Litigation launched in mobile gambling dispute

According to reports on TMC.net, the administrators of a bankrupt Las Vegas mobile gambling firm have launched litigation, demanding at least $1.2 million from the Australian company eBet Limited, and alleging that it failed to honour promises of financing, with the possibility that a conflict of interest may be involved.

The mobile company, Sona Mobile Holdings Corporation filed for bankruptcy in a Las Vegas court two years ago with liabilities of $6.2 million and assets of $2 million, having lost over $26 million over several years as it developed software for gambling and mobile devices over wired, cellular and Wi-Fi networks.

The bankruptcy filing described the software as “real-time, multiplayer wagering on games that accommodate an unlimited number of players” on cell phones or any carrier.

The report notes that similar technology was developed by rivals for “on premises” mobile gambling at major land casino operations in the United States, and that Sona had been involved in a strategic alliance with Shuffle Master on products of this nature branded mCasino and mWager.

The latest action against eBet and its CEO, Anthony P. Toohey, claims that in terms of a master services agreement, eBet committed to paying a $2.5 million licence fee to Sona Holdings.

eBet allegedly agreed to provide advisory services and software development and maintenance services, and Sona Holdings agreed to pay for those services, with eBet reimbursing Sona Holdings for these costs through a chargeback arrangement, the complaint says.

eBet was also allowed to designate the CEO of Sona Holdings, and from late 2008 Toohey served as chief executive of both Sona Holdings and eBet Ltd.

By early 2009, relations between the companies had soured, with arguments over finances, staff deployment and transfers to the eBet payroll

With his eBet hat on, Toohey is alleged to have “failed to authorize and direct eBet’s reimbursement of Sona’s chargeback costs under the MSA and failed to authorize reimbursement to Sona for its employee costs resulting from eBet’s refusal to assume and transition Sona’s technical employees.”

This constituted a conflict of interest, the administrators claim, along with breach of contract; breach of the implied covenant of good faith and fair dealing; and breach of fiduciary duty by Toohey.

eBet has declined to comment on the action.