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As the US online gambling industry is in a consolidation push amid a lull in expansion, a legal dispute may have some bearing on the extent to which parties may join forces. The lawsuit in question is especially pressing because one of the named parties is currently engaged in a consolidation action.
Koin Mobile has filed suit against Everi Holdings and its payment platform subsidiary, arguing that Everi’s vendor contracts with gaming licensees represent an illegal restriction of the market for financial services. While the complaint’s chances of success are unclear and there are questions about the ramifications of success for the claimant, there could be a precedent that gambling companies may want to observe.
Koin lawsuit alleges Everi’s engagement in monopoly-building
Koin filed its complaint1 in the US District Court for Nevada on April 19. The main allegations stem from Koin’s attempt to garner a service contract with a Nevada casino to provide its payment platform to the gaming facility.
The casino was already an Everi client at the time, and when Everi learned of Koin’s attempts to garner the business, Everi took action against the casino for breach of contract earlier in April.
Koin argues that Everi’s service contracts with casinos tie those gaming licensees to using Everi Payments for multiple services like ATMs and cashless gaming funding. That tenet, Koin alleges, represents an unfair trade practice and violate multiple federal antitrust standards
A July 8 response2 by Everi refutes those allegations, stating that its clients have the option to use or not use any of Everi’s individual services and that specific elements of Everi’s financial services are inseparable from each other. At this point, an out-of-court settlement preempting trial remains a possibility.
To what degree this matter could have larger implications for the gambling industry in the US depends on how dedicated both parties are to proving their point. At a high level, though, the impact could be significant.
Potential legal outcomes for Koin v. Everi
The first matter the Nevada District Court will have to weigh in on is Everi’s plea for the court to dismiss Koin’s lawsuit. If the court grants that request, that would essentially settle this issue between these two parties.
Assuming the court does not dismiss the case and there is no settlement, a finding for either party at the current level would primarily only affect the involved jurisdiction and parties. At least for the immediate future, anyway.
There could be some immediate impact on the pending acquisition of Everi and IGT by Apollo Global Management3. It might increase regulator scrutiny of a merger of three companies that represent a significant footprint in the gaming service provider industry.
Broader ramifications might come into focus upon an appeal of the district court’s ruling. Affirmation or reversal by the US Ninth Circuit Court of Appeals would have some precedential weight. Such a ruling might guide future merger moves in the gambling space.
The future of financial services in US online gambling business
While market consolidation by gambling operators gets most of the headlines, the consolidation of vendors in the gaming space is just as pivotal to the larger industry’s future. That maturation is currently ongoing at a faster pace than the same for operators.
Aside from the aforementioned AGS-Everi-IGT agreement, Evolution has made a deal with Galaxy Gaming and Sega Sammy is looking to absorb Stakelogic. These transactions create the potential for more online casino operators to obtain more of their necessary products and services from fewer providers.
A favorable ruling for Koin could at least make parties to such deals more wary of combining all elements of their businesses and/or create more space for competitors/regulators to challenge such transactions. On the other hand, an opinion that supports Everi might belay such fears and inspire confidence in such transactions.
There is much yet to unfold in this dispute, and a quick dismissal may limit its impact on the US online casino business significantly. It’s still worth watching because of the potential for greater ramifications, though.
