PokerStars has lost at least $100 million to the State of Kentucky. The loss came after the Franklin Circuit Court ruled that the governor's office could collect bonds posted by PokerStars almost a year ago. However, the question of whether the online gambling site will lose more money to the Blue Grass state remains open.
The Governor's office petitioned the Franklin Circuit Court for the $100 million bond on March 24, 2021. It took the courts a few weeks, but that money is now being processed. It will first go into escrow with the court's lawyers. Once the exact procedure is figured out, the money will then be moved on, directly into the state's coffers.
The initial amount owed by PokerStars was set at $1.3 billion. However, the unalterable forces of time and compound interest mean that PokerStars now owes Kentucky $1.59 billion. The fine is currently accruing interest at a rate of about $504k every single day.
The state has collected less than a year's worth of interest and not a single cent of capital on what PokerStars owes.
Render unto the governor
The damages were initially deemed to be $290 million by the Franklin Circuit Court. This was the court's estimate of how much money Stars illegally raked from residents of the state between 2006 and 2011. Under Kentucky law, however, money lost in illegal gambling can be recovered with triple damages.
The damages were set at around $900 million. This was back in 2014. Since then the ruling was overturned by the Kentucky Appellate Court, and reinstated by the Kentucky Supreme court this year. The Supreme Court added some interest for the time spent going round the houses on this. The Supreme Court figure was $1.3 billion, and the vig keeps running.
Because PokerStars and Flutter Entertainment — the parent company to PokerStars — are UK companies, Kentucky could have difficulties enforcing the fine. If Kentucky were on the verge of offering licenses to online poker companies, they might have some leverage. Stars has shown interest in breaking into the U.S. market wherever the light of regulation starts showing through the cracks. But Kentucky is dragging its feet over legalization and is unlikely to be offering anything like that soon.
PokerStars is now making noises about taking the whole megillah to the U.S. Supreme Court.
One sticking point in getting the ruling to stick is British Contract Law. In Britain, punitive damages are not recognized and never awarded. Where a party is required to pay damages, that party is only ever on the hook for the amount they cost the plaintiff. Ironically, demanding more money from PokerStars, could be the exact reason the money tap runs dry at $100 million. Tripling the damages makes the Kentucky ruling almost entirely unenforceable in the Courts of England and Wales.
Whatever happens here, it looks like Kentucky may have raked in their last pot from Stars.
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