You may have heard that Kentucky was recently awarded $870 million worth of damages from Amaya Inc., the owners of the PokerStars and Full Tilt brands. This was triple the damages from the earlier $290 million that had been asked for.
After the first ruling Amaya issued a statement reading:
“Amaya intends to vigorously dispute any liability that may be ordered at the trial court level, and believes that there are a number of compelling legal arguments reserved for consideration, including, without limitation, the lack of standing to bring this proceeding in the name of the Commonwealth and the Court’s failure to properly apply the law.”
On December 23, 2015, Judge Thomas Wingate tripled the damages to $870 million and also ordered Amaya to pay 12% in interest each year. That makes an additional $104 million per year until the full amount is paid. All of the money awarded in this judgment would be sent to the Kentucky government and not the players who lost the money. It almost seems as if after hearing Amaya’s statement, Judge Wingate purposely tripled the damages and added 12% in interest to make sure that some money was paid before the hearing could be resolved differently.
According to Marlon Goldstein, the Executive Vice President of Corporate Development and the general counsel of Amaya, this ruling is absurd. “This is a frivolous and egregious misuse of an antiquated state statute to enrich the contingent-fee plaintiff’s attorneys hired by the Commonwealth and not the people of Kentucky. Given that PokerStars only generated gross revenues of approximately US$18 million from Kentucky customers during the five years at issue, a damages award in excess of US$800 million is notable only for its absurdity.”
Amaya intends to launch its appeal over the next couple weeks and points out that there were many factual and legal errors that include violation of state statutes and failure to apply laws to facts in a correct manner.
It’s notable that Amaya was not the owner of the PokerStars brand during the period under review for this hearing. The total loss of money by Kentucky residents at the time was roughly $18m. None of these same players will see a dime of the $870 million awarded to Kentucky in this case.
The State of Kentucky filed the lawsuit based on a 19th-century statute that was meant to allow individuals to sue opponents for illegal gaming losses. It was not meant to be used in the way that the Commonwealth is currently using it, which is as a 3rd party looking to reclaim those losses.
In the past, Kentucky has been known to participate in legal battles with other gambling companies. In 2013, they obtained $15 million from a settlement with Bwin.Party Entertainment and in 2013 they tried to seize 141 domain names associated with Internet gambling.
Amaya says that if their appeal fails they will likely chase the former poker stars owners with legal action.
“Regardless of the dollar amount, to the extent the PokerStars entities may be ultimately obligated to pay any amounts following exhaustion of all appeals and other legal remedies, Amaya intends to seek recovery against the former owners of the PokerStars business.”
Chances are that if you asked one of the gamblers who lost 5-10$ (the average amount lost by players in this case) to PokerStars during the period from 2006 to 2011, they would disagree with the way the situation has been handled. Instead of the players receiving back their $18 million, Kentucky’s Commonwealth is receiving $870 million, and returning none to the players.
When 14,000 poker players represented by the Poker Players Alliance, attempted to intervene on the players’ behalf, they were ignored. Now we can only wait and see how Kentucky defends its position during Amaya’s appeal over the coming months.