Flutter Entertainment, which owns PokerStars has been fighting a lawsuit with the state of Kentucky for a long time. The dispute involved PokerStars offering online poker services in Kentucky without being licensed to do so.
After a lot of back and forth over the last few years, Flutter Entertainment has agreed to pay Kentucky $300 million. Kentucky has accepted the settlement and has now dropped all charges against Flutter and has closed the case against PokerStars.
Flutter Informs London Stock Exchange
The news of the settlement emerged after Flutter Entertainment released a statement to the London Stock Exchange (LSE) and informed its investors that it had agreed to the $300 million settlement and closed the Kentucky lawsuit. The market responded well to the news as shares of Flutter went up by 4.13 percent on September 22.
In a statement, Flutter said “Further to the announcement of 25 March 2021 the Group today announces that the legal dispute between Flutter and the Commonwealth of Kentucky has now been settled in full. The Group strongly believes that this agreement is in the best interests of Flutter shareholders. The Group now considers the matter closed.”
While Flutter did not get into the details of the settlement, it summed up the agreement with two points. Flutter would pay the Commonwealth of Kentucky $200 million in addition to the previously forfeited $100 million to the Commonwealth of Kentucky which was a part of the bond in the case.
Based on the $300 million settlement from Flutter, the Commonwealth of Kentucky had agreed to withdraw all charges regarding this lawsuit.
Flutter Happy To Put Case To Rest
The case between Flutter and the Commonwealth of Kentucky goes back over a decade. Kentucky claimed that PokerStars and Full Tilt Poker operated unlawfully and made close to $18 million in revenue by offering online poker games to residents of Kentucky from 2007 to 2011.
During this period of time, PokerStars was owned by Amaya Group Holdings and operated in a number of grey markets. Kentucky filed a lawsuit against Amaya and Judge Thomas Wingate ruled in favour of Kentucky and asked PokerStars to pay out $290 million. Amaya did not pay up and Judge Wingate decided to triple the fine to $870 million. There was also a 12 percent interest fine imposed which added another $104 million to the amount.
Amaya Group was later renamed to the Stars Group in May 2017. Three years later, in May 2020, UK-based Flutter Entertainment would go on to buy out the Stars Group in an $11 billion merger. Kentucky continued to pursue the case even as the ownership of PokerStars continued to change hands.
Flutter Decided To Approach Supreme Court
Flutter continued to fight the lawsuit as the total amount started to increase due to the 12 percent increase. Flutter at one point had to pay $1.3 billion to the state as the Supreme Court of Kentucky had ruled in favour of Kentucky and was not willing to let PokerStars off the hook.
Flutter decided that it would approach the Supreme Court as it felt that it was being wronged by asking to pay out $1.2 billion when the total profits that PokerStars accumulated from its Kentucky operations was just $18 million.
While $300 million is still a huge amount, Flutter will be happy that it did not have to approach the Supreme Court and risk being fined a total of $1.2 billion. Kentucky should also be happy collecting $300 million at this point in time when the state is struggling financially due to the COVID-19 impact.