The Commonwealth of Kentucky has agreed to drop a lawsuit against Flutter Entertainment, parent company of PokerStars in exchange for a $300 million payout. The legal dispute between Kentucky and Flutter received a lot of media attention as Kentucky was seeking a total of $1.3 billion from Flutter.
Kentucky decided to go after PokerStars and Full Tilt Poker (no longer operational) for offering unlicensed online poker games in the state during 2007 and 2011. PokerStars at the time was owned by the Amaya Group which did not object to the online poker giant entering grey markets.
Kentucky claimed that the state lost revenue as PokerStars never did pay any taxes for operating in the Bluegrass state.
Judge Thomas Wingate ruled in favour of Kentucky and asked Amaya to pay $290 million which the company refused to do. The outstanding amount was then tripled to $870 million with an additional interest fee of $104 million.
Flutter Entertainment ended up buying out the Amaya Group which would go on to rename itself to the Stars Group. When Flutter bought out the Stars Group, it also picked up PokerStars and the Kentucky lawsuit.
Flutter fought back and claimed that PokerStars only made around $18 million in Kentucky during 2007 and 2011. The overall fine which had now grown to $1.3 billion felt completely unjust and the UK operator was prepared to go to the Supreme Court.
Flutter Agrees To Pay $300 Million
The two parties have appeared to have been in talks that resulted in a settlement. Flutter informed its shareholders on the London Stock Exchange (LSE) that the Commonwealth of Kentucky had agreed to accept a settlement of $300 million in exchange to drop all charges.
Flutter told its investors that it believed the settlement was in the best interest of its shareholders and it lowered the risk of any other potential outcome. The market responded well to this news as shares for Flutter went up by 4 percent on September 22.
Flutter has agreed to pay out $200 million to Kentucky and also forfeit the earlier $100 million which it had paid the state as part of the supersedes bond. Kentucky has dropped all charges based on the $300 million agreement.
This news bodes well for PokerStars as it prepares to enter new markets in the United States that are preparing to open up to online poker and sports betting.