Delaware North Sues Over Sportsbook Closures
Delaware North recently filed a civil lawsuit seeking monetary damages against United Kingdom-based Miomni Gaming and its Chief Executive Officer Michael P. Venner. Miomni is involved in a contract dispute with a third-party technology supplier which has prevented Delaware North’s West Virginia casinos–Mardi Gras Casino in Nitro and Wheeling Island Hotel-Casino-Racetrack, plus its BetLucky app–from taking new sports wagers since March 6.
The lawsuit claims “Miomni Gaming and its chief executive officer fraudulently misrepresented its ownership of a key part of the BetLucky sports wagering platform and breached the companies’ joint venture contract.”
In the lawsuit, Delaware North said it believed it was getting a full sports betting solution from Miomni; the fact that a third-party dispute could lead to the shutdown came as a shock. However, part of the public record from the West Virginia Lottery indicated Miomni does not have end-to-end sports betting capability in-house, and that it does work with third parties to help supply sports betting apps, for example in Nevada.
The lawsuit states, “During negotiations for the joint venture, Miomni and Venner repeatedly represented to Delaware North that Miomni owned the intellectual property rights in the platform, including the source code underlying the ‘front-end interface’ and the ‘back-end’ of the platform. Delaware North relied on those representations when it decided to contract with Miomni. In the joint-venture agreement, Miomni represented that it owned and controlled the platform and that Miomni’s performance would not be impaired by any third-party contracts.”
Miomni’s relationship with Cyprus-based Entergaming is central to the lawsuit. In a June 2018 letter from Miomni to Delaware North, Venner indicated Entergaming had agreed to sell and transfer to Miomni the software, source code, object code and all other rights in the platform. But the deal between Entergaming and Miomni never materialized. Miomni never notified Delaware North or its affiliates that it was using Entergaming as a third-party vendor, and Miomni never sought approval from Delaware North or its affiliates to use Entergaming. The lawsuit states Delaware North and its affiliates only later learned that Miomni was using Entergaming as a subcontractor.
The BetLucky License Agreement required Miomni to seek prior approval before retaining any third parties to perform services in connection with the platform. Miomni disclosed several entities that were providing such services, products or materials, but did not include Entergaming and never obtained approval for Entergaming to play any role in the operation or support of the platform.
“On February 5, 2019, the platform stopped working for several hours. Miomni representatives told Delaware North they did not know the cause of this loss of functionality. On March 6, 2019, the platform ceased working again. This time, service was not restored. When the March 6, 2019 outage occurred, Miomni personnel initially represented to Delaware North they did not know the cause of this loss of functionality,” the lawsuit states.
It continues, “As Delaware North continued its investigation and pressed for answers, Miomni claimed, for the first time, that Entergaming had been providing ongoing ‘technical support’ for the ‘back-end’ of the platform. Miomni, through Venner, also alleged that Entergaming had caused the recent platform failures as part of a ‘scheme’ to ‘extort’ Miomni and that Entergaming had engaged in ‘criminal’ activity by ‘hacking’ into the platform.”
Delaware North said in reality Entergaming shut down its services when Miomni didn’t live up to an “option agreement between the two companies” and never paid Entergaming any portion of the option fee, and also never executed a perpetual license agreement with Entergaming for the source code. As a result, Entergaming ended its services. Miomni knew the cause of the March 6, 2019 platform outage was not the result of any “criminal” behavior or “hacking,” according to the lawsuit.
Meanwhile, Delaware North continues to lose revenue as sportsbooks remain unavailable at its two West Virginia casinos and BetLucky app.