Flutter loses Kentucky appeal on PokerStars $870m litigation 

By | March 25, 2021

The Supreme Court of Kentucky has denied Flutter Entertainment Plc an appeal to rehear the litigation made by the state against its PokerStars subsidiary.   

The FTSE100 firm’s request relates to the Kentucky Court of Appeals reversing its judgement on PokerStars owing the Commonwealth of Kentucky $870 million for unlicensed online poker wagers recorded between 2006-to-2011.

In 2018, Kentucky judges ruled 4-to-3 in favour of reversing a previous dismissal which cleared PokerStars former owner Amaya Inc from paying a $870 million settlement to the Commonwealth of Kentucky.

The decade-long dispute relates to PokerStars continued US activity, prohibited under the terms of the Unlawful Internet Gambling Enforcement Act (UIGEA), which was passed in 2006 and saw the majority of online gambling operators exit the US market.

Despite the legal uncertainty, PokerStars continued to service its US customers, citing that online poker was a ‘grey area’ under UIGEA’s legislative scope.  

However, in 2011 the US Department of Justice extended UIGEA’s mandate to cover digital interstate transactions and deposits, which effectively outlawed online poker – resulting in PokerStars and its market rivals abruptly terminating their services.

The Commonwealth of Kentucky would launch legal proceedings against PokerStars, citing the state’s 18th century ‘Loss Recovery Act’, deeming that Kentucky courts have a right to seize money from illegal gambling activities.    

In a 2015 ruling, the Kentucky judge imposed an ‘award’ equating to approximately $290 million, which would later treble to $870 million, plus 12% compound interest per year.

PokerStars Kentucky drama reemerged in December of last year, as Kentucky’s Supreme Court upheld the Commonwealth’s rights to proceed with a litigation. 

The Kentucky judgement was sanctioned as Flutter completed its $11 billion merger with The Stars Group Inc, to become the global gaming industry’s most valuable company. 

Flutter and TSG maintained that at no previous time had PokerStars’ Kentucky litigation been recognised as a potential liability

“Flutter remains confident that any amount ultimately paid to resolve this matter will be a limited portion of the reinstated judgment. Further announcements will be made in due course as and when appropriate.” Flutter detailed in its statement.