About Kentucky’s 1.3 billion lawsuit against PokerStars

By reinstating a 2015 ruling from a Franklin Circuit Court, the Supreme Court of Kentucky has ordered PokerStars to pay around $1.3 billion to the state.

Originally filed in 2010, the suit filed by Kentucky Justice and Public Safety Cabinet J. Michael Brown, was for $290 million against the online poker operator. Brown now serves as Governor Andy Beshear’s executive cabinet secretary.

The suit claimed that PokerStars was operating illegally within the state’s borders and that 34,000 Kentucky residents lost nearly $300 million playing poker on the site.

In 2015, Franklin Circuit Court Judge Thomas Wingate ruled in favor of the state. After the state of Kentucky requested triple the damages, Judge Wingate ruled that PokerStars owed the state of Kentucky $870 million.

PokerStars Parent Company Appeals the Ruling

The Stars Group, which owns PokerStars and was subsequently acquired by Flutter Entertainment in 2020, appealed the ruling, and in 2018, a Kentucky Court of Appeals reversed Wingate’s decision.

In the state of Kentucky, anyone can sue the “winners” in a game of chance to recover lost wages, but the appeals court ruled that the state itself can not sue on behalf of its citizens.

However, state officials then re-appeal the case, taking it to the State’s Supreme Court, where they received a ruling in their favor. The Kentucky Supreme Court agreed with the original ruling from Judge Wingate, ruling that PokerStars owes the state $870 million. Then the state asked for an additional 12% interest, and the Supreme Court agreed, ruling that the total fine was a whopping $1.3 billion.

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Governor Beshear Calls PokerStars Irresponsible

While earlier this year, Governor Beshear had called on lawmakers to pass internet gambling legislation, he called PokerStars “irresponsible” after the ruling.

“This will never be enough to make up for the damage to the state and Kentucky families from years of irresponsible and criminal actions by PokerStars, but this is a good day for Kentucky,” said Beshear.

Beshear’s pro-gambling stance formed much of his 2019 Gubernatorial platform, as he promised to bring land-based casinos to the state. On the other hand, former Governor Matt Bevin made crazy claims about suicides occurring nightly at casinos. However, since Beshear’s victory, no progress has been made on gambling legislation.

Operating in a Gray Area

During the time of the Kentucky incident, PokerStars operated within the U.S. in what could be described as a legal gray area, following the passage of the 2006 Unlawful Internet Gambling Enforcement Act.

PokerStars left the US market at that time, but returned in limited jurisdictions in 2016 after receiving an online gambling license to operate in New Jersey. The company further expanded into neighboring Pennsylvania’s legal gambling market in 2019.

Currently, only the states of New Jersey, Nevada, Pennsylvania, Delaware, Michigan, and West Virginia allow legal, online poker. And only three of those states, New Jersey, Nevada, and Delaware, allow cross-state play.

PokerStars is only currently operational in Pennsylvania and New Jersey.

A Patchwork of Online Gaming in the US

The legalization of online gaming in the United States has been anything but uniform, going on a state-by-state basis.

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While some states allow online poker and casino games, others only allow legal sports betting.

Horse racing is legal in Kentucky, as well as the state lottery, but all other forms of gambling are not. The closest Kentuckians will get to an online casino is in neighboring West Virginia.

There are three racetrack casinos in the Blue Grass State that offer some type of casino gambling but there are no slot machines’ rather, they only offer instant racing bet machines. While the race betting machines look like regular slot machines, they’re really gaming machines based on past horse races and the spinning reels are for entertainment purposes only.