This is a developing story and will be updated.
Casino operator Delaware North is suing the company that was providing its sports betting platform in West Virginia, after it was forced to shut down all wagering last month.
The basics of the WV sports betting shutdown and lawsuit
Miomni had been the supplier for WV sports betting for Delaware North at its two casinos — Mardi Gras and Wheeling Island casinos — as well as the BetLucky sports betting app.
But all of those been shut down as part of what has been called a dispute between Miomni and one of its vendors.
According to a press release from Delaware North, the lawsuit alleges “that 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.”
It’s a quick turnaround from a relationship that was heralded publicly just six months ago.
Delaware North had apparently been looking to deploy sports betting via the JV in Arkansas, as well.
The Delaware North lawsuit
You can see the full lawsuit here, which names both Miomni and CEO Michael Venner:Delaware North iGaming, Inc. v. Miomni Gaming Ltd., et al. - Verified-Complaint
The lawsuit was filed in the Court of Chancery for Delaware.
Allegations from the WV sports betting lawsuit
At the core of the lawsuit is what exactly Miomni was supposed to offer as part of the sports betting joint venture. Delaware North, for its part, says it believed it was getting a full sports betting solution; the fact that a third-party dispute could lead to the shutdown was news to Delaware North, at least if you believe their lawsuit.
A recent freedom of information request shed a bit of light on the relationship between Delaware North and Miomni.
While the contact between the two parties was heavily redacted, part of the public record from the West Virginia Lottery makes it clear that Miomni does not have end-to-end sports betting capability in-house, at least not one as robust as other gambling operators.
It was also well-known that Miomni works with hird parties to help supply sports betting apps in Nevada, for instance.
More from the lawsuit:
“During negotiations for the joint venture, Miomni and Venner repeatedly represented to DNG 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.
“DNG 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.”
Entergaming and Miomni
Delaware North, throughout the lawsuit, alleges that Miomni misrepresented how it was operating sports betting and its ability to do so outside of third-party contracts.
Central to the case is the relationship with a company based in Cyprus called Entergaming and how it relates to Miomni.
Here’s how a June 2018 letter from Miomni to DN is characterized in the lawsuit:
… Entergaming stated that it had agreed to sell and transfer to Miomni the software, source code, object code, and all other rights in the Platform.
In his cover email, Venner advised DNG representatives that the Entergaming letter “outlin[ed] the Miomni ownership of the back office for N. America” (emphasis added), thereby representing that Miomni had acquired all rights in the “back-end” from Entergaming.
The lawsuit continues that “Venner’s written representations of ownership in his June 14 and June 15 emails were consistent with the oral representations of ownership that he made to DNG in June and July.”
Deal or no deal?
But apparently that deal between Entergaming and Miomni never materialized, and Entergaming continued to operate as a third-party vendor.
Miomni never notified DNG or its affiliates that Miomni was utilizing Entergaming as a subcontractors, and Miomni never sought approval from DNG or its affiliates to utilize Entergaming to perform services as required under the PSA.
DNG and its affiliates later learned that Miomni was utilizing Entergaming as a subcontractor and that Entergaming was providing services required under the PSA.
The BetLucky License Agreement required Miomni to seek prior approval before retaining any third parties to perform services in connection with the Platform. The BetLucky License Agreement also required Miomni to identify all third-party products or materials that were included in, or required to operate, the Platform.
Miomni disclosed several entities that were providing such services, products, or materials, but Miomni failed to disclose Entergaming. Miomni never disclosed, let alone obtained approval, for Entergaming to play any role with respect to the operation or support of the Platform.
More on the timeline of WV sports betting being shut down
Some of the details of the how and why the WV sportsbooks from Delaware North shut down had never been known. But the lawsuit sheds some more light on things.
According to the lawsuit:
- “On February 5, 2019, the Platform stopped working for several hours. Miomni representatives told DNG that 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 DNG that they did not know the cause of this loss of functionality.”
- “As DNG 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.”
Miomni allegedly breached its contract with Entergaming
So why did sports betting get shut down? According to Delaware North’s version of events, Entergaming shut down its services when Miomni didn’t live up to an “option agreement between the two companies:
Under the Option Agreement, Entergaming retained all ownership rights in the “back-end” of the Platform. The Option Agreement also restricted Miomni’s ability to purchase a perpetual license to use (but not to own) the source code for €750,000 (the “Option Fee”) to a limited option-exercise window.
Miomni never paid Entergaming any portion of the Option Fee, and Miomni never executed a perpetual license agreement with Entergaming for the source code.
That led to Entergaming ending its services. But the story gets even worse from there, Delaware North alleges:
Miomni did not disclose Entergaming’s February 25, 2019 letter to DNG or to any of DNG’s affiliates or representatives until March 12, 2019, several days after the Platform outage.
Miomni instead misrepresented the cause of the March 6, 2019 Platform outage to DNG. Entergaming’s disabling of the Platform was not the result of any “criminal” behavior or “hacking,” and Miomni knew that all along.
What’s next in the WV sports betting case?
Miomni will obviously have a chance to reply to the case and fight it in court.
It’s at least feasible the case gets settled, as well, if much of what Delaware North alleges is true.
Contract law is in the details, though, so Miomni could believe it did not breach the contract, and could hope that a judge agrees.
No matter what, the breakup of Miomni and Delaware North is messy, and it remains a black eye on the early days of legal sports wagering outside of Nevada.