The Kentucky court fined Amaya USD 870 million for offering real-money poker between 2006-2011.
After the news spread about Amaya’s USD 870 million fine, the company stocks hit a 2015 low. The penalty was imposed for PokerStars’ activities during a period between 2006 and 2011, three years before Amaya acquired the brand. The legal proceeding was based on a 18th century statute, which allows the state to recover the poker losses of its residents. US gambling news report that the fine was originally set at USD 290 million. However, it was raised upon a request from the state. Earlier this year, a similar case against PokerStars was dismissed in Illinois.
PokerStars continued to offer its services after the introduction of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006. The UIGEA “prohibits gambling businesses from […] accepting payments […] in a bet or wager that involves the use of the Internet.” According to the Franklin Circuit Judge, Thomas Wingate, the leadership at PokerStars thought that “breaking the law was good for [their] business.” During that five year period, “PokerStars generated aggregate gross revenues in the Commonwealth of Kentucky of approximately US$18 million,” admits Amaya’s press release.
Amaya will appeal the USD 870 million fine
However, the company finds the action “frivolous and without merit.” Amaya announced that it will appeal the judgement and “avail itself of any and all remedies available to it.” They assert that the new order applies a methodology with no legal basis, since it calculates with gross losses instead of net losses. “Given that PokerStars only generated gross revenues of approximately USD 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,” declared Marlon Goldstein, Executive Vice President, Corporate Development and General Counsel of Amaya.
Amaya bought PokerStars in 2014, approximately three years after the period at issue. Now, the company “intends to seek recovery against the former owners of the PokerStars business.” The Kentucky Court’s fine is heavily criticized by many publications. The Las Vegas Review-Journal says that “the Kentucky ruling was ludicrous. The judge didn’t understand the basics of Internet poker.”
Budget shortage in Kentucky
News outlets suggest that Kentucky’s budget deficit was the reason behind the extreme fine. “Kentucky will be hundreds of millions of dollars short of just meeting basic obligations in the next budget if we don’t look for additional revenue,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy. “The pension issue is something we’ve gotten into over a couple of decades […] and it’s gonna take probably 20 to 30 years to climb out of it.” commented Dave Adkisson, Kentucky Chamber President.