Koin Mobile claimed an early-round win when a federal judge denied Everi Payments’s request to block discovery based on Everi’s still-pending motion to dismiss Koin’s claims.
Koin filed a federal antitrust lawsuit alleging Everi used its contracts to tie customers exclusively to Everi’s digital wallet, hindering competition in the markets for cashless gaming solutions. The lawsuit filed in Nevada said Everi unlawfully forces casinos to use only its own digital payments product in a bid to dominate the market.
In a ruling on Sept. 25, U.S. District Court Magistrate Judge Craig S. Denney found that, on preliminary review, Koin makes a plausible claim that Everi is using its contracts to tie customers exclusively to Everi’s digital wallet and hinder competition in the markets for cashless gaming solutions, Koin said in a statement released Thursday.
“We appreciate the federal court’s careful work here,” said Koin President Gary Larkin said in the statement. “Judge Denney considered a half-dozen briefs and held lengthy oral arguments on the issue, and we’re gratified to move forward with our investigation of Everi’s conduct.”
Everi argued that Koin’s investigation should halt, because it brought “baseless” claims predicated on deficient antitrust theories. In July, Everi filed a motion that the lawsuit from Koin was “misguided” and “flawed” and should be thrown out.
In its statement, Koin said Judge Denney disagreed and held that Koin’s allegations likely made out claims of anticompetitive conduct in the markets for digital payment solutions.
“Our goal is and always has been to level the playing field for digital-payment providers: Koin, Everi and the rest,” Larkin said. “Everyone benefits from competition. It’s the American way. This ruling is another step forward in what we know will be a long fight, but it’s worth it.”
The Sept. 25 ruling follows a Nevada state court granting a stay of Everi’s parallel state litigation against Koin. The state court ruled Koin’s federal action takes precedence.
The federal lawsuit said Everi violates U.S. antitrust law by “tying” the use of its digital wallet to other company services involving cash access and through “onerous” long-term exclusive agreements that bar casinos from working with other non-Everi digital wallet providers, Reuters reported.
Everi countered in its filing that the company isn’t engaged in “tying,” because cash and digital wallets are not distinguishable products in the gaming industry. Everi also claimed “vibrant competition” for gaming digital wallets.
Koin’s Koin Wallet competes with Everi’s CashClub Wallet. Koin has billed its wallet as general-purpose, supporting gaming-related financial transactions and other activity.
“Koin said its digital wallet threatened [Everi’s] dominance of in-casino financial access” and that the larger rival has taken steps to stymie competition, including interfering with Koin’s casino business relationships,” Reuters reported.
Koin alleged, “Everi can and does charge higher prices than its competitors,” because casinos are locked into using its services.
“More casinos and patrons using digital wallets means fewer casinos and patrons using Everi’s cash-access systems,” Koin’s lawsuit said. Digital wallets, the lawsuit said, “threaten to relegate cash-access kiosks to history’s trash heap of payphones and typewriters.”
In its motion to dismiss, Everi denied Koin’s central claim that it bars its cash-access services to casinos that do not also agree to use its virtual wallet CashClub.
The federal action is Koin Mobile, LLC v. Everi Holdings Inc. and Everi Payments Inc.
