US casino operator Delaware North has filed a lawsuit against its sports betting joint venture partner Miomni Gaming, accusing the supplier and its CEO Michael Venner of engaging in “an ongoing pattern of misrepresentation and bad faith” throughout the partnership.
The operator is seeking monetary damages through the suit filed in the Chancery Cour of Delaware, including Miomni’s 49% stake in the BetLucky joint venture, which the supplier is apparently refusing to give up.
The joint venture was to launch the BetLucky sports betting platform, which went live in West Virginia on December 27, 2018, only to cease operating on March 6, 2019. Delaware North then terminated the contract earlier this month.
The operator claims Miomni made fraudulent claims to induce it to enter into a joint venture, as well as of wilfully breaching a limited liability company agreement governing the operation of BetLucky.
Delaware North claims that Miomni and chief executive Venner repeatedly claimed to own intellectual property rights to the platform, including the source code for the front end and back end of the platform. It cited emails from Venner, sent June 14 and 15 2018, which claimed this was the case.
However, the operator says it later discovered that these were provided by Cyprus-based supplier Enterg Software Solutions, trading as Entergaming. Miomni had told Delaware North that Entergaming agreed to sell it all rights to the platform including the software, source code and object code.
This was key to Miomni being granted its 49% stake in the joint venture, with Delaware North holding the 51% majority stake, in return for providing $5m (£3.8m/€4.4m) in cash capital and licence to use certain intellectual properties. Ultimately, Delaware North was unaware that Miomni was subcontracting elements of the platform to Entergaming, something prohibited under the joint venture terms.
“Miomni did not possess sufficient rights or control over the platform to perform its obligations under the JV agreement, and Miomni knew that when it signed the JV agreement,” Delaware North claims in the lawsuit.
It was only after the platform went offline on March 6 that it emerged that Entergaming retained all ownership rights to the platform back end. Miomni had an option to pay €750,000 for a perpetual licence to the source code, though it never did so. As a result of Miomni’s use of the back end for the BetLucky product, Entergaming then disabled the platform.
The platform had first gone offline on February 5, at which point Miomni told Delaware North it did not know what had caused the outage. It repeated this when the platform went down permanently on March 6, only to later admit that Entergaming was providing support for the solution.
Delaware North says that as a result Miomni’s only actual contribution to BetLucky, the licence for the platform, was “illusory” from day one. A separate claim of fraud has been filed against Venner for his involvement.
The operator is demanding monetary damages from both the supplier and its chief executive. It is also looking to have the Delaware Chancery Court declare that Miomni has breached the joint venture agreement, and be awarded its 49% stake in the joint venture. It also demands it be discharged from any obligations to the supplier under the joint venture agreement.