Flutter Entertainment PLC, the parent company of global online-poker market leader PokerStars, disclosed on Tuesday that it will petition the U.S. Supreme Court over a massive $870 million judgment awarded to the Commonwealth of Kentucky in connection with PokerStars' services to Kentuckian poker players from 2006 to 2011.
Flutter disclosed its plans regarding the Kentucky proceedings in its 2021 first-half earnings statement. "The Group is currently in the process of preparing a Petition for Writ of Certiorari to be filed with the US Supreme Court," Flutter offered. The petition will seek "review of the judgement based on U.S. Constitutional grounds, including that the judgement violates due process and the prohibition on excessive fines."
Later in its update, Flutter offered more specifics on the timing of its planned filing. "Our petition will be submitted this month," Flutter stated. "We expect that the U.S. Supreme Court will decide whether to take up the case during Q4 2021." The U.S. Supreme Court accepts only a tiny percentage of cases submitted for its consideration, but the unique characteristics of this dispute increase its odds of being heard.
Excessive fines at root of dispute
Flutter's claim of excessive fines is the key to this ongoing legal battle. The case dates back to 2012, when the state's attorney general sued PokerStars for just over $290 million allegedly lost by Stars' Kentucky players. After a lengthy trial, Kentucky Circuit Judge Thomas D. Wingate ruled in 2015 in the state's favor. Wingate also trebled the alleged damages, to more than $870 million. With accrued interest, that judgment is now worth well over $1.3 billion.
To calculate the original $290 million in alleged damages, however, Kentucky calculated players' profits and losses on a hand-by-hand basis. This method ignored poker's normal flow and vastly overstated real losses. PokerStars, which was at the time owned by Canada's Amaya Gaming, calculated that its actual profit derived from Kentucky players from 2006-2011 was about $18 million.
The wide gulf between the two loss valuations provides the basis for Flutter's excessive-fine claims. The due-process claim is more complex. Kentucky based its lawsuit on a late-19th century law, the Loss Recovery Act. The law was designed to help the families of indigent gamblers recover losses. The antiquated law, however, carried no provision allowing Kentucky to sue on behalf of all Kentucky poker players.
Flutter inherited see-saw legal battle
Ireland-based Flutter (then known as Paddy Power Betfair) acquired the Kentucky case when it purchased the PokerStars family of assets from Amaya in 2019. The case had already bounced back and forth in Kentucky's court system, with both sides logging earlier victories.
In December of 2018, the Kentucky Court of Appeals threw out Wingate's initial ruling on similar grounds to Flutter's current claims. The state then appealed that reversal to Kentucky's Supreme Court, which in 2020 reinstated the judgment on a narrow 4-3 vote. The Kentucky Supreme Court also denied an appeal by Flutter to rehear the case, by the same 4-3 vote.
Amaya previously paid $100 million supersedeas bond to Kentucky to allow the initial appeal. Earlier this year, following the Kentucky Supreme Court's ruling in the state's favor, Kentucky's Attorney General's office moved to seize that $100 million and deposit it into the state's general fund.
Collecting any sum beyond that $100 million may prove difficult for Kentucky, however. Flutter and the two PokerStars entities specifically involved in the judgment are based in Ireland, not the U.S., and an American civil judgment cannot be collected in another country.
Featured image source: "Kentucky Grunge Flag" by Free Grunge Textures - www.freestock.ca is licensed with CC BY 2.0. To view a copy of this license, visit https://creativecommons.org/licenses/by/2.0/
