Responsibility for the $870 million judgment awarded to the state by a Franklin Circuit Court judge on December 23 was rejected by the former owners of PokerStars, according to the Canadian online gaming operator.

Amaya announced on Monday that a notice of appeal had been filed for the $870 million judgement awarded to the Commonwealth of Kentucky based on the online poker game play on PokerStars by Kentucky customers during the period after the passage of the 2006 Unlawful internet Gambling Enforcement Act (UIGEA) and the company’s forced exit from the U.S. market following the Black Friday indictments in 2011, according to CalvinAyre.

In August, Franklin Circuit Court Judge Thomas Wingate ruled in favor of the state and on November 20 awarded initial damages of $290 million to Kentucky’s state government. However, the following month lawyers for the state asked the judge to reconsider his calculations and to triple the damages. The judge was also asked by Amaya lawyers to reconsider his November 20 order. Judge Wingate sided with the state and awarded $870,690,233, in total to the Commonwealth. In addition, the judge tacked on a 12 percent annual interest rate applicable through the award’s payment. After the judgment, Sheryl Snyder, a lawyer who represents Amaya, said, “Absolutely, we plan to appeal.” Snyder said, “We think that awarding $870 million against a company that did $18 million in revenue is a total misuse of an anachronistic statute,” according to the Lexington Herald-Leader.

Initiated by former Governor Steve Beshear, the suit against Amaya alleged that 34,000-plus Kentucky players lost a minimum of $5 playing poker on its websites between Oct. 12, 2006 and April 15, 2011. The state argued that under an 1833 statute it was entitled to seek third party damages, and sued Amaya for operating illegally in Kentucky.

At the time of the initial award, it was announced by Amaya that it would be looking to offload any damages on PokerStars’ former owners, Isai and Mark Scheinberg, who in 2014 Amaya purchased the company’s parent group the Rational Group from. Now Amaya says such a claim was filed with the former owners in late January. The claim seeks indemnification of the judgement per the 2014 sale agreement. Amaya says the claim asked the Scheinbergs’ representative and escrow agent that the remaining $300 million, established under the sale agreement, in the escrow fund, be frozen. The company says the Scheinbergs responded by “initially disputing all claims set forth in Amaya’s notice of claim.”

While Amaya says it will continue to seek indemnification from the Scheinbergs, investors were warned that there is no guarantee it will collect any of the money in the escrow fund, let alone balance of the $870 million that Kentucky is seeking. Subsequently, Amaya announced, in order to hold off enforcement of the state order during appeal of Wingate’s judgement, it had posted a $100 million supersedeas bond. Collateral totaling $35 million in cash as well as letters of credit worth $30 million were submitted by Amaya as required by state law.

News of the development in Kentucky sent shares of the publicly traded company down less than 1 percent on Tuesday. That, after a mild surge on Monday following media reports in the U.K. that online gambling software company Playtech was considering its own takeover ot Amaya.

Leave a Reply

Your email address will not be published.