaming Board’s authority to make decisions about the
validity and the enforceability of the exclusive location agreements at issue does not depend upon
the correctness of the Gaming Board’s decision. One Way Liquors, Inc. v. Byrne, 105 Ill. App. 3d
856, 861 (1982). When an administrative agency acts within the scope of its conferred authority,
the agency’s authority carries with it the authority to make incorrect decisions as well as correct
decisions. One Way Liquors, Inc., 105 Ill. App. 3d at 861. In this case, we do not find that the
Gaming Board exceeded its authority under the Gaming Act or the J&J Ventures decision in
analyzing and deciding the matters presented in the plaintiffs’ petitions.
¶ 23 The plaintiffs also claim that the Gaming Board’s decision to deny their petitions to enforce
the exclusive location agreements was based on an erroneous finding that J&J Ventures failed to
12
complete a condition precedent to enforcement. The plaintiffs contend that the Gaming Board
improperly construed the “term provision” in the exclusive location agreements and erroneously
concluded that the placement and operation of video gaming terminals within the Contested
Locations was a condition precedent to finding that the agreements were valid and enforceable.
¶ 24 Each of the exclusive location agreements at issue contains a preamble section titled
“Recitals” that set forth the intentions of the contract. Therein, the parties stated the intent to obtain
the necessary licenses required under the Gaming Act and “the wish to enter the agreement for the
purpose of placing and operating video gaming terminals in the Licensed Establishment.” Each of
the exclusive locations agreements at issue also contains a section titled “Term of Agreement.”
This section provides that the initial term of the agreement “will commence upon the date the first
video gaming terminal described herein first operates in the Licensed Establishment.” See J&J
Ventures, 2016 IL 119870, ¶ 38 (in considering whether the agreements at issue fell within the
purview of the Gaming Board, our supreme court noted that the subject agreements required each
party to obtain the “requisite license” and “specifically provide[d] that they take effect when the
first video gaming terminal first operate[d] in the licensed establishment”).
¶ 25 In the recommended decision, the administrator considered the submissions of the parties
in light of the provisions in the Gaming Act, the pertinent rules of the Gaming Board, and the
supreme court’s decision in J&J Ventures, 2016 IL 119870, ¶ 38. The administrator found that
Accel, a licensed terminal operator, placed and first operated the first video gaming terminals
within Contested Locations who were also licensed. The administrator concluded that Accel met
the agreed requirements for the placement and operation of video gaming terminals within the
Contested Locations and that J&J Ventures did not. In adopting the administrator’s recommended
decision, the Gaming Board determined that Accel’s exclusive location agreements were valid and
13
enforceable and that those agreements would be given priority over the competing location
agreements assigned to J&J Ventures. This was an appropriate exercise of the Gaming Board’s
discretion and its authority under the Gaming Act. 11 Ill. Adm. Code 1800.320(b)(1)(B), amended
at 41 Ill. Reg. 10,300 (eff. July 13, 2017). Acting within the scope of its authority and consistent
with the intent of the Gaming Act, the Gaming Board could have reasonably concluded that Accel
would best serve the interests of the citizens of Illinois by spurring economic development,
promoting tourism, and increasing State revenues. See 230 ILCS 10/2 (West 2016); 230 ILCS
40/78(a)(1) (West 2016).
¶ 26 In sum, the Gaming Board carefully considered the entire record and concluded that the
plaintiffs failed to establish that their exclusive location agreements should be given priority under
the circumstances presented. The Gaming Board acted within its discretion, and its decision was
based upon its experience within the gambling and video gaming industries. After reviewing the
record, we do not find that the decision of the Gaming Board was clearly erroneous.
¶ 27 In their respective briefings, the parties noted that after the final order was issued in this
case, the Gaming Board amended its rules to address situations similar to those presented here.
See 11 Ill. Adm. Code 1800.320(a)(2) (2022); see also 46 Ill. Reg. 17107 (eff. Sept. 28, 2022).
None of the parties argued that the amendment applied retroactively to this dispute. Accordingly,
that issue is not before us.
¶ 28 Next, the plaintiffs claim that the Gaming Board’s decision should be reversed because the
procedures set forth in section 1800.320 of the Illinois Administrative Code did not afford a
hearing or discovery in violation of their procedural due process rights. The plaintiffs contend that
they were entitled to discovery and a hearing based upon the “contested case” provisions in section
10-25 of the Illinois Administrative Procedure Act (5 ILCS 100/10-25 (West 2016)).
14
¶ 29 Administrative proceedings are governed by the fundamental principles and requirements
of due process of law. See generally Abrahamson v. Illinois Department of Professional
Regulation, 153 Ill. 2d 76, 92 (1992). Due process, however, is a flexible concept and requires
only such procedural protections as fundamental principles of justice and the particular situation
demand. Abrahamson, 153 Ill. 2d at 92. When reviewing an administrative decision, a court has a
duty to examine the procedural methods employed to ensure that a fair and impartial procedure
was used. Abrahamson, 153 Ill. 2d at 92-93.
