KY Supreme Court PokerStars

Last week, the Kentucky Supreme Court reinstated a massive judgment against PokerStars and parent company Flutter Entertainment. The judgment is seeking damages against PokerStars for operating in the state after the passage of the UIGEA.

What will this mean for Flutter and specifically PokerStars? Time will tell, but it likely will have little impact on the company’s expansion into legal US gambling.

PokerStars Ordered to Pay $1.3 Billion Judgment

News broke last Thursday that the Kentucky Supreme Court reinstated a judgment against PokerStars regarding its activity in the state post-UIGEA. The state had sued PokerStars back in 2010 and the matter drug out in court until 2015. Then, a Kentucky trial court judge awarded damages of $870 million to the state.

Fast forward to 2018 and the Kentucky Court of Appeals struck down the ruling, which at the time was ruled a massive victory for PokerStars. The KY Supreme Court reinstated the original judgment last week, voting 4-3 in favor of the state.

https://twitter.com/pokerfuse/status/1341720990976360453

The original $870 million judgment is reinstated and will be charged compounding interest at a rate of 12% annually. This brings the total judgment to $1.3 billion. The KY Supreme Court stated that “The Commonwealth of Kentucky has losses due to PokerStars’ illegal internet gambling criminal syndicate. The amount recovered in this case may not cover the actual cost suffered by the Commonwealth of Kentucky.”

Judgment Seems Excessive Considering the Amount of Money Earned in KY

Flutter Entertainment commented on the ruling shortly after it was announced. The company claims that PokerStars only earned about $18 million in Kentucky during the time period covered by the judgment. The judgment is 72.2 times the amount earned by the company. Most anyone would agree that the penalty is excessive.

Looking back to PokerStars’ Black Friday settlement with the Department of Justice, this judgment seems doubly excessive. PokerStars paid $731 million with part of that money going to repay Full Tilt Poker, Absolute Poker, and UB players. The KY judgment would almost double the DOJ’s settlement, and one can agree that the DOJ had a much greater case.

A judgment of 5x to 10x the amount earned is much more appropriate and in-line with what you normally see in this type of case. Kentucky was not a linchpin in the gaming structure of the company in the US, so an excessive fine is not warranted.

How Will This Impact Flutter and The Stars Group

Looking forward to the future, we don’t see this judgment having a lot of impact on the company in terms of expanding in the United States. The original company has changed hands multiple times since the original lawsuit was filed. Flutter Entertainment is now the sole owner of PokerStars.

The main impact this will have is on Flutter’s balance sheet. If the company pays the fine, it will certainly be a major blow to the company financially and could cause a lot of internal upheaval. However, we don’t see the company paying the full fine. It is much more likely that the company pursues other legal matters and even comes to a settlement with KY. We see the company paying somewhere around $100 million to make the case go away.

For the company’s future, we don’t see this impacting Flutter’s expansion into legal US gambling states. Flutter already operates in New Jersey and Pennsylvania. Flutter had nothing to do with what happened in 2006 and will have no problem opening legitimate online casinos in the United States.

While it is unfortunate that Flutter will be on the hook for PokerStars’ misdeeds, it is a cost of doing business when you acquire the assets of another company.

About the Author
James Guill avatar
James Guill

James Guill is a veteran of the gambling industry with over a decade of experience. Starting as a semi-professional poker player, he transitioned into the media. He’s worked for many top companies in the past, including Ongame, bwin, and 888. Originally specializing in poker, he now brings a wealth of knowledge and experience covering the spectrum of online casino gambling. James brings the latest news and casino market information, including an ongoing Game of the Week feature highlighting the latest and greatest online slots and casino games.

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James Guill is a veteran of the gambling industry with over a decade of experience. Starting as a semi-professional poker player, he transitioned into the media. He’s worked for many top companies in the past, including Ongame, bwin, and 888. Originally specializing in poker, he now brings a wealth of knowledge and experience covering the spectrum of online casino gambling. James brings the latest news and casino market information, including an ongoing Game of the Week feature highlighting the latest and greatest online slots and casino games.

READ MORE
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