Kentucky v PokerStars v Scheinbergs

Amaya is currently involved in an interesting three-way legal battle, with Kentucky seeking to collect on a $870 million judgment awarded to it by the state against PokerStars, just as PokerStars looks to make the company’s previous owners, the Scheinbergs, make good on the $300 million escrow balance agreed after the company’s purchase.
PokerStars continued to operate in the US after the UIGEA was passed in 2006, and in November 2015 Kentucky was slapped with a $290 million judgement against it for contravening state online gambling laws between 2006 and 2011. Amya’s decision to appeal the judgement subsequently lead to the penalty being trebled to $870 million by Kentucky Circuit Court Judge Thomas Wingate, which is compatible with Kentucky law.
In the meantime, Amaya acquired PokerStars in 2014 for $4.9 billion, with part of the deal including the company’s previous owners, the Scheinbergs, establishing an escrow fund to cover the costs of any outstanding legal cases from when the Scheinbergs ran the company. Following Kentucky’s judgement against PokerStars, Amaya needed to post a $100 million supersedeas bond to halt the order’s enforcement pending the appeals process. The money was supposed to have come from the escrow account set up after the sale of PokerStars, but the previous owners have disputed Amaya’s claims, leading Amaya to seek indemnification for the following:
“..losses and potential losses caused by breaches under the merger agreement and requesting, among other things, that the escrow agent retain the then-remaining balance of the escrow fund established under the merger agreement in an aggregate amount equal to approximately US$300 million.”
News of the issue has already sent shares in Amaya falling by 1% in early trading today, and would also seem to dispel any rumors that the Scheinbergs may have been invited to be part of Amaya CEO David Baazov’s recent all cash offer to acquire full private ownership of the company.

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