¶ 30 Section 10-5 of the Administrative Procedure Act provides, “All agencies shall adopt rules
establishing procedures for contested case hearings.” 5 ILCS 100/10-5 (West 2016). Section 10-
25 provides that in a contested case, “all parties shall be afforded an opportunity for a hearing after
reasonable notice.” 5 ILCS 100/10-25(a) (West 2016). Under the Administrative Procedure Act, a
“contested case” is “an adjudicatory proceeding (not including ratemaking, rulemaking, or quasi-
legislative, informational, or similar proceedings) in which the individual legal rights, duties, or
privileges of a party are required by law to be determined by an agency only after an opportunity
for a hearing.” (Emphasis added.) 5 ILCS 100/1-30 (West 2016). In order to be entitled to a hearing
before an administrative agency under article 10 of the Administrative Procedure Act, there must
be some constitutional right, statute, or administrative regulation that requires the agency to
conduct a hearing when making the decision at issue. See Nyhammer v. Basta, 2022 IL 128354,
¶ 41 (also cases cited within).
¶ 31 Procedural due process protections are triggered only when a constitutionally protected
liberty or property interest is at stake. Nyhammer, 2022 IL 128354, ¶ 64; Wilson v. Bishop, 82 Ill.
2d 364, 368 (1980). The starting point in any procedural due process analysis is “ ‘a determination
of whether one of those protectable interests is present, for if there is not, no process is due.’ ”
15
Wilson, 82 Ill. 2d at 368-69 (quoting Polyvend, Inc. v. Puckorius, 77 Ill. 2d 287, 294 (1979)). As
noted, there is no common law right to engage in or profit from gambling in Illinois. J&J Ventures,
2016 IL 119870, ¶ 26. In this case, the plaintiffs did not raise their procedural due process claim
before the Gaming Board. Furthermore, the plaintiffs have made only conclusory assertions about
their property interests under the exclusive location agreements and their rights to due process
under the United States Constitution and the Illinois Constitution. Stated simply, the plaintiffs did
not adequately develop their claim that they have constitutionally protectible interests in the
gaming agreements at issue. Accordingly, we decline to address that claim.
¶ 32 In addition, the plaintiffs have not established that a proceeding to decide a petition under
Title 11 of section 1800.320 of the Administrative Code constitutes a “contested case” within the
meaning of the Administrative Procedure Act. The plaintiffs have not pointed to any provision in
the Gaming Act or any other law or regulation that required the Gaming Board to provide an
opportunity for discovery or a hearing before the Board decided the merits of their claims.
¶ 33 Section 1800.320 sets forth the procedures governing petitions to determine the validity
and enforceability of such agreements. See 11 Ill. Adm. Code 1800.320, amended at 41 Ill. Reg.
10,300 (eff. July 13, 2017). Section 1800.320(b)(1) provides that the Gaming Board “shall decide
a petition brought by a terminal operator or licensed video gaming location alleging that a Use
Agreement, or portion of a Use Agreement, is invalid or unenforceable.” 11 Ill. Adm. Code
1800.320(b)(1), amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017)). The petition shall be in
writing and shall contain “[d]etailed facts and reasons upon which the petitioner relies” in support
of the petition. 11 Ill. Adm. Code 1800.320(b)(2)(B), amended at 41 Ill. Reg. 10,300 (eff. July 13,
2017). The petitioner may include documentary evidence and affidavits. The petitioner bears the
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burden of proof by clear and convincing evidence. 11 Ill. Adm. Code 1800.320(b)(2), amended at
41 Ill. Reg. 10,300 (eff. July 13, 2017).
¶ 34 Upon receipt of a petition meeting the requirements of section 1800.320(b)(2), the
administrator is required to promptly send complete copies of the petition to each nonpetitioning
terminal operator or licensed video gaming location or other interested party. Nonpetitioning
parties are permitted to file written responses, including documentary evidence and affidavits. 11
Ill. Adm. Code 1800.320(b)(3), amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017). The
administrator is then required to issue a written recommended decision and set forth the reasons
why “the Administrator is recommending the granting or denial of the petition.” 11 Ill. Adm. Code
1800.320(b)(6), amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017). The petitioner or party named
in the petition may file exceptions to the recommended decision. The exceptions “shall specify
each finding of fact and conclusion of law to which exception is taken.” 11 Ill. Adm. Code
1800.320(b)(7), amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017). Oral argument on the
exceptions is not permitted. 11 Ill. Adm. Code 1800.320(b)(7), amended at 41 Ill. Reg. 10,300 (eff.
July 13, 2017). The Gaming Board then “shall review the entire record, including the petitions
filed, the Administrator’s recommended decision, and any exceptions filed, and shall render a
written order including the bases for its decision.” 11 Ill. Adm. Code 1800.320(b)(10)(A),
amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017).
