On Wednesday, PokerStars’ owner and operator, Flutter, announced it had settled a lawsuit with the Commonwealth of Kentucky by paying an extra $200. Added to the first payment of $100 million, PokerStars is now clear from further suit. This ends a decade of in and out of court for Kentucky and PokerStars.
In 2010, J. Michael Brown, the Kentucky Justice, and Public Safety Cabinet, filed a lawsuit against PokerStars for operating in the state illegally. Michael is currently serving Governor Andy Beshear as his executive cabinet secretary.
The $290 million lawsuits argued that PokerStars was illegally operating in the bluegrass state between 2007 and 2010. It also stated that 34,000 residents had played at the poker room and deposited and lost $290 million. The online poker room was asked to pay $870 million and 12 percent in interest payments, adding up to $1.3 billion.
PokerStars has paid $100 million in bonds which it was forced to forfeit in April last year. The ten-year-long legal battle ended in December 2020, after the Kentucky Supreme Court ruled in favor of the state. Pokerstars was supposed to pay the whole amount in 20 years, with Franklin Circuit Judge Thomas Wingate announcing that the state was collecting the first $100 million in April this year.
Kentucky Used a 1798 Law to Argue Its Case
Online poker boomed barely 15 years ago. Kentucky officials investigated unregulated sites offering their products to its residents to stop them. Being the largest of all the sites, PokerStars took the heat when Michael filed the $290 suit against it.
Under the Loss Recovery Act, a gambler could recover their losses through gambling. The 1798 act gave bettors a chance to collect their losses in six months, after which it could be collected by anyone else.
The state used this law to win the lawsuit in 2015 when Franklin Circuit Court ruled in support of it. Three years later, the ruling was overturned because on account that the loss recovery act called for bettors to file the suit and not the state on behalf of its residents.
Last December, the Supreme Court reversed the appealed court decision. This meant Kentucky could get $870.7 million in addition to interest accrued at 12 percent.
PokerStars Disputed the Decision on Accounts It Also Lost Money
PokerStars maintained Kentucky assessed the loss extremely without considering the money won by its residents. The operator filed a petition to the US Supreme Court. The appeal showed PokerStars had only made $18 million from Kentucky during the five years it supposedly operated illegally in the state.
PokerStars’ lawyer also argued that the brand’s parent company is located in the Isle of Man, under British law. According to this law, Kentucky cannot collect the $1.3 billion.
The lawyer added that the statute in the United Kingdom treated the ruling as void and unenforceable. Thus, if the state were to collect the money in the UK, it would not be allowed.
Following the Kentucky court ruling, Fitch Rating noted the payout would affect Flutter’s goal to reduce its debt load. PokerStars was still in the appeal process when it agreed with the state to pay an extra $200 million on the condition the state would not drop the lawsuit.
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