DraftKings marketing deal with Illinois VGT operator turns sour


Illinois gambling regulators want to impose a $5m penalty against video gaming terminal (VGT) operator Accel Entertainment for violating state regulations in the firm’s now-scrapped deal with sports betting operator DraftKings

On Friday, the Illinois Gaming Board (IGB) filed a complaint for disciplinary action against Accel, which operates a VGT network spanning some 2,335 locations – restaurants, bars, truck stops, etc. – across the state. 

The IGB accuses Accel of “offering and providing payments and other things of value to licensed video gaming establishments as illegal inducements or incentives to locate, keep or maintain” Accel’s VGTs. The IGB says Accel is guilty of violating the Video Gaming Act and the IGB’s Adopted Rules for Video Gaming, for which the IGB seeks a penalty of $5m. 

Accel struck a deal with DraftKings in August to promote the latter firm’s new Illinois betting app to VGT customers. The promos were to air via Accel’s VGT screens, with DraftKings paying Accel $200 for each ‘qualified’ new bettor who signed up and met certain wagering benchmarks. 

Accel had the option to share these commission payments with VGT host venues if venue operators made “efforts to market and promote” DraftKings to their customers. A July email from Accel’s chief commercial officer said the deal would allow Accel to “drive new location sales and loyalty from location owners.” 

An August email from the same individual asked the contract negotiators to add a clause specifying that the commissions DraftKings paid would be “shared with the location for their efforts.” The staffer said it was important that the IGB see “that we are operating as a pass through for the commissions.”

Accel’s management sought to insert the phrase “participating partner establishment” into the DraftKings contract, while emphasizing that Accel was “passing these funds” from DraftKings to the venues. The emails noted that Accel directly paying venues “could violate the IGB inducement rules.” 

But after the deal was done, Accel emailed its host venues detailing “incentives for your establishment,” explaining how venues could receive payments from Accel of $100 for each customer they convinced to sign up with DraftKings. 

Accel reps then fanned out across the state, pitching venues that didn’t yet host its VGTs on the potential benefits of promoting DraftKings, while also offering “social media marketing as incentives or inducements to enter a future use agreement.” By December 1, Accel had made 211 betting-related payments to host venues. 

The party came to an end on December 11, when the IGB discussed the matter with Accel. By December 16, Accel and DraftKings “mutually’ agreed to terminate their deal. 

Accel CEO Andrew Rubenstein told local media that his company would fight the IGB’s proposed penalty, saying his firm and DraftKings were “two public companies that absolutely knew what they doing and following the law.” DraftKings has yet to comment on the IGB’s complaint. 

The IGB’s most recent sports betting market report for the month of October showed DraftKings claiming the largest slice of wagering handle, while placing second on the betting revenue chart behind Rush Street Interactive’s BetRivers brand.