The case of PokerStars versus the Commonwealth of Kentucky is over – really this time – at least on the state level. Most thought it was over in December 20 when the Supreme Court of Kentucky ruled against the online poker giant, but parent company Flutter Entertainment appealed once more.
This week, though, the Kentucky Supreme Court ruled against another appeal. In the eyes of the state, it is over and done. And Kentucky now wants its money, which now includes interest and exceeds $1B.
PokerStars parent company Flutter Entertainment wants them to slow their roll.
The Original UIGEA Case
Most of the troubles regarding online poker in the United States reference Black Friday in 2011. That April 15 was the date that US government officials announced indictments against executives associated with poker sites, including PokerStars. The Department of Justice seized the sites and effectively stopped online poker in the US from the world’s largest companies.
Prior to that, however, Kentucky sued PokerStars not long after the US government signed the UIGEA (Unlawful Internet Gambling Enforcement Act) into law.
We wrote a more detailed explanation a few months ago. In summary, then-Governor Steve Beshear obtained a court order to block access to 141 gambling-related websites for Kentuckians. While many of those sites fought that action, the Commonwealth of Kentucky later sued a number of online poker sites (including PokerStars) for the rake they collected from 2006 to 2011.
As other poker sites folded (see what I did there?), PokerStars was the only viable company remaining for Kentucky to sue. The Franklin County Circuit Court ruled in favor of the state and ordered PokerStars to pay more than $870M plus interest.
PokerStars, then operating as Stars Interactive – appealed the ruling to the Kentucky Court of Appeals. In 2018, those judges ruled for PokerStars and dismissed the case.
The Commonwealth of Kentucky appealed to the Kentucky Supreme Court, which handed down its decision in December 2020 in favor of the state. The 4-3 decision affirmed the trial court decision, reversing that of the Appeals Court. The new amount due to the state from PokerStars – with years of interest – was approximately $1.3B.
It Ain’t Over
The December ruling seemed final. Flutter Entertainment had acquired The Stars Group earlier in 2020 and didn’t plan to take that Kentucky Supreme Court ruling without a fight. Flutter claimed that PokerStars made only $18M in gross gaming revenue during those years in Kentucky, and Flutter planned to examine the “number of legal processes available.”
https://twitter.com/ijiLaw/status/1339674051518742528?s=20
Indeed, Flutter did submit a motion for rehearing on January 6, 2021. It only took the Commonwealth 20 days to respond in opposition to the rehearing. On March 25, the Kentucky Supreme Court denied unanimously to deny the motion to rehear the case.
On that same day of March 25, Flutter Entertainment on behalf of The Stars Group filed a motion to stay any enforcement of the Kentucky Supreme Court judgment pending a petition for a writ of certiorari to the United States Supreme Court (SCOTUS). The court must respond by April 7.
That option became clearer with the Flutter statement in response to the ruling against the rehearing.
“Flutter is disappointed by the denial of its rehearing petition and continues to strongly dispute the basis of this judgment. Together with its legal advisors, Flutter will continue to consider its position in relation to the judgment, including potentially appealing the ruling of the case to the US Supreme Court along with other legal avenues which it may pursue thereafter.“Flutter remains confident that any amount ultimately paid to resolve this matter will be a limited portion of the reinstated judgment.”
It seems that the motion with the Kentucky Supreme Court simply keeps the window open for a SCOTUS appeal. It provides time for Flutter’s attorneys to examine the company’s options.
https://twitter.com/astraffon/status/1375247436805980161?s=20
Kentucky Wants the Money
The Commonwealth of Kentucky clearly doesn’t plan to wait around for Flutter to act.
Governor Andy Beshear, son of Governor Steve Beshear who started the whole process in 2008, told the Associated Press that Kentucky will pursue the $1.3B. Lawyers filed a motion in the Franklin Circuit Court – the original court – to collect $100M in bonds. Evidently, PokerStars originally posted $100M in bonds five years ago after the initial court loss, and Kentucky is prepared to collect.
A hearing on that matter is set for April 19.
Meanwhile, Beshear continues to misrepresent PokerStars by calling it an “illegal internet gambling criminal syndicate.”
