The Illinois Gaming Board has filed a third disciplinary complaint against a Chicago businessman from Highland, the latest development in its six-year effort to revoke his license to operate video-gambling machines.
Lucky Lincoln Gaming, which is owned by Jeff Rehberger Jr., has nearly 1,200 machines, officially known as “terminals,” in about 200 bars, restaurants, gas stations and other locations throughout Illinois. That includes 10 in the metro-east, according to its website.
Other complaints against the company, filed in 2017 and 2019, have been stuck in an “administrative-review process,” as well as a court case in which Lucky Lincoln argued that the Gaming Board violated the state’s Open Meetings Act for not going into closed session at a meeting.
In the meantime, the company has made millions of dollars off its poker and slot machines, and Rehberger Jr. recently opened marijuana dispensaries in Champaign and Edwardsville after obtaining state licenses.
Rehberger Jr. referred questions about Gaming Board complaints to Lucky Lincoln President Jeff Heimerdinger. This month, Heimerdinger said he couldn’t comment on pending litigation, but he would be happy to answer questions when the case is over.
“The foundational principles of Lucky Lincoln are to support the rules of the Illinois Gaming Board and provide the most pleasurable experience for people playing at our partner locations,” he said.
The three complaints contain a total of 21 counts, each referring to alleged violations of the Illinois Video Gaming Act, the Illinois Gambling Act and the Board’s Adopted Rules on Video Gaming.
Many of the counts relate to “inducements,” ranging from $5,000 cash payments and Rolex watches to construction of video-gambling rooms, that Lucky Lincoln allegedly offered to owners of restaurants and other establishments for agreeing to install its machines.
The Illinois Video Gaming Act “prohibits terminal operators from giving anything of value to a video gaming establishment as an incentive or inducement to locate (machines) in that establishment,” according to the complaints.
Several counts relate to Rehberger Jr.’s allegedly improper relationship with a company co-owned by his father, Jeff Rehberger Sr., of Highland, that operates 39 video-gambling lounges under the name Lacey’s Place. One is off South Belt West in unincorporated Belleville.
The Gaming Board doesn’t propose disciplinary action against Lacey’s Place in the complaints.
Other counts allege witness-tampering in the form of Rehberger Jr. trying to pressure a former sales agent to change his testimony, and failure to properly disclose employee names and activities.
“(Lucky Lincoln’s conduct) discredits or tends to discredit the Illinois video gaming industry and does not serve the best interests of the citizens of Illinois,” the complaints state.
Suspension reversed
The Gaming Board is a state regulatory and law-enforcement agency that oversees casino, video and sports gambling in Illinois. It consists of an administrator, staff and citizen-advisory board appointed by the governor and confirmed by the Illinois Senate.
Administrator Marcus Fruchter filed the third complaint against Lucky Lincoln on May 12, maintaining that the company illegally paid more than $21,000 to build an addition for video gambling onto a restaurant in a Chicago suburb in 2020 to persuade the owner to install its machines.
The board imposed a “limited summary suspension,” characterizing the alleged violation as a repeat offense due to previous complaints. That prohibited Lucky Lincoln from entering into any new use agreements with video-gambling establishments.
But the company filed a lawsuit in Cook County Circuit Court seeking a permanent injunction, arguing that a suspension would violate its due-process rights. Judge Celia Gamrath issued a temporary restraining order on June 2, staying the suspension while the case proceeds.
“As stated in the Motion for Temporary Restraining Order, years have passed since the supposed bad acts occurred,” the judge wrote. “There was ‘considerable confusion’ surrounding the prohibition on inducements at the time Lucky Lincoln was cited, and the alleged violation has purportedly been cured.
“All the while, the (Gaming Board) has allowed Lucky Lincoln to operate despite having two complaints pending. The balancing of interests calls for an injunction to issue to maintain the status quo ... until after a hearing.”
Illinois legalized video gambling in 2009. Since that time, the Gaming Board has approved new rules and clarified existing rules, including those on what constitutes an inducement.
Heimerdinger spoke at a Gaming Board meeting on June 15 in Chicago, asking that the agency post a website notice, letting the public know the company is still doing business as usual.
Heimerdinger told staff and advisory-board members that Lucky Lincoln’s competitors had been circulating news of the suspension among the company’s existing and potential new “partners” (video-gambling establishments), causing irreparable harm.
“We have lost multiple opportunities, spent much of our time attempting to repair existing relationships and have employees concerned for their professional careers,” he said.
