\nBy Howard Stutz, Las Vegas Review-Journal<\/p>\n
\tWe know Kentucky has problems filling its budget gaps, but a state judge\u2019s Christmas Eve gift was a little extreme.<\/p>\n
\tIn essence, Franklin Circuit Judge Thomas Wingate is forcing owners of an online gaming company to pay penalties of $870 million, which could help bail out the financially troubled commonwealth.<\/p>\n
\tHeck, you could buy all of Kentucky for that amount.<\/p>\n
\tMaybe the judge had few mint juleps at the court\u2019s holiday party.<\/p>\n
\tWingate, ruling on a case that had been languishing since 2010 and relying on a centuries-old law that allows individuals with gambling losses to sue their opponents, said Amaya Inc. owed Kentucky the excessive amount. Why? Because online gaming giant PokerStars allowed Kentucky residents to gamble on the website for five years after the 2006 Unlawful Internet Gambling Enforcement Act took effect.<\/p>\n
\tThe figure is much more than the $731 million PokerStars forfeited in a settlement with federal prosecutors in 2012 to end a 16-month legal battle. Meanwhile, Canada-based Amaya didn\u2019t even own PokerStars during the years covered in the Kentucky case. The company spent $4.9 billion in 2014 to buy PokerStars\u2019 Isle of Man-based corporate parent.<\/p>\n
\tIn his ruling, Wingate said PokerStars\u2019 former ownership decided \u201cthat breaking the law was good for business.\u201d He calculated that 34,000 Kentucky residents lost $290 million wagering through PokerStars from 2006 to 2011. He tripled the damages and ordered the state to collect 12 percent interest until the amount was paid in full.<\/p>\n
\tNeedless to say, Amaya plans to appeal.<\/p>\n
\t\u201cThis is a frivolous and egregious misuse of an antiquated state statute to enrich the contingent-fee plaintiff\u2019s attorneys hired by the commonwealth and not the people of Kentucky,\u201d Amaya General Counsel Marlon Goldstein said in a written statement.<\/p>\n
\tOn Monday, the Lexington Herald-Leader detailed the state\u2019s budget shortfalls heading into the 2016 legislative session.<\/p>\n
\t\u201cIt\u2019s a pretty deep ditch that we find ourselves in,\u201d Kentucky Chamber President Dave Adkisson said. \u201cAnd it\u2019s gonna take probably 20 to 30 years to climb out of it.\u201d<\/p>\n
\tInstead, Wingate used PokerStars to cover the debt.<\/p>\n
\tThe ruling comes at an inopportune time for PokerStars, which is hopes to launch online gaming operations in New Jersey early in 2016. The business, which shut off its American arm following the April 2011 Black Friday crackdown on illegal online gaming, has been trying to get back into the U.S. \u2014 legally \u2014 since signing a deal with Resorts Atlantic City in 2013.<\/p>\n
\tIn September, the New Jersey Gaming Enforcement Division gave PokerStars the go-ahead to offer the state\u2019s residents online poker and casino games.<\/p>\n
\tMuch of the credit goes to Amaya CEO David Baazov and the Montreal-based gaming technology company. Amaya replaced PokerStars\u2019 former owners with a business publicly traded in Canada and the U.S. with access to credit markets for financing growth. Amaya says its online gaming products have 97 million users worldwide.<\/p>\n
\tWhen it was operating despite UIGEA, PokerStars was easily America\u2019s favorite online gambling platform. Combined with FullTilt Poker, which is also owned by Amaya, the businesses controlled more than 54 percent of the Internet gaming market.<\/p>\n
\tLaunching in New Jersey offers PokerStars a vehicle to prove it can operate in a regulated gaming environment. It would also send a message to other states, such as California, which may legalize online poker, and Nevada, which sidelined PokerStars through a \u201cbad actor clause\u201d related to the UIGEA transgressions.<\/p>\n
\tThe Kentucky ruling was ludicrous. The judge didn\u2019t understand the basics of Internet poker.<\/p>\n
\tThe commonwealth\u2019s residents didn\u2019t lose money to PokerStars. They lost to other online players. At the most, PokerStars generated $18 million in gaming revenue from Kentucky through fees for operating the game over five years.<\/p>\n
\t\u201cA damages award in excess of $800 million is notable only for its absurdity,\u201d Goldstein said.<\/p>\n
\tAmaya noted that no other U.S. state has sued relying the same law. The company also said the former owners of PokerStars would be on the hook for anything the company might have to pay.<\/p>\n
\tKentucky has long been considered a possible target for casino expansion. The state\u2019s former governor, a Democrat, was blocked by a Republican-controlled legislature in past efforts to legalize gaming as a way to generate tax dollars for shortfalls in public pension programs. Kentucky\u2019s current Republican governor is anti-gambling.<\/p>\n
\tIt looks like Wingate came up with his own a way to use gambling money for a budget fix.<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
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