PokerStars Beats Kentucky’s $870 Million Lawsuit

Kentucky online poker bill

The Stars Group has won a major victory in a Kentucky appeals court after its three-judge panel voted to release the gambling company from an $870.7 million judgement leveled against it by a trial’s court three years earlier. The fine had originally been imposed against the PokerStars owner for transgressing the state’s anti-gambling law between 2006 and 2010. Furthermore, the huge sum was the biggest legal judgement ever imposed on a company in the whole of Kentucky state history.

The $870.7 Million Law Suit

In 2010, State Cabinet Secretary John Tilley filed a lawsuit against The Stars Group for a whopping $870.7 million, despite PokerStars only having operated in the state for five-years and raking in an estimated $18 million from state residents. According to the state, however, its citizens lost around $290 million playing poker over the period.

In December 2015, Franklin Circuit Judge Thomas Wingate agreed with the state and ordered The Stars Group to pay triple that amount for making “a calculation that breaking the law was good for business.” In addition, he ordered a further 12 percent interest on the ruling until the sum was recovered. Interestingly, all the money would have gone towards state coffers, instead of those Kentucky poker players who actually lost money. The company subsequently launched an appeal a couple of months later.

Reversed Decision

On Friday, Dec.21, the three-judge panel rejected the trial court’s original judgement. One of the presiding judges, Allison Jones, wrote that allowing the state to collect on such a large sum would contravene a major function of Kentucky’s anti-gambling law, namely allowing people who lost money while illegally gambling “to avoid becoming destitute as a result of a gambling problem.” As Judge Allison Jones wrote:

“The Commonwealth is not bringing this action to collect the money and then return losses to the ‘losers.’ It is bringing this action to collect treble damages for its own benefit.”

Meanwhile, the state has expressed its disappointment over the ruling, with State Cabinet Spokesman Mike Wynn asserting that the “decision doesn’t appear to even address the substantive issues in the case, but rests entirely on procedural questions.” Nevertheless, the state still has the option open to re-appeal the case, or even take its grievance all the way up to the Kentucky Supreme Court.

PokerStars Applauds Judgement

The Stars Group originally set aside $300 million in an escrow account in the eventuality of it being forced to settle the unfavorable order leveled against the firm. It also has $100 million tied up in a supersedeas bond posted so as to stay the trial court’s multi-million dollar order during the appeals process. Sheryl Snyder, an attorney acting on behalf of The Stars Group, said that the company now expects to have the money returned, providing the appeals court ruling stands. In addition, Marlon Goldstein, Executive Vice President & Chief Legal Officer of The Stars Group, stated:

“We applaud the decision of the highly-respected three-judge panel of the Kentucky Court of Appeals. The merits of the case prevailed, and we look forward to putting this matter behind us as we sharpen our focus on executing on our growth strategy going forward.”

Kentucky Strikes Out

In 2010, the Bluegrass State brought cases against a number of online poker operators for offering their products in Kentucky between 2006-10. It enjoyed a measure of success, too. PartyPoker, for instance, paid $15 million to settle the case, while Full Tilt handed over a $6 million payment. Maybe the state would have had better success against PokerStars had its claim been of a similar magnitude. Instead, the Kentucky appellate judges referred to the fine imposed by the original trial’s court as “absurd and unjust.”