$800 Million Question: State of Kentucky to Continue Suit Against New PokerStars Owner, Flutter Entertainment
UK-based online betting and casino giant Flutter Entertainment is one of the world’s biggest gambling companies after merging with The Stars Group earlier this year.
However, even Flutter is not immune from regulatory whipping – and Kentucky is preparing to hit it with a big one – $870 million in damages, to be exact.
Since Flutter is now the owner of PokerStars’ owner Stars Group, any existing lawsuits or interests carry over. Considering PokerStars’ less-than-clean-handed history in the US, this could be bad news for Flutter.
The Stars Group was one of the companies indicted on the so-called “Black Friday” of online poker in 2011. This related to years of providing “gray-market” online poker services to Americans, which the federal government eventually cracked down on.
The final sentence of the whole affair was only handed out in October 2020. Former PokerStars owner Isai Scheinberg was sentenced to time served plus a $30,000 fine for his role in the operation – after eight years on the run from authorities.
This new lawsuit from Kentucky could end up being one of the biggest penalties ever recorded in the online gambling world – if the court agrees with the figure.
Kentucky accuses the Stars Group, and by unfortunate proxy now Flutter, of running an illegal online poker service in the state between 2006 and 2011. It traded under the name Oldford – an official subsidiary of Stars at the time.
The initial lawsuit for $870 million was brought in 2015, as by Kentucky law, any losses in illegal gambling games can be ordered to be returned by courts.
At the time, the court was in no mood to mince its words. “This ruling means a recoupment of some portion of the countless dollars the criminal syndicate has cost Kentucky and Kentuckians collectively.”
That’s some strong language. Considering Poker Stars was then and is now a globally known and legally operating brand in an array of markets, “criminal syndicate” is not holding back.
The suit was thrown out in 2018, and Flutter execs may have expected (or at least hoped) that it would remain that way.
Unluckily for them, the Kentucky Court of Appeals ruled a reinstatement in 2018.
This new ruling also adds five years’ worth of 12% APR interest to the original charges, bringing the potential penalty up to over $1 billion.
Flutter vowed to fight the lawsuit in the courts after the news broke, even as its shares tumbled.
“Flutter is wholly surprised by today’s ruling and strongly disputes the basis of this judgment”Company statement
What arguments its legal team will bring are as of yet unknown. In the 2018 case it thought it had won, Flutter argued that Kentucky customers only ever lost money to each other, as the rake at this particular site was very low.
However, that argument didn’t wash with the Appeals Court. So, Flutter’s lawyers will no doubt be looking for another angle before this case goes before the Kentucky bench once more.
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