North Dakota Settles With Three Gaming Companies Accused of Exploiting Nonprofit

Troutman Pepper

[co-author: Stephanie Kozol]*

On July 6, North Dakota Attorney General Drew Wrigley announced a settlement of an administrative complaint, accusing Western Distributing Company and affiliate companies Plains Gaming Distributing Inc. and Midwest Gaming Distributing Inc. of violating the state’s gambling laws and regulations by facilitating excessive rent payments and attempting to influence bars’ charitable gambling activities through the Wall of Honor veterans nonprofit.

The crux of the settlement agreement lies in its articulation of the allegations against the respondents and the stipulated terms of resolution. Despite disputing certain allegations, the respondents acknowledged that their representatives committed conduct violating North Dakota gaming laws. The settlement agreement, subsequently, delineated multiple crucial elements:

  1. David L. Wisdom and his immediate family were to be removed from ownership and involvement in the respondents’ operations, indicating a significant shakeup in the companies’ organizational structure.
  2. The respondents were ordered to pay a considerable fine of $125,000, in addition to attorney fees and costs, highlighting the financial repercussions of gaming law violations.
  3. The agreement imposed a “deferred revocation” of the respondents’ licenses, a provision emphasizing the consequences of repeated misconduct over a three-year probationary period.

Along with the settlement, Wrigley issued the following statement: “These gaming violations undermine the integrity of charitable gaming in North Dakota. Those responsible for these improper actions violated the public trust and the trust of the charities that relied on them. The last year has brought a new day in gaming enforcement, and the public can be assured that law enforcement and the outstanding professionals in the Attorney General’s Gaming Division are working hard to protect the integrity of the limited charitable gaming that is permitted under North Dakota law.”

Gaming Division Director Deb McDaniel also issued a statement: “Western Distributing, Plains Gaming Distributing, and Midwest Gaming Distributing intentionally used Wall of Honor to circumvent the gaming site rent limits set in law. The Gaming Division Investigators & Auditors spent countless hours across more than a year conducting audits, interviews, and investigative research to document this important case, which has now been resolved with an acknowledgment of wrongdoing by Western Distributing, Plains Gaming Distributing, and Midwest Gaming Distributing.”

Why It Matters

The enforcement action and the subsequent settlement illustrate how the state’s regulatory authorities are holding gaming organizations accountable for their actions, ensuring they operate within the bounds of the law. The enforcement action and settlement reinforce the importance of abiding by gaming laws and regulations to avoid severe penalties, including hefty fines and potential revocation of licenses. This case serves as a stark reminder to all stakeholders of the importance of lawful conduct and the severe consequences of falling foul of the rules.

*Senior Government Relations Manager in the State Attorneys General Department.

Written by:

Troutman Pepper

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