Flutter Entertainment, owners of The Stars Group who run PokerStars, are facing a $1.3 billion fine in the US. The Kentucky supreme court overturned a decision from two years ago, when the Court of Appeals found in favour of the gaming giant.
PokerStars Making More Negative Headlines
In December 2015, a trial court judge in Kentucky passed judgement of an $870 million fine on the owners of PokerStars. The lawsuit was brought by the Commonwealth of Kentucky in 2010 to recover losses by residents of the state who continued to play on the platform in direct contravention of the UIGEA 2006.
Three years later, The Stars Group announced that the Kentucky Court of Appeals had reversed the decision stating:
“Allowing a complaint, like the one put forth by the Commonwealth, to move forward would lead to an absurd, unjust result.”
Usually, in a case such as this we would expect to hear nothing more about it, but state prosecutors were not happy, and they weren’t going to let up until the last avenue was explored.
This last avenue was, of course, the state’s supreme court.
Two more years of legal wrangling and discussion between the seven judges dragged on, but last week finally we finally got a result.
PokerStars a Victim of Bad Timing?
The law is highly subjective. These three judgements show us that defendants often rely more on luck than anything else.
In this particular case, has Flutter Entertainment simply been unlucky and a victim of bad timing?
It doesn’t take a genius to work out that the fallout from the 2020 pandemic is going to leave residents, businesses, and local government short of cash. Does this latest judgement have this in mind?
Governor Andy Beshear made a personal statement, raising awareness of the forthcoming windfall to the state coffers.
“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,”
“This better positions us to emerge from this painful pandemic to help Kentuckians, help our businesses, provide quality health care to more Kentuckians, strengthen our public schools and keep our promise to educators and other public employees – some of whom were on the front lines battling the fallout from their greed.”
Flutter Entertainment Surprised
This whopping fine is a huge slap in the face for even such a large company.
The $870 million fine will now come with an eye-watering 12% compound interest calculated all the way back to the initial judgement in 2015, totalling $1.3 billion.
As you might expect, the share price of Flutter Entertainment dropped by around 2% on this news reaching the headlines. The company released a statement saying:
“Flutter is wholly surprised by today’s ruling and strongly disputes the basis of this judgement which, it believes, runs contrary to the modern US legal precedent,”
Analysts in the city have questioned if the fine will create a liquidity challenge for the firm. It wouldn’t be a surprise to see another rake increase on PokerStars.
Without providing any additional information Gavin Kelleher, gaming and leisure analyst with Goodbody stockbrokers, said:
“The company appears confident that it will not have to pay the full outstanding amount of the claim, which based on actual revenues from the state seems overly onerous.”
We will soon see if full payment is what happens. With licenses at stake in other states it is highly unlikely they can get out of this.
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