Illinois regulators levy fine against video gambling company Accel Entertainment

Accel Entertainment, a west suburban-based company that has become one of the largest video gambling operators in the United States, is facing a $5 million fine from the Illinois Gaming Board.

According to state gambling regulators, the company entered into a deal with the online sports betting company DraftKings in order to pay commissions to business owners to entice them into putting Accel gambling machines in their establishments. It’s illegal for video gambling operators to offer “inducements” to try and drum up or maintain video gambling business, and regulators allege the $21,000 in commissions paid out by Accel violate the Illinois Gaming Act.

Accel President and CEO Andrew Rubenstein wouldn’t comment on the complaint when reached Sunday by WBEZ. But he indicated the company, which is traded on the New York Stock Exchange, would fight the allegations.

“This was two public companies that absolutely knew what they were doing and following the law,” Rubenstein said.

According to the complaint, as part of the deal between the betting companies, Accel would offer DraftKings advertising space on its video gambling screens, and then would get $200 from each new customer it drove to the sports betting outfit, provided they met certain conditions. Accel would have the right to share those payments with the establishments – often bars or restaurants – where those video gambling machines were located.

The gaming board quotes an email from Accel’s chief commercial officer, who asks for the agreement to specify that Accel will be sharing some revenue from DraftKings with business owners who have Accel machines.“We want it in the agreement so the gaming board can see that we are operating as a pass through for the commissions,” the email reads, according to regulators.

Another email noted, “We’d like to use the language of ‘participating partner establishments’ and clarify that we are passing these funds from [DraftKings] to the [video gambling establishments]. This is essential as we are not allowed to provide compensation to the partner from our funds as it could violate the [Illinois Gaming Board] inducement rules.”

The gaming board alleges that under the agreement Accel had complete control over the payments and planned to use them to curry favor with current and potential clients.

An attorney for Accel, Donna More, said in a written statement that, “Accel is committed to conducting itself in accordance with all relevant gaming laws and regulations. As to the allegations in the Compliant[sic], the Company disagrees with the IL Gaming Board and it intends to vigorously defend itself.”

The 8-page disciplinary complaint against Accel was signed by the gaming board’s administrator, Marcus Fruchter, who was appointed in May 2019, months after the swearing-in of Democratic Gov. JB Pritzker.

Friday’s complaint isn’t the first time Accel has drawn the scrutiny of Illinois video gambling regulators.

In March, ProPublica Illinois reported that Rubenstein and Accel also took advantage of connections at the Illinois Gaming Board at a time when regulations for video gambling were being drafted and the competition to lock up gambling locations was at its fiercest. The company obtained internal gaming board documents about its competitors and benefited from board decisions that made it more difficult for other operators to gain a foothold in the Illinois market, the investigation found.

Gaming board officials said they opened an investigation into the correspondences between Accel and the board’s former top lawyer, but the spokesman for state regulators has declined to comment on the status of that probe.

It has proven difficult for Illinois officials to punish alleged violators of the video gambling law, which was approved in 2009. The gaming board began a disciplinary case against another major video gambling company three years ago, threatening to close it down, but the company sued regulators in a case that remains mired in court.

Accel and other major players in the industry organized a public-relations campaign and brought busloads of employees to the Illinois Capitol last year in an effort to protect their interests in Springfield.

Because of the growth of video gambling, Illinois has more places to make a bet than any state in the country, including Nevada, an investigation by ProPublica Illinois and WBEZ found. By the end of last year, Accel had gambling machines at 2,300 locations in Illinois, controlling nearly a third of the machines in the state.

But Illinois taxes the machines at one of the lowest rates in the country. That’s allowed Accel to bring in hundreds of millions of dollars in revenue since the first video gambling machines in the state came online in 2012.