Andy Beshear, Governor of Kentucky, is proceeding with attempts to collect the $1.3 billion fine which PokerStars incurred last year.
In a statement made on March 24, 2021, the Governor’s office said their lawyers are filing a request with the Franklin Circuit Court.
The request is for the Circuit Court to pay out the $100 million bond it holds on PokerStars behalf. The bond was paid to the court during the 2015 case which first ruled that PokerStars owed the state.
PokerStars continues to insist that the ruling was unfair. Their parent company, The Flutter Group, is Ireland based, and has limited their co-operation with the authorities in Kentucky.
How PokerStars got in trouble
PokerStars owe the $1.3 billion for running an “illegal gambling syndicate” (as the Supreme Court put it). The operations are alleged to have cost Kentucky residents around $300 million between 2006 and 2011.
Previously, the Franklin Circuit Court ruled in 2015 that the losses to Kentucky residents were a little under $300 million. This was tripled to $870 million. Kentucky law allows the state to collect back any wagers lost in illegal gambling, and to triple the repayment amount as a punitive measure.
So the ruling in 2015 determined that PokerStars’s illegal operations in Kentucky made them liable for any gambling losses incurred by Kentucky residents.
In November 2016, representatives of PokerStars’ parent company unambiguously stated that they would not be paying the fine. The execs stated that they had plenty of legal tools with which to avoid paying. It is unclear if they still feel that is the case.
PokerStars appealed against the Franklin Court ruling. In 2018, they won their case in the Kentucky Court of Appeals. Then they lost the counter-appeal in the Kentucky Supreme Court two year’s later.
This whole process took so long that the Supreme Court also opted to charge interest on the original fine. The total settled on by the court was $1.3 billion.
The Supreme Court’s opinion on the subject reads: “The commonwealth’s recovery in this case is certainly not a windfall, as the Court of Appeals seems to assume; rather, it is a recoupment of some portion of the countless dollars the criminal syndicate has cost Kentucky collectively and Kentuckians individually.”
This opinion comes from the stated idea that, “the Commonwealth of Kentucky suffered financial losses along with the tragic damage to its citizens. Mental and physical health care systems that care for the citizens, which were harmed by the illegal gambling, are supported in part by the state. Money sent to offshore gambling accounts is lost and the state deprived of the taxes to which it is entitled. The cost to prosecute and incarcerate individuals who resort to crime to support their gambling is a huge cost on Kentucky’s strained and overextended penal system.”
A complex legacy
Opinions vary on PokerStars’s place in the grey market of yesteryear. Some view their involvement in the Black Friday busts as part of what killed poker. Others see the deal they cut with Full Tilt Poker after the fact as having saved it.
The reality is a bit of both.
However, with PokerStars’s role as an online poker provider in other states, the latest ruling on the Wire Act, and the burgeoning U.S. market, they may well want to change their tune if the other states see their behavior in Kentucky as concerning. In particular, since Kentucky appears to be forging ahead with its own laws to legalize online poker, PokerStars may want to get in good with the lawmen of the Bluegrass State.
Stars has a complex hand to play. We will see how they cope in the coming months.