The Stars Group wins $870m Kentucky legal victory
Commonwealth of Kentucky had sued PokerStars for alleged gambling losses incurred by residents between 2006 and 2011
The Stars Group’s (TSG) share price soared on Friday (21 December) after it announced the Kentucky Court of Appeals had reversed an $870m lower court ruling from 2015 against the Toronto-listed operator.
The litigation dates back to 2010 when the Commonwealth of Kentucky sued PokerStars, acquired four years later by TSG, for alleged gambling losses incurred by residents between 2006 and 2011.
According to TSG, Kentucky relied on a “centuries old statute” to bring the action against the online gambling giant, which plans to seek the release of a $100m bond posted during the appeals procedure.
Approximately $300m continues to be held in an indemnity escrow fund established under the merger agreement governing $4.9bn acquisition of PokerStars by TSG (formerly Amaya Gaming).
“We applaud the decision of the highly-respected three-judge panel of the Kentucky Court of Appeals,” Marlon Goldstein, executive vice president and chief legal officer of The Stars Group, said.
“The merits of the case prevailed and we look forward to putting this matter behind us as we sharpen our focus on executing on our growth strategy going forward.”
However, Stars still expects Kentucky to either seek a rehearing or a review by the Kentucky Supreme Court, which the operator said it would “vigorously dispute”.
TSG’s share price climbed from CA$20.83 to CA$22.48 on the news.
In other Stars Group news, the operator also announced last week it had signed a new marketing sponsorship deal with UFC for PokerStars to become UFC’s first-ever Official Poker Partner.
Under the deal, PokerStars will have a branded presence inside the Octagon at UFC’s final pay-per-view event of 2018, UFC 232: JONES vs. GUSTAFSSON 2, which takes place in Las Vegas on 29 December.
“UFC and PokerStars have a lot in common,” said Christopher Coyne, chief marketing officer of Stars Interactive, a division of The Stars Group.
“We want to thrill and entertain, both in our products and customer experience. UFC is the world’s leading MMA promoter with millions of fans and followers around the globe, while PokerStars is the heavyweight of online poker. It’s a classic combination.”