By Ja’Larris Williams
In 2023, Internet Sports International, Ltd. (ISI), a company specializing in sports betting software, filed a lawsuit against Amelco USA, LLC and Amelco UK Ltd. in the United States District Court for the District of Nevada. Internet Sports claimed that Amelco misappropriated its proprietary technology and trade secrets to create competing sports betting kiosks. The case centered on questions of software ownership, confidentiality, and the boundaries of discovery in complex technology litigation. On September 24, 2025, United States Magistrate Judge Nancy J. Koppe issued an order on Amelco’s motion for sanctions under Federal Rule of Civil Procedure 37(c)(1). Amelco argued that Internet Sports failed to properly disclose critical source code materials and sought case-ending sanctions. Judge Koppe granted the motion in part and denied it in part. The court restricted Internet Sports from using certain late-disclosed materials but rejected Amelco’s request to dismiss the case entirely. The ruling emphasized the importance of procedural compliance, transparency, and fairness in the discovery process.
The dispute arose when Internet Sports produced a spreadsheet in February 2025, after the close of discovery, titled “ESI Identification.” This document identified three additional pieces of source code that had not previously been disclosed. Amelco argued that these materials were directly relevant to Internet Sports’ claims and that the late disclosure demonstrated a deliberate effort to withhold key evidence. The defense asserted that this delay prevented its experts from reviewing the materials before summary judgment, creating unfair prejudice that warranted sanctions. Internet Sports responded that it had complied with its obligations during discovery and that two of the three code files were irrelevant to its claims. Internet Sports stated that it did not plan to use those materials at trial and therefore was not required to disclose them earlier. As for the third piece of code, Internet Sports contended that Amelco had already possessed the file since 2019, making any late disclosure harmless. Internet Sports also explained that its February 2025 production was part of its continued compliance with the court’s discovery orders rather than an act of concealment.
Amelco sought sanctions under Federal Rule of Civil Procedure 37(c)(1). This rule allows a court to impose penalties if a party fails to provide required disclosures or supplemental information under Rule 26(a) or Rule 26(e). The rule prevents a party from using information that was not properly disclosed unless the failure was substantially justified or harmless. Possible sanctions include exclusion of evidence, monetary penalties, or, in serious cases, dismissal. To obtain sanctions, the moving party must first demonstrate that a disclosure of violation occurred. Amelco argued that Internet Sports violated both Rule 26(a), which governs initial disclosures, and Rule 26(e), which requires parties to supplement or correct prior discovery responses in a timely manner. According to Amelco, the late disclosure of the source code was a clear violation of these rules and prejudiced its ability to defend against Internet Sports’ claims. The company requested dismissal of the case or exclusion of the undisclosed materials as an alternative.
Before addressing the merits of the sanctions of motion, Judge Koppe considered Internet Sports’ procedural objections. Internet Sports contended that the motion was untimely because the deadline for dispositive motions had already expired. The court rejected that argument, finding that Amelco had good cause for the delay since the disputed materials were not produced until February 2025 and required expert review. The court also disagreed with Internet Sports’ claim that Amelco violated local filing rules by combining its request for sanctions with a scheduling modification, finding no procedural prejudice. Judge Koppe then examined whether Internet Sports failed to meet its disclosure obligations under Rule 26(a). ISI had not included the newly identified source code in its earlier disclosures, but it explained that two of the three code files were not relevant to its claims and would not be used at trial. The court agreed that Rule 26(a) requires a party to disclose only information it may use to support its claims or defenses, not material that benefits the opposing side. Because Internet Sports confirmed that it would not rely on those two code files, the court found no Rule 26(a) violation for those materials.
The third code file presented a different situation. Internet Sports admitted that it intended to use that file to support its claims. Because the file was not identified until after discovery had been closed, Judge Koppe determined that Internet Sports likely violated its disclosure of obligations with respect to that material. However, both parties offered limited legal arguments on whether Amelco’s prior possession of the code excused the late disclosure. Instead of ruling definitively on that question, Judge Koppe allowed Amelco to renew its motion for sanctions on this specific issue by October 8, 2025. Amelco also argued that Internet Sports violated its duty to supplement discovery responses under Rule 26(e). The defense claimed that ISI provided incomplete responses and only corrected them after being ordered to do so by the court. Judge Koppe rejected this argument. She explained that the duty to supplement arises only when a party learns that a prior response is incomplete or incorrect because of new information. The court found that Amelco did not allege that Internet Sports had obtained new information requiring supplementation but rather accused it of deliberately withholding materials. The judge concluded that such conduct, even if true, did not fall under the duty to supplement as defined by Rule 26(e).
In her final order, Judge Koppe prohibited Internet Sports from using the two undisclosed code files, as well as any related software used to transfer betting lines to television screens or any corresponding numerical code systems. This restriction bars Internet Sports from relying on those materials in motions, hearings, or trial. However, the court denied Amelco’s request to dismiss the case, explaining that dismissal was too severe given the lack of clear evidence of bad faith. Judge Koppe emphasized that sanctions under Rule 37(c)(1) must be grounded in specific procedural violations and are not meant to serve as punishment.
The ruling carried significant implications for both parties. Internet Sports lost the ability to rely on potentially valuable evidence to support its claims, which may narrow its case at trial. Amelco did not obtain the dismissal it sought, but it did secure evidentiary restrictions that may strengthen its defense. The decision also reaffirmed the court’s commitment to enforcing discovery rules fairly while avoiding penalties that are disproportionate. Judge Koppe noted that discovery sanctions are designed to ensure transparency and fairness, and that they are not intended to penalize litigants. Courts have to balance the need to enforce procedural compliance with the broader goal of resolving disputes on their merits. The ruling reflects the judiciary’s effort to maintain that balance, particularly in cases involving complex technological evidence. The outcome of Internet Sports Int’l, Ltd. v. Amelco USA, LLC demonstrates how federal courts approach discovery disputes in the fast-growing sports betting technology industry. Judge Koppe’s decision highlights that sanctions under Rule 37(c)(1) require clear proof of a violation, and that courts will hesitate to impose case-ending measures without strong justification. The case serves as a reminder that transparency and timely disclosure are essential in litigation, and even more so when dealing with technical and proprietary materials.
As the sports betting technology industry keeps growing, it’s no surprise that disputes over intellectual property and software development are becoming more frequent. This case serves as a reminder that courts expect both parties to follow procedural rules carefully and act in good faith during discovery. In the end, Internet Sports Int’l, Ltd. v. Amelco USA, LLC highlights the court’s role in making sure each side gets a fair chance to present its case while keeping sanctions reserved for situations where there’s a clear, well-founded violation of the discovery process.
