Flutter Entertainment has confirmed that it has settled a decade-long legal dispute with the Commonwealth of Kentucky. The parent company of the PokerStars online poker site stated that it agreed to pay $300 million in settlement fees – $100 million of which were bonds awarded to the state earlier this year.

For nearly 11 years, the sides have been embroiled in a dispute akin to a ping-pong game.

Kentucky initially accused PokerStars.com of allowing state residents to gamble at its site between 2007 and 2011.  Backed by the antiquated , dating back from 1798, Kentucky demanded that PokerStars pay back three times the amount allegedly lost by Kentucky players.

The relevant parts of the Loss Recovery Act are as follows:

KRS 372.020

If any person loses to another at one (1) time, or within twenty-four (24) hours, five dollars ($5) or more, or anything of that value, and pays, transfers, or delivers it, the loser or any of his creditors may recover it, or its value, from the winner, or any transferee of the winner, having notice of the consideration, by action brought within five (5) years after the payment, transfer or delivery?…

KRS 372.040

If the loser or his creditor does not, within six (6) months after its payment or delivery to the winner, sue for the money or thing lost, and prosecute the suit to recovery with due diligence, any other person may sue the winner, and recover treble the value of the money or thing lost, if suit is brought within five (5) years from the delivery or payment.

PokerStars Makes its Case

PokerStars argued that the initial $290 million in damages demanded by the state was ridiculous. It pointed out that the state used aggregated gross losses, instead of net losses, in their calculations. That means every dollar lost in a bet was counted, with no consideration to how much the player eventually won.

Flutter said that it allegedly served Kentuckians illegally in the entire period that it probably generated just $18 million revenue from the state.

Over the years, the case was in and out of court before it recently reached the US Supreme Court level.  The sides were encouraged to reach a settlement, which they did this week.

Flutter said in a statement that it strongly believed that the agreement was in the best interests of its shareholders.

“The Group now considered the matter closed,” said Flutter.

As a result of the settlement, Flutter’s stock price closed 4% higher on the London Stock Exchange.

In a statement issued by Kentucky Governor Andy Beshear, the proceeds for the settlement will go to the state’s General Fund.

“After ten long years, the commonwealth has not only prevailed but collected dollars that the General Assembly will be able to direct to critical areas, like education, health care, and economic development,” Beshear said.

PokerStars Kentucky Dispute Timeline

The case dates back to 2007 when Kentucky began investigating offshore online poker sites. 

2010

In 2010, the Secretary of Justice and Public Safety of the Commonwealth of Kentucky filed suit against multiple online poker operators, including PokerStars. The lawsuit was attempting to recover bets placed on the sites between October 12, 2006, and April 15, 2011.

2015

The Franklin Circuit Court ruled in Kentucky’s favor and assessed the defendant’s liability at $290 million. That amount was trebled as part of the LRA, leaving PokerStars on the hook for $870 million.

2018

The Kentucky Court of Appeals Court overturned the lower court’s ruling in 2018, calling the judgment “absurd.”

As attorney Behnam Dayanim wrote in a 2019 Gaming Law Review article ():

The court considered two dispositive: the Commonwealth’s standing to sue, and the sufficiency of the plaintiff’s pleadings. Regarding the Commonwealth’s standing, the appeals court held that KRS § 372.040 provided standing only to plaintiffs who were natural persons, not to a sovereign like the Commonwealth. The court also concluded that the Commonwealth’s complaint against PokerStars was insufficient, because it detailed the cumulative losses among Kentucky residents over a given timeframe, rather identify the particular transactions underlying those totals.

2020 

PokerStars celebration was cut short when the Kentucky Supreme Court, in a 4 – 3 decision, that the government cannot act as a third party. The Kentucky Supreme Court ordered Flutter to pay $1.3 billion, the original settlement plus interest.

2021

PokerStars filed a petition for the US Supreme Court to take up the case in August.

The two sides finally reach an agreement, whereby PokerStars will pay $300 million, and Kentucky will not make further claims.