Judge dismisses antitrust suit against casino credit company

By Steve Green (contact)

Friday, Aug. 13, 2010 | 10:43 a.m.

A federal judge on Monday dismissed one of the two antitrust lawsuits filed this year by competitors against Las Vegas-based casino ATM provider Global Cash Access Holdings Inc.

Sightline Payments LLC, headed by former Global Cash CEO Kirk Sanford, filed the suit March 22 in U.S. District Court in Las Vegas.

After months of legal wrangling by the parties, federal Judge Philip Pro rejected Sightline's arguments Monday and dismissed the case.

Sightline complained that through acquisitions GCA now controls 90 percent of the casino ATM market, but GCA argued that even assuming that was true, Sightline failed to allege GCA charges monopoly prices or that GCA has done anything more than lawfully grow its business.

"The court finds merely alleging that GCA has acquired a 90 percent market share, without more, is insufficient to support Sightline's claims," Pro wrote in his ruling.

Pro also rejected allegations that GCA purchased a patent to restrict competition, entered "exclusionary agreements" with casinos and disparaged Sanford when it settled a complaint filed by Arizona gaming regulators alleging wrongdoing by GCA executives years ago.

In settling the Arizona complaint, GCA agreed to disassociate itself from Sanford. Sanford argued that resulted in the tarnishment of his character and harmed efforts by Sightline to gain gaming licenses.

"To prove that disparagement rises to the level of antitrust violation a plaintiff must show those disparaging representations are clearly false. Sightline makes no such allegation in its complaint," Pro wrote.

Another lawsuit pitting Global Cash against Sanford and other former GCA executives, in which GCA alleges trademark infringement and accuses the defendants of violating confidentiality agreements, is pending in Clark County District Court.

On July 16 in that case, state Judge Kathleen Delaney issued a temporary restraining order barring Sanford and codefendants Thomas Sears and Diran Kludjian from using or disseminating any of GCA's trade secrets or confidential and proprietary information.

"The court finds that this will not prevent defendants' business, Sightline Payments LLC, from continuing to operate," the judge wrote.

Separately, Global Cash was sued by competitor Automated Systems America Inc. (ASAI) on July 7 in federal court in California. Automated Systems also alleged antitrust violations and defamation related to GCA's use of patents.

"ASAI ... alleges that Global has threatened to file, or filed, other suits based upon the (patents) in order to drive other competitors out of the market," that lawsuit complains, adding the patents at issue are not enforceable.

Global Cash has not yet answered that complaint in court, but in a recent regulatory filing said: "The company believes it has meritorious defenses and will vigorously defend this action."

For the second quarter, Global Cash said revenue fell 9.1 percent on a year-to-year basis to $157.2 million. It posted a profit of $5.9 million or 9 cents per share, down from $9.2 million or 12 cents in 2009's second quarter.

"While conditions in the gaming industry remain challenging, we’ve continued to pursue our product and service innovation strategy and believe that this is positioning the company well for the long-term. We believe our market position, breath of products and our ever-increasing focus on innovation and customer service continues to position us well for the future," CEO Scott Betts said in the Aug. 4 earnings report.

Global Cash also said July 21 that a big customer, Harrah's Entertainment Inc., was not renewing contracts that are expiring Nov. 30, and that the decision should not have a material impact on its 2010 results.

The company received a boost last month when Nevada gaming regulators approved testing of the company's QuikTicket system allowing gamblers to receive slot machine tickets, or vouchers, from ATM machines.

Instead of taking cash from an ATM machine and inserting it into a slot machine, players can use the tickets instead. This has been touted as a means to reduce cash-handling costs and improve security.