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Judge Orders PokerStars to Pay $100 Million in Penalties
By Shane Addinall May 01, 2021 IndustryA Kentucky judge recently ordered the world’s largest poker site, PokerStars, to pay $100 million to the state as the first payment towards its $1.3 billion penalties. Read on for the full scoop as the betting behemoth intends to stand its ground.The PokerStars brand has been in the headlines a lot lately. Just recently, its contracting of sports star - Neymar Jr as its cultural ambassador, trended positively in betting circles. Unfortunately, that good news was overshadowed as the results of its Kentucky court case began to come to fruition.
A Franklin Circuit judge ruled that the state of Kentucky can now collect $100 million in bonds from PokerStars in payments towards its $1.3 billion conviction order by the courts in December 2020. The sum is payable before the middle of May 2021.
In March, the controlling group for PokerStars, Flutter Entertainment, stated that it may take the case to the US supreme court. The group argues that the ultimate penalty is far too steep for the transgression. The latest news may expedite the company’s actions. A statement from Flutter Entertainment read:
“Flutter remains confident that any amount ultimately paid to resolve this matter will be a limited portion of the reinstated judgment.”
It seems that Flutter Entertainment might stand in defiance of the judgement. Previous comments from the British-based company suggest that British law does not recognise litigation for damage payments of the nature levelled by Kentucky. Recent transference of valuable assets has led the prosecuting parties to believe that the gambling group will renege on the payment order.
The Basis for the Billions
The lawsuit has a long history that stems back to 2010, when Kentucky Justice and Public Safety Cabinet, J. Michael Brown, filed a case for $290 million against PokerStars (then owned by The Stars Group) for operating illegally inside the state borders. They claimed that 34,000 residents deposited on the site and lost an alleged amount of $290 million in the process.
After a lengthy arbitration, a Franklin Circuit Court Judge ruled in favour of Kentucky in 2015, ordering the poker site to pay $870 million in damages after the state requested that the judge triple the initial stated amount. The Stars Group then appealed the verdict in 2018 and won the case when the court ruled that the state could not sue the betting company on behalf of its citizens.
The state then took the suit to the Supreme Court, where they re-appealed the case, this time against the new owner of PokerStars - Flutter Entertainment. The Supreme Court agreed with the initial findings and re-instated the $870 million in penalties in December 2020, with 12% compound interest on top. The penalty now stands at a whopping $1.3 billion and growing, as the interest equates to around half a million dollars a day.
Questionable Mathematics
The judgement seems very harsh at first glance and finds its basis in a seemingly outdated centuries-old statute. Business records from PokerStars showed that the poker site only generated $18 million in Kentucky for the period in question. This is a sum far lower than the initial $290 million levelled at the group. It is this dubious mathematics that seems to have the defendant up in arms and ready to give it one last shot in the highest court in the country.
Kentucky state governor, Andy Beshear, who is ironically a former activist for regulated gambling in the state, condemns PokerStars, brandishing the brand as ‘’irresponsible’’. His statement after the last court hearing is just as astounding as he believes that not even $1.3 billion is enough money to atone for the damage done. He said:
“This will never be enough to make up for the damage to Kentucky families and to the state from their years of irresponsible and criminal actions, but this is a good day for Kentucky.”
While no one can truly put a price on human suffering, the resultant penalty seems like a lucky windfall of its own – a dubious progressive jackpot win that carries the undertones of a lynching. The question now is – will the operator fold its hand or go all in?
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