The online poker company Stars Group has been backed by the Kentucky Court of Appeals, which has reversed a $870m judgement made in December 2015.
The legal action that was the subject of the appeal was filed by the Commonwealth of Kentucky in 2010, four years before the Stars Group’s bought the PokerStars business. It sought recovery of losses that it alleged had been sustained by Kentucky residents on real-money poker games via the PokerStars’ website from 2006 to 2011.
The legal action relied on an old statute that was originally intended to allow people who incurred gambling losses to take action against their successful opponents.
Following the new ruling, the Stars Group have stated that they will petition for the release of the bond it had posted to stave off enforcement of the original trial court’s order while the appeal proceeded. That amount includes $5m in cash collateral and $65m in letters of credit. Speaking about the Appeal Court outcome, the Executive Vice President & Chief Legal Officer of the Stars Group, Marlon Goldstein, said that the company welcomed the decision of the judges:
“The merits of the case prevailed and we look forward to putting this matter behind us as we sharpen our focus on executing on our growth strategy going forward.”
Indemnity Escrow Fund
Currently, around $300m is still being held in an indemnity escrow fund that was set up as part of the merger agreement signed when the Stars Group’s bought the PokerStars business. The group has also filed an indemnification claim, currently pending against the previous owners of the PokerStars business, to cover losses and costs incurred in the litigation.
But the Kentucky Appeals Court decision may not be the end of the matter. Stars Group expect that the Commonwealth of Kentucky will seek to petition the Court for a re-hearing or seek a discretionary review by the Kentucky Supreme Court.
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