The Supreme Court for the Commonwealth of Kentucky reversed a 2018 appellate court ruling and reinstated an enormous $870 million judgement against the online gaming website PokerStars and its parent company, Stars Interactive Holdings last week.
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In a close 4-3 vote, the majority affirmed a 2015 ruling that PokerStars’ actions between 2007 and 2011 violated the Unlawful Internet Gambling Enforcement Act (UIGEA). The court calculated the illegal offshore gambling operations led to almost $300 million in actual cash losses from thousands of Kentuckians who played on PokerStars websites.
A state appellate court had overturned the decision in 2018, finding that the commonwealth lacked standing under Kentucky’s Loss Recovery Act. The act allows a third-party cause of action to be brought against the winning gambler by “any other person.” The appellate court decided the state did not qualify as “any other person”, however the high court’s majority found otherwise.
“Nothing in the text of [the statute] mentions or even suggests that the statute is limited to ‘natural persons,'” the majority found. “On the contrary, the General Assembly chose to modify the noun ‘person’ with the adjective ‘any’ — ‘any other person.'”
On top of the $870 million fine amount, the court added 12% interest for the past five years, bringing the total amount to almost $1.3 billion.
“The Commonwealth of Kentucky suffered financial losses along with the tragic damage to its citizens,” the court said. “Mental and physical healthcare systems that care for the citizens harmed by the illegal gambling are supported in part by the state. Money sent to offshore gambling accounts is lost and the state deprived of the taxes to which it is entitled. The cost to prosecute and incarcerate individuals who resort to crime to support their gambling is a huge cost on Kentucky’s strained and overextended penal system.”
The Supreme Court said in a statement, even with the interest added, the total fine may be lower than actual costs suffered by the Bluegrass State.
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Source: https://www.law360.com/articles/1339119
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