iGaming Company Takes on State Licensing Commission’s Rejection – Achieves Rare Victory

By: Jeff Ifrah

Ifrah Law’s litigation experience and broad knowledge of gaming licensing laws and procedures rescued a client from an unfair application denial, which would have frozen the company out of a major state’s market and tarnished the CEO’s reputation among licensing boards in other states.

A successful iGaming company had nearly completed the rigorous registration process required to operate in one of the most populous states in the U.S. The backgrounds of virtually all company employees had been cleared by the state’s gaming commission, except for that of one important individual: the company’s co-founder and CEO.

On the company’s registration form, the CEO had dutifully disclosed that 20 years earlier he had been the victim of financial fraud. The perpetrator had hacked his online brokerage account and illegally traded some of his investments. The fraud was investigated and the criminal was apprehended and charged. The CEO was found to be entirely innocent.

Case closed, right? Not, unfortunately, in the minds of members of the gaming commission’s review team. They interpreted the two-decade-old crime as bordering on “securities fraud” which they theorized would compromise the CEO’s suitability to lead the company’s operations in the state. Such an interpretation of a fraud victim’s status was unfair and troubling, but to push back against any state gaming commission’s preliminary ruling is nearly always doomed to fail.

With the company’s operating license hanging in the balance, the CEO thought that he had only three unappealing options in front of him:

• Resign from his position in a company he had co-founded and built for 10 years, appointing someone else to lead it
• Sell the company – lock, stock and barrel
• Withdraw the company’s application, which would be costly and could cause other states to follow suit in scrutinizing this purported “black mark” in their registration deliberations

Fortunately, rather than exercise any of these options, he asked for advice from Ifrah Law. With significant litigation and dispute resolution experience in the iGaming space, as well as deep knowledge of financial regulations, our lawyers immediately saw that the CEO was in no way implicated in the securities violation; such an assertion was groundless. We also knew that a state gaming commission’s initial assessment was not the final word; despite the odds, the right argument could reverse it. Finally, our successful iGaming litigations in other states has given our lawyers insights into administrative law and how to frame and present arguments to a judge under the proper legal standards.

Under a tight deadline, we prepared for a one-shot opportunity to present our client’s case to the administrative judge. The judge agreed with us on every single point. He then directed the gaming commission to reverse its preliminary decision.

Within a few weeks our client – with its CEO at the helm – continued on its journey to become a major contributor to the state’s thriving iGaming industry.

Read the other articles in our series, Real Experience. Real Results.

“Cross-Border Acquisition Helps Canadian Firm Gain Traction in U.S. iGaming Markets”

“Fast-Paced, Multi-Pronged Partnership Deal Lets London Financial Giant Access U.S. iGaming Market”

“Investment Giant Clears State Regs, Gains Major iGaming Equity Stake”

To find out more about how Ifrah Law helps clients across the online gaming ecosystem succeed and grow, download our iGaming Services brochure.