Flutter loses Kentucky appeal on PokerStars $870m litigation 

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 launched 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 is disappointed by the denial of its rehearing petition and continues to strongly dispute the basis of this judgment,” read a Flutter statement.

“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. Further announcements will be made in due course as and when appropriate.” 

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