Judge hands Flutter $100m Kentucky enforcement bill
Franklin Circuit Court denies operator’s attempt to delay enforcement and rules state can reclaim historic PokerStars bonds within 20 days
Flutter Entertainment is facing a $100m bill from authorities in Kentucky after a judge ruled the state could claim bonds filed by PokerStars in the operator’s legal appeal against paying historic damages.
On April 22, Franklin Circuit Court Judge Thomas Wingate ordered the surrender of the bonds to state authorities after dismissing a new attempt by Flutter to delay enforcement of the penalty.
The surrendered bonds are the first step of a repayment process that could see the FTSE 100 pay up as much as $1.3bn.
However, lawyers acting on behalf of the state have said the amount of the claim could rise to more than $1.5bn, based on compounded interest accruing at $504,477 per day while Flutter’s delay petition is being considered by the US Supreme Court.
Kentucky officials originally sued PokerStars in 2010 when it owned by Rational Group under the state’s Loss Recovery Act (LRA), which allows gamblers to reclaim losses by direct legal action against an operator.
If the affected gambler fails to bring legal action against the operator within a six-month period, a third party, which in this case is the state of Kentucky, can file a civil lawsuit which allows for the initial damages to be trebled.
TSG has said that gross gambling revenue generated in Kentucky for the period of the claim was just $18m.
Under this lawsuit, Kentucky sued PokerStars initially for $290m, but later elected to treble the claim under the LRA. At a hearing in the Franklin Circuit Court in December 2015, this claim was upheld and The Stars Group (TSG), which was trading as Amaya at the time, was ordered to pay $870m.
However, this ruling was overturned in December 2018, following an appeal by TSG against the decision in the Kentucky Court of Appeal.
As part of this appeal and under state law, PokerStars was required to post bonds through insurance companies capped at $100m.
The bond must guarantee satisfaction of the judgment with costs, interest and damages for delay if the appeal is dismissed or if the judgment is affirmed.
Importantly, it also guarantees satisfaction of any modification of the judgment and such costs, including costs on the appeal and interest as the court may order.
This latest ruling orders the surrender of those bonds to the state within 20 days. It is understood that these monies will be held in an escrow account while the state agrees what to do with the funds.
Lawyers acting for the state have asked the court to increase the mandatory bond amount filed by Flutter if the case continues.
Flutter’s lawyers had previously argued that UK law invalidated the tripled damage claim, something which the court dismissed.
In comments reported by the Lexington Herald Leader, Flutter lawyer Sheryl Snyder argued: “The statute in the UK treats the entire judgment as void and unenforceable.
“So the simple point is, my client believes that when you get to the UK to collect, they won’t let you domesticate the judgment,” Snyder added.
In anticipation of a failed appeal, Flutter has asked creditors to change the definition of events of financial default in which they are able to claim funds back from the business.
This process is understood to be ongoing, but has led to state lawyers suggesting the company is seeking to avoid payment.