Heimerdinger noted that Lucky Lincoln produces about $100 million in net terminal income and $25 million in state taxes each year.
Net terminal income refers to funds left over after customer payouts from video-gambling machines. Those funds are divided between the establishments, state and local governments and terminal operators. The latter’s share is about a third of net, according to Heimerdinger.
At the meeting, he called the Gaming Board’s attempt to suspend Lucky Lincoln “unprecedented.”
Process is ‘confidential’
All Gaming Board disciplinary complaints against video-gambling establishments and terminal operators go through an administrative-review process, according to Policy Director Joe Miller.
Administrative-law judges, randomly selected from a pool of designated attorneys, oversee hearings that are procedurally similar to bench trials in Illinois circuit courts. The presiding judge makes a recommendation before the agency takes final action in a case.
“We typically don’t comment on pending litigation or active disciplinary complaints,” Miller said. “The administrative-hearing process is confidential.”
However, Judge Gamrath’s order revealed that the three complaints against Lucky Lincoln had been consolidated into one case, and that the Gaming Board held its first closed hearing on it May 22.
“The administrative-law judge had let us know that they are reviewing all the testimony and they would have a finding in the fourth quarter of 2023,” Heimerdinger said this month. “Of course that could change.”
Rehberger Jr.’s attorneys include Sergio Acosta, a former Gaming Board administrator now in private practice with the national firm Akerman LLP.
Chicago-area resident Kevin McGourty summarized the three complaints against Lucky Lincoln aloud during a public-comment period at the June 15 board meeting “for the public record.”
McGourty is semi-retired after working 11 years as a sales agent for four video-gambling terminal operators in Illinois (not Lucky Lincoln). He frequently speaks at Gaming Board meetings and sometimes criticizes the agency for allegedly not doing enough to stop illegal activity in the industry.
“The problem with the Gaming Board is that they’re empowered to do things, but they don’t have the power to do them,” McGourty said in an interview. “I think they’re corrupt. I think they’re incompetent. I think they have limited powers.
“There’s not even an inspector general (independent auditor) for that agency. The inspector general is the administrator. That is ridiculous. Every other agency has an inspector general.”
Gaming Board officials declined to respond to McGourty’s comments through spokeswoman Beth Kaufman.
The Illinois Office of the Executive Inspector General is responsible for investigating complaints against agencies under the governor’s jurisdiction, but due to high volume, limited resources and other factors, some are referred back to agencies, according to a spokesman. This happened with a complaint McGourty filed against the Gaming Board.
One of McGourty’s biggest criticisms is that its administrative-law judges often recommend cases be settled with fines that represent a fraction of what video-gambling businesses earn. He also feels Illinois laws are too weak to prevent crime and corruption.
According to McGourty, the number and seriousness of complaints against Lucky Lincoln show a higher-than-normal level of determination by the Gaming Board to revoke its license, but delays, including those caused by the company’s court filings, have worked in Rehberger Jr.’s favor.
“He’s still operating his business, and he’s still making money during all of this,” McGourty said. “He’s also in the marijuana-dispensary business, and he was allowed to get a license even though (legal trouble with the Gaming Board) was known at the time.”
Father named in case
Former Gaming Board Administrator Mark Ostrowski filed the agency’s first disciplinary complaint against Lucky Lincoln in 2017. As amended the following year, it includes 15 counts.
Some of the counts refer to Jeff Rehberger Sr. and Christine Morgan, co-owners of Highland Management Group. The company operates 39 video-gambling lounges in the Lacey’s Place chain.
State law provides for a tiered licensing system, which requires separate licenses for video-gambling establishments and terminal operators, to prevent “vertical integration,” maintain competition and avoid monopoly.
The complaint alleges that Rehberger Jr. violated the Illinois Video Gaming Act by exhibiting “significant influence” over Highland Management Group with such actions as drafting franchise agreements, handling property leases and giving directives to employees.
“A video gaming terminal operator may not own, manage or control a licensed establishment,” the complaint states.
It also alleges that Lucky Lincoln failed to properly disclose the names of several employees, including Letizia Lowe, Rehberger Sr.’s wife and Rehberger Jr.’s stepmother, who was employed by Lucky Lincoln while being affiliated with Highland Management Group.
The Belleville location of Lacey’s Place is in Far East Center, a strip mall that Rehberger Jr. bought in December under the limited-liability company name Midwest Real Estate Portfolio One.
