PokerStars’ return to the United States was not a cheap one and it may cost them even more depending on the results of a lawsuit by the State of Kentucky against the online poker giant.
Earlier this week, news broke of a $290 million judgment against PokerStars and parent company Amaya, Inc in connection to a case filed by the state against numerous online poker companies that previously serviced Kentucky residents.
Kentucky has been going after various online poker sites since 2008 when they attempted to seize 141 domains from various online gambling companies. The present suit was filed against PokerStars and various other online poker sites in 2010, a suit that could ultimately cost Amaya over $800 million.
Suit Based on 18th Century Statute
Kentucky’s lawsuit against PokerStars and various online poker companies is based on an 18th Century statute that allows third parties to collect on the illegal gambling losses of Kentucky citizens. Furthermore, the statute can force the illegal gambling company to pay up three times player losses.
According to press release issued by Amaya on Thursday, PokerStars generated around $18 million in revenue in Kentucky from October 12, 2006 to April 15, 2011. Normally, this would result in a maximum penalty $54 million.
However, prosecutor William Hurt was able to convince Franklin Circuit Judge Thomas Wingate to grand damages and penalties for $290 million. He requested this amount to be trebled and that would bring the total to $870 million.
PokerStars Plans to Appeal and Seek Payment from Former Owners if Needed
In Thursday’s presser, Amaya reiterated that they felt that the suit was “frivolous and without merit.” Furthermore, they pointed out that the trial court admitted that the $290 million requested was incorrect and has yet to file a final order awarding damages.
The final order is subject to appeal and Amaya says that they intend to “vigorously dispute any liability that may be ordered at the trial court level and believes that there are a number of compelling legal arguments reserved for consideration, including, without limitation, the lack of standing to bring this proceeding in the name of the Commonwealth and the Court’s failure to properly apply the law.”
Finally, Amaya revealed that should the company be forced to pay damages to Kentucky, they will seek restitution from Isai Scheinberg and the other former owners of PokerStars. The company was sold to Amaya in August 2014 for $4.9 billion.
PPA Gets Involved – Accused of Being Funded by Amaya
The Poker Player’s Alliance has recently filed a motion to join the lawsuit against PokerStars and Amaya in order to represent the 14,000 Kentucky poker players that had funds on the site after October 2006.
The PPA is trying to argue that damages awarded in this case should go to the poker players rather than to the state. According Don Cox, PPA attorney, the statute that the case is based on allows the poker players to intervene in the case.
Prosecutor William Hurt wasted little time attacking the motion, claiming that the PPA and PokerStars were working together to convert the trial into a single-party case so that PokerStars doesn’t have to pay treble damages.
Hurt also accused the PPA working directly with Amaya and that the organization was funded by PokerStars. Cox denied the allegation saying that they were not funded by PokerStars and that “There is no evidence on record” to support such a claim.
Unless Amaya decides to negotiate a settlement in this case, don’t expect it to be resolved anytime soon. Bwin.party settled with the state in 2013 for $15 million and the federal government gave the state $6 million in 2012 to conclude legal action against the company.