PokerStars Appeals Kentucky Fine to US Supreme Court
Flutter Entertainment, on behalf of subsidiary PokerStars, is taking the case as high as it will go in the United States court system. What started in 2008 as a way for Kentucky to lash out at online poker has evolved into a $1.3B court case in the state of Kentucky. But PokerStars isn’t taking any of it lying down. Not long after Kentucky went after $100M in bonds to begin paying on billion-dollar debt, PokerStars and parent Flutter decided to try one last thing.
That effort was to petition the United States Supreme Court for a writ of certiorari, asking the highest court in the land to review the decision by the Kentucky Supreme Court. They did that on August 23, 2021, more than a dozen years after the case began.
For perspective on the latest development, let’s do a brief rundown of the legal battles between PokerStars and Kentucky.
-2008: Kentucky Governor Steve Beshear seized 141 online gambling domains, including PokerStars, as “leeches on our communities” and part of the “underworld” of websites that preyed on Kentucky citizens. PokerStars fought back.
-2011: Kentucky sued several companies, including the soon-to-be-only-solvent PokerStars for collecting rake from players between 2006 and 2011 in violation of the UIGEA.
-December 2015: Franklin County Circuit Court rules in favor of Kentucky for $870M, calculated by 34,000 residents who lost a total of approximately $290M on the site and multiplied times three for the damage allowance.
-December 2018: Kentucky Court of Appeals overturned previous ruling as an “absurd, unjust result.”
-December 2020: Kentucky Supreme Court ruled for Kentucky in a 4-to-3 decision because the state qualified as a person under Kentucky’s Loss Recovery Act. In addition, PokerStars was the “winner” in games because of the rake and benefitted from players’ losses.
-March 2021: Kentucky Supreme Court ruled against another appeal.
-April 2021: Original Circuit Judge ruled Kentucky could claim $100M in bonds deposited by PokerStars after the original Circuit Court ruling in 2015.
Meanwhile, it’s important to note that the $870M sum increased through the years. By the time the Kentucky Supreme Court ruled for the Commonwealth, the amount had grown by 12% compounding interest. The new amount at that time was about $1.3B.
Flutter et al Prepare Petition
Through the years of the court battles, PokerStars changed ownership several times. Stars Interactive, Amaya Group, and Rational Entertainment were all used in documents since 2008. Since then, Flutter Entertainment purchased the Stars Group.
Flutter, therefore, issued a statement after the December Kentucky Supreme Court ruling, which said the company was reviewing the decision with its legal advisors. When that court refused to rehear the case, Flutter said its options included “potentially appealing the ruling of the case to the US Supreme Court…”
On August 10, 2021, Flutter released its interim first-half financials that included a confirmation of its intention. “The Group intends to submit a petition to the US Supreme Court to review the Kentucky judgement. Our petition will be submitted this month, and we expect that the US Supreme Court will decide whether to take up the case during Q4 2021.”
They did. Online Poker Report broke the story this week that Flutter submitted the petition for a writ of certiorari with the United States Supreme Court dated August 23.
— Jennifer Newell (@WriterJen) August 26, 2021
The petition for a writ of certiorari is Flutter’s way of asking the US Supreme Court to request the details of the lower court’s case for review. And it presents two questions for review:
-1. Whether an award of statutory damages violates due process when it exceeds by a factor of more than 30 any conceivable harm.
-2. Whether the Excessive Fines Clause prohibits a state from punishing a defendant by imposing a penalty 50 times in excess of the defendant’s revenue earned from the prohibited conduct.
Two constitutional provisions involved in the case are the Due Process Clause of the Fourteenth Amendment and the Eighth Amendment, the latter referring to excessive fines.
The document itself is 43 pages in length, with a 177-page appendix. It is interesting from the beginning, though.
“This case concerns the largest civil judgment in Kentucky history – an $870 million treble damages award that, with interest, exceeds $1.3 billion. … Until this case, this somnolent statute (Kentucky’s Loss Recovery Act) had not produced a reported decision in 60 years. … The Kentucky Supreme Court supersized the State’s recovery by holding that damages should be calculated by adding the value of every losing wager by Kentucky players – without crediting a single winning wager and without regard to the actual revenue ($18 million) earned in Kentucky by petitioners.”
Also interesting is the jab at the state’s lottery, which is more of a risk-based game than poker.
“The PokerStars platform accounted for only a tiny fraction of the gaming occurring in Kentucky, much of which takes place in the State’s own lottery.”
Finally, the attorneys wrapped it up at the end with this:
“In sum, the numerous errors in the Supreme Court of Kentucky’s treatment of important questions of constitutional law call out for this Court’s intervention, and this is the case in which to grant review.”
Flutter mentioned that it hopes to hear from SCOTUS before the end of the year. According to the court’s website, the justices review petitions when the Supreme Court is not in session. A session begins on the first Monday in October and lasts until June or July of the following year. There are recesses, however, at two-week intervals. During those times, the justices must write their opinions. At the same time, they evaluate about 130 petitions. Justices then meet to discuss petitions that they want to review. Using the Rule of Four, four of the nine sitting justices must agree to take the case, at which point they request all of the documents from the previous courts.
In total, SCOTUS justices receive about 10,000 petitions each year but only accept 70-80 of them.