Filing lawsuits must be addicting. The gambling industry has seen a plethora of extraneous litigation lately and one name has been popping up over and over. Delaware North Gaming sued Miomni after its sports gambling operations in West Virginia suddenly went dark and is now facing a lawsuit of its own in New York. An off-track betting (OTB) company believes DNG has been using one of its operations as its own piggy bank.
Going back eight years, Suffolk County OTB has been trying to figure out how to get back on course and has been going through the motions with its Chapter 9 bankruptcy proceedings. In an attempt to find solid ground, it opened Jake’s 58 in 2017, intending on making the slot machine parlor a huge success and help put everything back to normal.
The venue launched operations as a part of a hotel that DNG owns in Islandia, New York. The company also took over the management of the venue’s video-lottery terminal (VLT) operations; however, it seems that, according to Suffolk, the multimillion-dollar DNG wasn’t assisting out of an altruistic notion that it should help out the little guy. Instead, it acted with “knowing and intentional bad faith conduct and malfeasance” as it overcharged Suffolk for a number of different expenses.
That led to Suffolk’s lawsuit against DNG, in which it asserts that the company has been playing games other than through the VLTs. The suit explains, “Hundreds of millions of dollars of VLT revenue have passed through DNG’s hands. But at every opportunity, Delaware North has diverted money due to the state and county to its own hotel and other businesses. DNG’s secret business plan for Jake’s 58 is simple: Costs are charged to Suffolk OTB’s ‘Jake’s 58 Casino’ so that DNG’s ‘Jake’s 58 Hotel and Restaurant’ can make money.”
Suffolk apparently believes it can back up the claims with documentable proof, as well. It says that DNG has been using the OTB’s marketing budget as a “slush fund” and that it also filed 92 fake construction change orders that resulted in “millions in overcharges, all of which favored Delaware North.”
If the lawsuit is successful, DNG is on the hook for at least $5 million, as well as punitive damages and an array of other costs that will increase as the case waits to be heard by a judge. Suffolk also wants the court to rip up the contract it has with DNG and let it once again try to get back on the right path.
DNG is proclaiming its innocence. Glen White, a company spokesperson, said in an official statement that the accusations are “contrived,” and that the company has invested “millions of its own dollars in Jake’s 58” in order to turn it into a “professionally-run business that makes millions of dollars for the state and community.”
He adds, “Having landed in bankruptcy after years of ineffective operations, Suffolk OTB, with approval of the U.S. Bankruptcy Court, turned to home-state, industry-leading Delaware North to develop and manage its video gaming operations. Under Delaware North’s management, the property has consistently outperformed financial projections, resulting in higher-than-anticipated returns for Suffolk OTB, the citizens of Suffolk County, and the State of New York.”
It wouldn’t be too hard to envision DNG conducting operations in a manner that walked the line of proper business ethics. After all, this is the same company that believed it was entitled to own the copyright and trademarks to Yosemite National Park and its installations.