A Kentucky judge has ruled the state is entitled to $100 million in bonds that Stars Interactive Holdings posted as part of a years-long case regarding illegal online poker in the state.
The bonds are just part of the award the state is seeking. In December, the Kentucky Supreme Court reversed an appeals court ruling and sided with state officials, who were trying to recoup losses residents incurred more than a decade ago.
After the Supreme Court decided against reconsidering the case, lawyers for the state moved to obtain the bonds.
In all, the state expects to recoup $1.6 billion, Gov. Andy Beshear said late Thursday afternoon.
“We look forward by May 14 to receiving the first $100 million from the judgment in this case,” said Beshear, who added the money will first go to an escrow account for lawyers representing the state. “And we will continue to pursue other recovery (efforts).”
A message to Flutter Entertainment, the parent company for Stars Interactive Holdings, was not immediately returned Thursday.
Flutter had previously said it would consider appealing the state Supreme Court’s December ruling to the US Supreme Court.
PokerStars Lawsuit Nearly A Decade Old
The origins of the case date back to 2008 when the state sought to shut down more than 140 online domains for offshore gaming companies that attracted Kentuckians for real-money games.
As Beshear noted Thursday, nearly all companies agreed to block Kentucky IP addresses from their websites. One that did not, though, was PokerStars.
In 2012, Kentucky filed suit against PokerStars and sought to recoup more than $290 million. That money, officials said at the time, was what state residents lost through PokerStars rake in online games in a five-year span through 2011.
Franklin Circuit Judge Thomas Wingate ruled in the state’s favor in 2015. That prompted the appeal, which required Stars Interactive to post the bond money. After the appeals court overturned Wingate’s decision, the state appealed.
Under the Loss Recovery Act, Kentucky can receive triple damages, meaning that $290 million became more than $870 million. With compounding interest, the amount the state claims it’s due is now nearly double the initial award.
Kentucky Wants Asset Transfers
In speaking to reporters Thursday, Beshear sounded as if the state wanted more than just money.
We’re asking for the transfer of PokerStars’ trademarks to a new company be declared a fraudulent transfer and for the Franklin circuit court to void the transaction,” the governor said.
On Thursday, the Lexington Herald-Leader reported that state lawyers claimed in court this week that PokerStars and Flutter were seeking to move valuable assets. They said that suggests the company has no intention of paying the award.
Last week, Moody’s reported that Flutter was seeking consent agreements with lenders and noteholders as a result of the Kentucky Supreme Court ruling.
While Flutter has been considering an appeal, it has also stated that any payment to the state would be significantly less than the current award amount. It has estimated PokerStars gross gaming revenue from Kentucky players during the timeframe in question was about $18 million.