Earlier this year, Pat Gotto-Sauget, owner of Lucky Jack’s, another video-gambling lounge in the strip mall, told the BND that she rebuffed Rehberger Sr.’s suggestion that she install Lucky Lincoln machines. She has a contract with another terminal operator.
Lacey’s Place opened two doors down in April. Gotto-Sauget is moving after her lease expires in August.
“(The Rehbergers) are the worst thing that ever happened to the gambling industry,” Gotto-Sauget said in April, arguing that all businesses should have to follow the same rules.
Lacey’s Place also has had legal problems with the U.S. Equal Employment Opportunity Commission. In May, the agency announced that the company had agreed to spend $92,964 and furnish other relief to settle a pay-discrimination and retaliation lawsuit.
Female district managers were being paid less than their male coworkers with similar education and experience, and one female was fired for complaining about it, according to the lawsuit.
“Such alleged conduct violates Title VII of the Civil Rights Act of 1964 and the Equal Pay Act, which prohibit discrimination based on sex and retaliation,” an EEOC press release stated.
Rehberger Sr. didn’t respond to requests for comment.
10 metro-east locations
Lucky Lincoln video-gambling machines are used at Lacey’s Place locations in Belleville and Highland, according to its website.
Other metro-east locations include The Edge in Belleville, Tullaghan’s Irish Pub in Highland, The Pour House in Marissa, Eddie’s Rise n’ Dine in Breese, Route 66 Kick Stand in Granite City, All Mart Smoke Shop & Liquor in Mascoutah, Roger’s Mini Mart in St. Libory and Happy Hour Sports Bar in Waterloo.
Lucky Lincoln’s homepage begins with a pitch for small businesses to earn extra money with video gambling.
“With just 160 sq ft, Lucky Lincoln can make your location a cash generating entertainment destination,” it states. “More than ever, customers are seeking away-from-home entertainment options, and businesses need new ways to increase revenue and drive more traffic to their locations.”
Besides Lacey’s Place, none of the other metro-east establishments that use Lucky Lincoln video-gambling machines are mentioned in the Gaming Board’s 2017 disciplinary complaint.
Several counts in the complaint involve an alleged inducement by Lucky Lincoln to persuade a Pana businessman, who had applied for a state video-gambling establishment license, to install the company’s machines. The complaint reprinted an email from Rehberger Jr., dated Sept. 22, 2017.
“Yesterday, the (Gaming Board) passed a new ruling that will allow for Lucky Lincoln to pay for your entire gaming room construction and signage,” it reads. “I would love to assist you through the licensing process.”
The board met on Sept. 21, 2017, but didn’t change any video-gambling rules, according to the complaint. It alleges that Rehberger Jr.’s email constituted deceptive practices and unfair methods of competition prohibited by the Illinois Video Gaming Act.
The complaint names two Lucky Lincoln sales agents, Blerim “Ben” Bekiri and Fatmir “Fabio” Dikenoski, who allegedly offered cash payments and Rolex watches to persuade owners of several video-gambling establishments to switch terminal operators or sign use agreements.
The complaint references a week when Bekiri took Dikenoski, then a trainee, to four Albanian-owned restaurants and allegedly offered $5,000 to each for installing Lucky Lincoln machines.
Dikenoski told Gaming Board investigators that Rehberger Jr. personally directed sales agents at a 2018 meeting in Lucky Lincoln’s Chicago office to provide such inducements, according to the complaint.
Dikenoski also maintained that Rehberger Jr.:
- Stated that, ‘When it is a good account, we will offer them anything to make it happen.”
- Offered to drive Dikenowski to video-gambling establishments that were potential customers to provide inducements.
- Told Dikenowski he was “going to own the whole town of Chicago someday.”
- Assured Dikenowski that any Gaming Board problems would be settled with minor fines and that he had agency officials “under control.”
- Gave Dikenowski a check for $20,000 for his services at the end of the meeting.
Other employee issues
Other counts in the Gaming Board’s first disciplinary complaint against Lucky Lincoln allege that the company used the video-gambling-related services of Chad Michael, despite a 2015 ruling he could no longer work in the industry due to rule violations by his company, L.Z. Entertainment.
The complaint also alleges that Bekiri, the Lucky Lincoln sales agent, told co-worker Dikenowski to lie if contacted for an Gaming Board interview.
The second complaint, filed in 2019, is directly related to the first. It alleges that Rehberger Jr. engaged in “improper witness communications, witness harassment, obstruction of Board activities and conduct that discredits the Illinois video gaming industry.”
