The gaming industry is always competitive. However, rarely does it get so competitive that gambling kingpins seek to destroy each other.
This is exactly what has happened in Illinois casinos, with two gaming magnates exposing each other’s potentially illegal dealings. The situation has gone so far that the Illinois gambling and gaming board is now looking into the matter.
The following story is about Gold Rush Gaming founder Rick Heidner and gambling café owner Dan Fischer. The two are locked in a heated battle over slots supremacy in the Illinois state.
How Did Heidner and Fischer Get Into This Battle?
Rick Heidner’s Gold Rush Gaming leases some real money video poker and slot machines to Illinois-based businesses. The 60-year-old’s company provides gaming machines to over 500 businesses throughout the state.
However, his ability to supply slots has taken a hit. Illinois regulators claim that Heidner offered a $5,000,000 bribe to Fischer (covered later).
Heidner originally wanted a build a racino in the southwest portion of the state. But Gov. J.B. Pritzker stopped the deal after revelations that a bookie and shady banker were involved.
As for Fischer, he supplies many games to Illinois gaming cafes. He’s also hoping to develop a Hard Rock Casino in Rockford, IL.
Fischer purchased the Stella’s and Shelby’s business chain of 57 gaming cafes in 2018. Many of these same locations included Heidner’s machines, which Fischer eventually replaced.
Here’s where the controversy begins. Heidner refused to take his gambling machines out of the chains following the sale.
Fischer then sued Gold Rush Gaming to get the slots out of his newly acquired chain. After learning of a strange deal used to purchase Stella’s and Shelby’s locations, Heidner countersued under the claim that Fischer broke state laws to complete the deal.
He also wanted Illinois gambling and gaming board officials to provide records on the transaction. The Gaming board offered limited emails that suggest they were already looking into the deal.
The Shady Aspects of Fischer’s Casino Deal
Fischer acquired Laredo Hospitality Ventures, which is the parent business behind Stella’s and Shelby’s, in 2018. Strangely enough, Fischer only paid $2 million for 57 locations—approximately $35,000 per café.
He immediately received $44.5 million afterward from Midwest SRO for an exclusive contract to supply slots to the cafés. Fischer went about kicking Gold Rush Gaming slot machines out of his locations following the sale.
Fischer claims that the Stella’s and Shelby’s venues are truly worth only $2 million. He noted that overhead operating costs and a revenue split between the state and slots developers reduce the cafés value.
Heidner’s Claims on the Alleged Illegal Deal
Slot machine developers aren’t allowed to pay café owners to only offer their machines. This, however, is exactly what Heidner alleges happened.
He believes that Midwest SRO didn’t pay $44.5 million just for a non-compete deal. Instead, Heidner sees Midwest as the majority owners of the chain. Herein lies the reason why he didn’t want to take his machines out of the Laredo locations.
Fischer started out in the Illinois gaming market by operating a chain of Dotty’s cafés. He later purchased Laredo Hospitality Ventures and their aforementioned Stella’s and Shelby’s stores.
It’s at this point that he told Heidner that the Gold Rush Gaming machines would be replaced with Midwest SRO games.
Gold Rush owns machines in 500+ cafés throughout Illinois. However, their games in Laredo locations are particularly successful, making up for 25% of the company’s gaming profits.
Heidner later lost a potential multimillion-dollar bank loan after being booted from Stella’s and Shelby’s. He also sold 30% of his company to investors.
He met with Fischer in a desperate attempt to keep his machines in the Laredo venues. Heidner even proposed getting investors together who’d buy out Fischer’s stake in Laredo Hospitality for $7 million—$5 million more than the original purchase price.
The later proposal is what the Illinois gambling and gaming board claims is “illegal inducement.” Heidner’s offer, plus an extra $5 million, may ultimately be viewed as a bribe in the eyes of the law.
Eviction Notice Given
Fischer didn’t accept any of Heidner’s proposals or pleas. He also gave Midwest SRO the nod to put their slot machines in his cafes.
Given that the machines were still sitting in his cafés, Fischer issued an eviction notice to Heidner. All of the Gold Rush machines needed to be removed or they’d be confiscated.
Afterward, Heidner would learn the perceived nature of the Fischer/Midwest deal. The latter quite possibly supplied financing ($44.5m) to complete the deal and also became the sole supplier of Stella’s and Shelby’s cafés.
This is when Heidner complained that the Laredo Hospitality Ventures purchase may be breaking Illinois state gambling laws. It’s also when his alleged inducement to Fischer became public knowledge.
Where Are These Cases Currently At?
State gaming regulators knew that something was strange about Midwest’s and Fischer’s deal. However, they didn’t know if they had enough information or authority to halt it.
Midwest lawyers wrote the Gaming board to ensure that their deal was okay. Gaming board lawyer Jim Lopinski didn’t offer a blessing.
Lopinski wrote in an email:
“Technically [Midwest owners are] correct that they do not need our approval to do this transaction. However, the fact that they seek it tells me they believe we may have an issue with it,”
“[The owners] can go ahead with the transaction, but tell [them] my next audit will be Midwest SRO, its control over Illinois Cafe and Service Company, LLC and this transaction with the goal of proving inducement and shutting her client down.”
Lopinski didn’t get an opportunity to act on his threat of an audit. He left his position with the Illinois gambling and gaming board sometime in 2019.
Judge Sanjay Tailor, from Cook County, was also skeptical of the Laredo Hospitality purchase. She didn’t believe that the 57 cafés are only worth a combined $2 million.
Judge Sanjay Tailor stated:
“The Gaming Board has already, you know, at least preliminarily determined that the transaction is highly suspect…on its face from my review, it appears to be highly suspect.”
Judge Tailor no longer has any affiliate with this case, though, after moving up to a higher position. Her replacement for the case has yet to be determined.
The Moral of This Illinois Gambling Story
It’s almost never worth the hassle to get in a legal battle. It just costs everyone money and time.
So what will happen to these gaming machine kingpins?
Both parties are involved in suspended cases. The cases will likely be picked up when a new judge and Gaming board lawyer(s) are assigned.
It’s difficult to predict what punishments both parties will face if convicted. Fischer and Midwest SRO are accused of entering into an illegal deal, whereby Midwest would own both cafés and the associated gaming machines.
Heidner may have offered an illegal inducement of $5 million to keep his slot machines in Shella’s and Shelby’s. He could get leniency when considering the dire situation he was facing.
No timetable is set for when these matters will be settled. When the cases do come to court again, though, they figure to have a big impact on Illinois’ video gambling market.