Stars Interactive Holdings, formerly known as Amaya Group Holdings, along with Rational Entertainment Enterprises, has petitioned the Supreme Court to overturn a 4-3 decision from the Supreme Court of Kentucky. That decision, which the former online poker operator petitioners seek to strike, requires them to pay Kentucky over $1.3 billion, including interest, based on the value of every losing wager by Kentucky players from 2007 to 2011.
Per the petitioners, the case concerns the largest civil judgment in Kentucky history, which is based on the former online poker operator PokerStars collecting roughly $300 million from Kentucky users of the platform. After the Kentucky Court of Appeals reversed the trial court decision and dismissed the case, the Kentucky Supreme Court reinstated the judgment and it ballooned to $1.3 billion.
Kentucky initially sought the recovery of these losses under Kentucky’s Loss Recovery Act (KLRA), which allows individuals who lose money while gambling to recover that money from the winner. If the gambler does not sue, then the gambler empowers “any other person” to sue for treble the amount lost. Kentucky argued that it, as a state, could step in for the gamblers who failed to bring their cases.
According to the U.S. Supreme Court petition, the KLRA has not been applied in approximately 60 years, and its creation dates to when John Adams was president. Setting that aside, the petitioners argue that the “monstrous damages” established by the Kentucky Supreme Court “cry out” for the U.S. Supreme Court’s review. It needs to apply “constitutional breaks” to “damages that run wild,” the petition stated.
“The PokerStars platform accounted for only a tiny fraction of the gaming occurring in Kentucky, much of which takes place in the
State’s own lottery,” said the petitioners in their filing. “Yet the Kentucky Supreme Court blessed a damages award that exceeded the actual losses of Kentucky players by a factor of 34 and petitioners’ revenue by a factor of 50.”
The petitioners are arguing that their case is the poster child for a grossly excessive punishment that is prohibited by the Due Process Clause of the 14th Amendment and the Excessive Fines Clause of the Eighth Amendment.
Darren Heitner is the founder of Heitner Legal. He is the author of How to Play the Game: What Every Sports Attorney Needs to Know, published by the American Bar Association, and is an adjunct professor at the University of Florida Levin College of Law. You can reach him by email at email@example.com and follow him on Twitter at @DarrenHeitner.