Dikenowski interviewed with Gaming Board investigators in January 2018 and was listed as a potential hearing witness in discovery submitted in August 2018, according to the complaint.
It alleges that Rehberger Jr. initiated communications with Dikenowski in September 2018 and asked him to sign an affidavit recanting his earlier statements to investigators and swearing under oath that Rehberger Jr. never told him to offer inducements to video-gambling establishments.
“Rehberger reminded Dikenowski that thousands of dollars would purportedly be coming Dikenowski’s way for video gaming establishment accounts he procured,” the complaint states.
Dikenowski refused to sign the affidavit, asked Rehberger Jr. not to contact him again and blocked his cellphone number before Rehberger Jr. got through in October 2018 using a family member’s phone and threatened him with legal action, according to the complaint.
Attempting to deter witnesses from testifying in state or local government cases, threatening injury or damage, harassing or annoying them are felonies under Illinois law.
“Rehberger’s communications with Dikenowski ... pose a threat to the public health, safety, morals, good order and general welfare of (Illinois residents), discredit or tend to discredit the Illinois Gaming industry (and) reflect adversely on (its) security and integrity,” the complaint states.
Another Rehberger Jr. project resulted in controversy recently.
In March, residents of North Riverside, a Chicago suburb, protested a decision by the village board to grant a liquor license to Ava’s Cafe, a wine bar that one opposing trustee characterized as a video-gambling lounge too close to a school and residential neighborhood.
MRE Portfolio One LLC bought the former dry-cleaners building in June 2022, and Illinois Secretary of State records identify a Delaware company as its manager, according to a story in the Riverside-Brookfield Landmark.
“However, a man named Jeff Rehberger is listed as a contact for the property owner on an Illinois State Fire Marshal permit application last October to remove a heating oil tank on the property,” the story stated.
The village board didn’t discuss whether the wine bar in the building owned by Rehberger Jr.’s company would be using Lucky Lincoln machines, according to the Landmark.
Two pot dispensaries
Fortunate Son Partners LLC, another company owned by Rehberger Jr., has obtained two state licenses to operate marijuana dispensaries since Illinois voted to begin allowing recreational sales in 2020, according to the Illinois Department of Financial and Professional Regulation (IDFPR).
The company opened Cloud9 Cannabis stores in Champaign and Edwardsville this spring.
Rehberger Jr.’s ability to compete for the coveted dispensary licenses, despite ongoing legal troubles with the Gaming Board, was the subject of a 2020 investigation by WBEZ-FM radio, the National Public Radio station in Chicago.
Rehberger Jr., then 33, said in an interview that he couldn’t recall whether he told the IDFPR about the disciplinary complaints against Lucky Lincoln, as required in the application process.
“To be honest, it’s been about a year since we went through that,” Rehberger Jr. said. “I know we responded to all of the questions truthfully and accurately.”
WBEZ-FM requested a copy of the Fortunate Son dispensary application. IDFPR officials denied it, saying such applications were “confidential” under an exemption to the state’s Freedom of Information Act and the Illinois statute on recreational marijuana.
Rehberger told WBEZ-FM that he started Lucky Lincoln in 2013, when he was living at his mother’s house in Highland but later moved it to the Portage Park neighborhood on Chicago’s northwest side.
The company obtained its state license as a video-gambling terminal operator in 2014.
The Illinois Business Journal identified Rehberger Jr. as CEO of the private-equity firm Vast in a 2022 story about his plan to develop a chain of convenience stores with gas and electric-charging called Lindy’s.
The story listed other companies under the Vast umbrella, including Lucky Coin, Highland Crypto Technologies, Midwest Real Estate Investments of Illinois, MRE Community Solar and Aviator Coffee, in addition to Lucky Lincoln Gaming and Cloud9 Cannabis.
Last year, Rehberger Jr. announced plans for a $50 million investment in Highland that would consist of a housing development, a hotel, restaurants and the flagship location of a coffee-shop company that he hoped to expand nationally with franchises.
“I’ve developed deep-rooted personal relationships in (downstate Illinois communities), which inform my understanding of the needs of those who live there and the economic possibilities for growth,” he told the Edwardsville Intelligencer and The Telegraph in Alton.
“Now that I’m fortunate enough to have the opportunity to reinvest in these communities, I want Lucky Lincoln to be a part of that growth … in terms of job creation, charity and economic development.”
This story was originally published July 13, 2023 7:00 AM.