¶ 35 In this case, the parties complied with the requirements set forth in section 1800.320. The
plaintiffs filed their petitions and intervening petitions, along with supporting documentary
evidence and affidavits, and Accel filed a response. Following receipt of the administrator’s
recommended decision, the plaintiffs filed a statement of exceptions. Subsequently, the Gaming
Board carefully considered the entire record before issuing a final decision.
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¶ 36 According to the record, the plaintiffs first asserted a procedural due process claim in their
pleadings before the circuit court. There is no indication that the plaintiffs demanded that the
Gaming Board provide a hearing or discovery in that proceeding. We note that J&J Ventures’
original section 1800.320 petition included a footnote in which J&J Ventures recognized that the
existing Gaming Board rules did not provide for a hearing or discovery and “reserved any and all
rights to seek and obtain the same.” However, J&J Ventures did not make a demand for discovery
or a hearing before the Gaming Board, and it did not claim that the Gaming Board’s rule violated
its rights to due process.
¶ 37 The procedures outlined in section 1800.320 provides a decision-making process based
upon the parties’ petitions and responses, supporting affidavits and documentary exhibits, and
written arguments. By all accounts, those procedures were followed in this case. As noted above,
due process requires only such procedural protections as fundamental principles of justice and the
particular situation demand. Abrahamson, 153 Ill. 2d at 92. After reviewing the record, we find
that the plaintiffs failed to show that this matter constituted a “contested case” within the meaning
of the Administrative Procedure Act. Furthermore, the plaintiffs failed to show that the Gaming
Board’s rules deprived them of a fair and impartial process. Accordingly, the plaintiffs have failed
to present a meritorious procedural due process claim.
¶ 38 The plaintiffs next claim that the Gaming Board’s final order should be reversed because
the Gaming Board ignored evidence of fraud and misconduct by Accel and/or its sales agent, Jason
Rowell. We disagree. As noted above, the rules established by the Gaming Board require a
petitioner to file a written petition containing “[d]etailed facts and reasons upon which the
petitioner relies in arguing that a Use Agreement, or portion of a Use Agreement, is invalid or
unenforceable.” 11 Ill. Adm. Code 1800.320(b)(2)(B), amended at 41 Ill. Reg. 10,300 (eff. July
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13, 2017). The petitioner may include supporting documentary evidence and affidavits. 11 Ill.
Adm. Code 1800.320(b)(2)(B), amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017). These same
standards apply to an intervenor’s petition. See 11 Ill. Adm. Code 1800.320(b)(8)(C) (2022). The
administrator is then required to issue a written recommended decision, based upon the contents
of the petition and any responses. 11 Ill. Adm. Code 1800.320(b)(6)(A), amended at 41 Ill. Reg.
10,300 (eff. July 13, 2017). Exceptions to the administrator’s recommended decision “shall specify
each finding of fact and conclusion of law to which an exception is taken.” 11 Ill. Adm. Code
1800.320(b)(7), amended at 41 Ill. Reg. 10,300 (eff. July 13, 2017). Notably, section 1800.320
contains no provision that would permit a party to introduce new allegations or new evidence in
its exceptions to the administrator’s recommended decision.
¶ 39 In this case, J&J Ventures did not allege fraud or misconduct against Accel or its agents in
its initial section 1800.320 petition. Likewise, the plaintiff-intervenors, Action Gaming and Illinois
Gaming, did not allege fraud or misconduct in their initial pleadings. The plaintiffs first raised
allegations of Accel’s fraud and misconduct in their exceptions to the administrator’s
recommended decision. The plaintiffs have not claimed that they were unaware of fraud or
misconduct at the time they filed their initial petitions pursuant to section 1800.320, and they have
offered no explanation or excuse as to why the allegations of fraud were not presented to the
administrator before he issued the recommended decision. Based upon our review of the record,
the plaintiffs’ allegations of fraud and misconduct were not properly before the Gaming Board.
Therefore, the plaintiffs’ claim that the Gaming Board ignored evidence of fraud and misconduct
is not supported by the record and is without merit.
¶ 40 III. CONCLUSION
¶ 41 For the reasons stated, the final decision of the Illinois Gaming Board is affirmed.
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¶ 42 Affirmed.
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J&J Ventures Gaming, LLC v. Illinois Gaming Board, 2024 IL App (5th) 230255Decision Appeal from the Circuit Court of Marion County, No. 21-
Under MR-88; the Hon. Mark W. Stedelin, Judge, presiding.
Review:
Attorneys Christopher A. Koester, Kara J. Wade, and Andrew T.
for Koester, of Taylor Law Offices, P.C., of Effingham, and William
Appellant: M. Gantz and Keith M. St. Aubin, of Duane Morris LLP, of
Chicago, for appellants.
Attorneys Kwame Raoul, Attorney General, of Chicago (Jane Elinor
for Notz, Solicitor General, and Chaya M. Citrin, Assistant Attorney
Appellee: General, of counsel), for appellee Illinois Gaming Board.
Steven P. Blonder, of Much Shelist P.C., of Chicago, for
appellee Accel Entertainment Gaming, LLC.
No brief filed for other appellees.
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