Company to appeal decision
The legal problems of PokerStars.com, the international poker network acquired last year by supplier Amaya Gaming, are far from over. A judge in a lawsuit filed against PokerStars by the state of Kentucky has fined Amaya, as the PokerStars parent, $870 million for PokerStars’ illegal operation of internet gaming available to Kentucky residents between 2006 and 2011.
PokerStars has struggled to become licensed to operate iGaming in the U.S. states where it is legal, since the U.S. Department of Justice shut down its sites in 2011 for operating illegally U.S.-facing iGaming after passage of the Unlawful Internet Gaming Enforcement Act in 2006.
It is estimated Kentuckians lost more than $290 million on PokerStars.com between 2006 and 2011. While no players sued PokerStars to recover losses, in 2010, the Kentucky Justice and Public Safety Cabinet sued to recover the money. On December 24, Franklin Circuit Judge Thomas Wingate ordered Amaya to pay the money back, plus triple damages as punishment for what he called a willful violation of Kentucky law, which makes all forms of gambling outside of racing and the lottery illegal.
Wingate also ordered the state to collect 12 percent interest on Amaya’s debt until it is paid—potentially adding another $104 million to the award.
“Without a doubt, the Defendants made a business calculation that took into account the violation of Kentucky’s laws,” Wingate wrote in the decision. “However, the law is more than some ordinary itemized expense on a balance sheet, and its value is not as easily accounted for as the Defendants may have thought as they executed their illicit business plan.”
Amaya quickly announced it will appeal the decision. In an interview with the Associated Press, Amaya attorney Sheryl Snyder called the judgment a “gross distortion” of state law, particularly since PokerStars’ gross online poker revenue in the years covered by the lawsuit was $18 million.
“The losses were not won by PokerStars; the losses were won by other players,” Snyder told the AP. “What PokerStars took was its rake out of the pot, its fee for providing the online platform for the players to play. To assess against the operator all of the losers’ losses without offsetting their wins, much less considering the revenue that PokerStars was actually deriving is, we think, an excessive punishment.”
Wingate did not rule on the request by the nonprofit Poker Players Alliance, representing 14,000 Kentucky poker players, to be permitted to intervene in the case. After Wingate’s decision, the organization issued a statement urging that the award be refunded to the Kentucky citizens who actually lost the money.
The PPA also noted that the state used an 18th century statute designed to protect farmers as the legal basis for the lawsuit.
“Judge Thomas Wingate’s decision to use a centuries-old statute to collect almost $1 billion in damages from PokerStars should benefit real Kentucky citizens whose money was lost, and not big-spending politicians and government trial lawyers,” said PPA Executive Director John Pappas in the statement.
“Kentucky citizens and poker players are very disappointed that Judge Wingate chose to enter a judgment in this matter prior to ruling on our motion to intervene,” continued Pappas. “He should continue to allow PPA to make its case that any damages collected, if actually sustainable, go to the citizens involved. Failure to do so would demonstrate that this is just a big-government money grab aimed at enriching politically connected trial lawyers and bailing out big-spending politicians.
“The facts are very simple: This money was lost by Kentucky taxpayers who participated in online poker against other Kentucky taxpayers on a platform provided by PokerStars. Therefore it is the people, not the politicians and trial lawyers, who should be reaping the benefit.”
Pappas also expressed concern about statements from the office of newly-elected Governor Matt Bevin that appear to support Wingate’s ruling.
“Governor Bevin ran on a platform of empowering hardworking taxpayers and reducing confiscatory government policies,” said Pappas. “Yet the trial lawyers who represent state government are actively fighting to prohibit Kentuckians who lost money on PokerStars to get their money back. If Governor Bevin really believes Kentuckians were hurt, then he should support making them whole. If Governor Bevin, in fact, supports the position taken by the governments’ trial lawyers, then he would be effectively be supporting the kind of big-government money grab he repeatedly opposed and was elected to stop.”
