$300M to be Paid by Pokerstars for Kentucky UIGEA Violations

A 10-year-plus legal case has finally come to an end with Flutter Entertainment paying $300,000,000 following a battle with the State of Kentucky. The company, which is the owner of the PokerStars online poker room, has been involved in the lawsuit with The Bluegrass State over alleged violations of the UIGEA legislation between 2006 and 2011. The settlement was announced on Wednesday, Sept. 22, 2021.

It might be hard to believe that the consequences of the Unlawful Internet Gambling Enforcement Act (UIGEA) are still being felt today. But it is from this legislation that Kentucky has taken much of its legal claim against PokerStars and Flutter Entertainment. So, what does this mean for both online poker sites and poker in the United States in general?

About the Lawsuit and Fine

The history behind this agreement is as follows:

1. A 2013 lawsuit alleged that between 2006 and 2011, PokerStars was operating in violation of the UIGEA. According to the suit, 34,000 Kentucky residents visited the poker room and lost $290 million there.
2. PokerStars was ordered to pay triple that amount to the State of Kentucky in 2015 by Judge Franklin Wingate.
3. The Court of Appeal overturned the decision against PokerStars in 2018.
4. In December 2020, the Kentucky Supreme Court upheld the original decision and fine on PokerStars.

In re-imposing the fine, the Supreme Court took the original trebled amount, about $870 million, and added annual interest to the amount owed, which brought it to around $1.3 billion. In April 2021, Flutter was ordered to pay supersedeas bond for $100M, and this was received by the state authorities in the form of securities the following month.

The Resolution Is Made Formal

It was on Sept. 22 of this year that an announcement was made on the websites of both Flutter and the Commonwealth of Kentucky. That announcement stated that the legal dispute between Flutter and the Commonwealth of Kentucky had been settled in full.

The primary elements that were included in the settlement were stated as follows:

• Flutter agrees to pay $200 million to the Commonwealth of Kentucky in addition to $100 million previously forfeited to the Commonwealth as part of the supersedeas bond in the case.
• In return, the Commonwealth of Kentucky has agreed to cease all further actions with respect to the case.

Through this, the payment of the $300 million has been agreed upon by both sides and brings an end to the lawsuit once and for all.

This outcome for Flutter was achieved perhaps due to the possibility of the UK Protection of Trading Interests Act 1980 coming into play. This operates as a restriction on the enforcement of certain overseas judgements.

Rather than extending the litigation further and broaden it to become an international case, Kentucky opted to negotiate. As Kentucky state authorities noted, under the agreement reached with Flutter, they received $10 million more than the initial $290 million.

Pre-Black Friday History Still Being Played Out

You would think that any cases from the ancient Black Friday and the UIGEA years would have been finalized and dealt with by now. However, they have been ongoing for a while with trials and lawsuits taking place throughout.

In 2020, the last of eleven defendants in the PokerStars UIGEA violation case was sentenced. Isai Scheinberg, the founder of the PokerStars brand, was not handed a jail sentence but instead was required to pay a fine of $30,000 for his part in the actions of the poker room. This came following the 73-year-old’s decision to give himself up to the US authorities.

Scheinberg was accused and found guilty of illegal gambling, bank fraud, and money laundering, so many people found it curious that he was not given a harsher sentence. Yet, his defense attorney argued that Scheinberg was misled by his own lawyers, he voluntarily gave himself up to the prosecutor’s office, his attitude towards online gambling had changed in the past 10 years, and PokerStars took full responsibility for its $304 million debts to Full Tilt Poker players.

How Does This Affect PokerStars and the State of Kentucky?

It is always a positive result when two sides of a lawsuit reach a compromise. Kentucky has managed to keep face in the ridiculousness of the multi-year litigation against Flutter, and Black Friday’s impact was finally brought to an end for the poker room. This leaves it better positioned to enter more regulated state markets.

The U.S. market is quite the burgeoning scene, with more and more states introducing gambling laws to ensure regulated and legal sports betting, casino gaming, and poker gameplay are available. For the owners of PokerStars, this allows them to get back into the game without the cloud of unresolved litigation hanging over them.

Naturally, online poker regulation across the United States on the whole won’t change due to this compromise. After all, it doesn’t have much to do with the laws in place at the moment. Yet it does mark quite the positive move with all those involved in the lawsuit taking the decision to leave those old problems in the past and move forward into a brighter future.

Play at PokerStars or Other Online Poker Rooms in the USA

PokerStars remains present within the U.S. poker scene although in the majority of states, it is unavailable for the time being. For anyone located in a state where it's impossible to play for real money at PokerStars, there are multiple other poker rooms that you can choose to play at. We have an in-depth guide to the best online poker sites for U.S. players that you can browse through to find a recommended platform.