PokerStars seems to be off the hook in a lengthy and expensive lawsuit the Commonwealth of Kentucky filed against the gaming operator years ago
The Kentucky Court of Appeals reversed a ruling by a lower court this past Friday, thus stripping the online poker room of liability to pay $871 million in losses incurred by Kentuckians for playing poker in the period between 2006 and 2011.
Betting on horse racing and the state-run lottery are the only legal gambling options on the territory of Kentucky. In other words, online gambling and online poker, in particular, are prohibited by law.
The state brought PokerStars to court, arguing that the gaming operator had to recover damages incurred by residents who played poker on its website between 2006 and 2011. Court papers showed that around 34,000 Kentuckians placed more than 246 million bets on PokerStars during the above-mentioned period.
Kentucky filed a motion against PokerStars, arguing that the card room had to pay $871 million in damages. The state based its arguments on the 18th century Loss Recovery Act that allowed a gambler or a gambler’s family or “any other person” to recover a gambler’s losses from the winners.
A trial court ruled in favor of Kentucky in December 2015, saying that a provision in the 18th-century statute allowed third parties to sue winners. The trial court also trebled the damages the state sought from PokerStars.
Court of Appeals Reverses the Ruling
In a recent ruling, the Kentucky Court of Appeals reversed the judgment of the lower court, saying that the state was not authorized to sue a winner and seek recovery of gambling losses. The Appeals Court further pointed out in a 34-page ruling that while the Loss Recovery Act contained a provision that a gambler or “any other person” could bring a winner to court to seek recovery of losses, the 18th-century statute did not clearly say whether the state was included in the definition of “person.”
The recent ruling also said that allowing a third party to sue and seek recovery of losses serves to main purposes of the Loss Recovery Act – to suppress gambling in Kentucky and to make a losing gambler whole. However, the state suing PokerStars only served the purpose of suppressing gambling, the Court of Appeals said.
The ruling read that Kentucky did not bring the action “to collect the money and then return losses to the ‘losers’”, but “to collect treble damages for its own benefit.”
The state said it is planning to appeal the recent ruling to the Kentucky Supreme Court. Commenting on the Court of Appeals’ judgment, Mike Wynn, spokesman for the Commonwealth’s Justice and Public Safety Cabinet, said that they are disappointed and that the decision does not appear “to even address the substantive issues in the case, but rests entirely on procedural questions of first impression.”
PokerStars said in a statement that it will dispute vigorously any liability if the state decides to appeal the ruling to the Supreme Court or seek a rehearing before the Court of Appeals.
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