PokerStars Ordered to Pay Kentucky $1.3 Billion in Damages

The Kentucky Supreme Court has upheld the original ruling ordering PokerStars to pay damages amounting to $1.3 billion to the state. The ruling that came Thursday concludes a decade-long legal battle between the company and the state.

The suit was originally filed in 2010 which claimed that the site was operating illegally inside the state’s borders and that 34,000 residents deposited on the site and lost nearly $300 million. In 2015, a Franklin Circuit Court had ruled against The Stars Group-created iconic online poker brand, ordering it to pay Kentucky state for illegal gambling losses.

However, in 2018, the Kentucky Court of Appeals rejected the collection of gambling losses. The total damages stood at $870 million at that time, plus an interest rate of 12% per annum. While overturning the lower court’s order in 2018, the Court of Appeals argued that the state could not identify any individuals withstanding who lost money to the online poker site and dismissed the case, ruling the state of Kentucky lacked the standing to file the claim.

Yet, in the latest verdict, the Kentucky Supreme Court reinstated the original judgment. The state won the original judgment seeking $300 million from PokerStars for its offshore operation of illegal online gambling in the Bluegrass State from 2007 to 2011. However, the damages owed by the poker site swelled to $1.3 billion due to interest.

What Did the Majority Decision Say?

Justice Samuel T. Wright III wrote the majority decision of the court, ruling the state did have standing, adding it was entitled to “a recoupment of some portion of the countless money the criminal syndicate has cost Kentucky collectively and its residents individually.” Justice Wright said the state suffered financial losses in addition to the tragic damage to its citizens, adding that mental and physical healthcare systems that care for the people harmed by the unlawful gambling are supported in part by the state. He said the money lost to illegal activity deprived the commonwealth of Kentucky of its right to collect taxes. The judge also observed the cost to prosecute such matters is a huge cost, straining the state’s resources.

Governor Andy Beshear welcomed the court’s decision as “a good day for Kentucky”. However, in the next breath, he said $1.3 billion would never be sufficient to make up for the damage to the state or its residents from their years of irresponsible and criminal actions. The governor said the reward would enable us in a better way to emerge from the pandemic to help Kentuckians in areas ranging from healthcare to education.

How Did We Reach Here?

According to state law, people who lose $5 or more in illegal betting have six months to file a lawsuit to recover the money. Even if they don’t, the law prescribes “any other person” can sue for the recovery. The Kentucky Justice and Public Safety Cabinet filed the case against PokerStars as it is illegal to play online poker for money in the Bluegrass State. Between 2006 and 2011, as many as 34,000 Kentuckians lost more than $290 million wagered on PokerStars’ online platform. The Isle of Man-based company later blocked Kentuckians from using its website.

In 2015, Circuit Judge, Thomas Wingate, agreed with the state authorities when he ordered PokerStars to pay back $290 million. The judge then tripled the amount against Flutter’s subsidiary for making “a calculation that breaking the law was good for business”. The governor said the state would take aggressive measures to collect the judgment for the benefit of all Kentuckians.

Flutter’s Response

In an email statement, the Dublin-based Flutter, current owners of PokerStars, said it was “wholly surprised” by the ruling and strongly disputes the basis of the judgment, which it believes “runs contrary to the modern US legal precedent.”

According to Flutter, PokerStars’ gross revenue generation from 2006 to 2011 amounted to merely $18 million. The group said it has a number of legal options available, believing that any amount it ultimately becomes liable to pay would be a “limited proportion of the reinstated judgment.”

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