Amaya is appealing a ruling in Kentucky that demands it pay the state $870 million for profiting off its residents unlawfully from 2006 to 2011.
Amaya purchased the world’s largest poker platform along with other assets in June of 2014 for $4.9 billion.
On Christmas Eve, Kentucky Circuit Judge Thomas Wingate said that 34,000 state residents lost over $290 million during the time period and that PokerStars profited off their participation illegally. Wingate tripled the damages and imposed 12 percent interest in reaching the $870 million fine.
“The Defendants made a business calculation that took into account the violation of Kentucky’s laws,” Wingate said in his ruling. “However, the law is more than some ordinary itemized expense on a balance sheet, and its value is not as easily accounted for as the Defendants may have thought as they executed their illicit business plan.”
Amaya Discredits Ruling
In 2012, PokerStars reached a deal with the United States government to pay $731 million to free itself of future federal litigation for operating as a so-called “Bad Actor” leading up to April 15, 2011, poker’s “Black Friday.”
Amaya has committed untold resources to repairing the image and brand of the robust online poker network and will return to the US in 2016 by way of New Jersey.
Shares of Amaya on Nasdaq exceeded $30 in early 2015, but have since tumbled to below $13 after the company posted lower-than-expected earnings and amid its continued legal scrutiny.
Headquartered in Canada, Amaya says the Kentucky verdict is impractical.
“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 General Counsel Marlon Goldstein said. “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.”
Amaya said it’s appealing the ruling, and the corporation will not be responsible for PokerStars’ actions before its acquisition. “Amaya intends to seek recovery against the former owners of the PokerStars business,” the company said in a press release.
Kentucky Fried Poker
When Wingate’s ruling came down, Amaya shares lost five percent of their value as investors scrambled to free themselves of the gambling stock.
Although Amaya is declaring the hefty penalty erroneous, even a reduced fine could create a storm of uncertainty for the PokerStars parent.
PokerStars offered its Internet card rooms to residents of all 50 states before April 2011. Kentucky is right in the middle in terms of population in America, meaning an imposed and executed monetary punishment could have trickle down consequences and tempt additional jurisdictions into taking action against Amaya.
The Poker Players Alliance (PPA) is leading the grassroots charge in advocating that players should be the ones benefiting from any such legal decision, not lawmakers in Frankfort.
“The facts are very simple: This money was lost by Kentucky taxpayers who participated in online poker,” PPA Executive Director John Pappas said. “Therefore it is the people, not the politicians and trial lawyers, who should be reaping the benefit.”