KY To Collect First $100 Million From PokerStars, Judge Orders, As Judgment Swells To $1.6 Billion

On Tuesday, a judge in Kentucky ruled that the state can collect a $100-million insurance bond in a long-standing dispute with PokerStars.
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Kentucky can collect $100 million worth of bonds in a long-standing legal dispute with PokerStars, a judge decided Tuesday. It was an expected development in the case.

According to the Lexington Herald-Leader, Franklin Circuit Judge Thomas Wingate told the state that it can collect $100 million in bonds that PokerStars was required to post through insurance companies during its years-long appeals process. The bonds must be surrendered within 20 days.

The $100 million is part of a growing billion-dollar judgment against the poker giant, which offered unregulated and illegal online gambling in the state leading up until 2011, when a federal government crackdown forced it to leave U.S. cyberspace. PokerStars has changed ownership multiple times since 2011, and it is now licensed to offer legal and regulated online poker in three U.S. states.

The Kentucky Supreme Court upheld the historic judgment last December.

The judgment currently stands at nearly $1.6 billion, up from a previously reported $1.3 billion, due to reported daily interest of more than $500,000. PokerStars is fighting against the rest of the judgment, indicating that the appeal could eventually reach the U.S. Supreme Court, should the court take the case. Kentucky has said that it will aggressively pursue the money.

PokerStars’ parent is Flutter Entertainment, which is based out of Ireland. The differences in Kentucky law and where PokerStars is based out of could end up being a roadblock for collection.

Addiction was the reason for the case

The crux of the matter from Kentucky’s end pertains to gambling addiction, which it said it was forced to pay for while PokerStars paid no taxes to the state despite making millions in rake off of Kentuckians.

In the Kentucky Supreme Court ruling, the court called illegal online gambling an “insidious problem” and going after offshore operators “an extremely difficult problem.” It cited costs to the state from tens of thousands of addicted gamblers, estimating social costs at a “minimum” of $81 million annually.

The state said approximately 34,000 Kentuckians had played on the poker platform.

PokerStars said it made only $18 million in rake from residents, while the state said resident losses were many multiples of that. Rake is revenue, which a poker site charges from every tournament buy-in and as a percentage of every cash game pot played.

While addiction is what Kentucky said motivated the entire case, the state has not said that any of the judgment would be used to help those with gambling problems, whether from online poker any other form of gambling. Instead, Kentucky plans to pay off some of its debts with the PokerStars money.

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