Amaya Slams Kentucky’s $290 Million Lawsuit Against PokerStars

December 18th, 2015 | by Jason Reynolds

Scheinberg Amaya Kentucky PokerStars lawsuit

Isai Scheinberg, the founder and former owner of PokerStars, who Amaya says it would ultimately seek reparations from if it were found liable by Kentucky. (Image: fr.pokernews.com)

Amaya Inc. has branded a $290 million lawsuit brought against its subsidiary PokerStars by the Commonwealth of Kentucky as “frivolous” and “without merit,” and vowed that it will “vigorously dispute” any liability that may be incurred from the case.

Kentucky is suing PokerStars in an attempt to recover millions of dollars lost by state residents at the site between 2006 and 2011. This relates to the period after the Unlawful Internet Gambling Enforcement Act (UIGEA) prohibited financial institutions from processing American bets, and before PokerStars shut down its operations in the US after Black Friday.

The state claims all transactions processed during this timeframe were illegal and must be reclaimed.

Passing the Buck

Kentucky initially launched lawsuits against a number of online gaming sites prior to Black Friday, in 2010, using an 18th century gambling claw-back law that was designed to protect the families of destitute gamblers.

Among those targeted at the time were PartyPoker and Full Tilt, which unsuccessfully tried to have the case dismissed on the grounds that Kentucky had no standing to sue. When Party merged with bwin in 2011, the new company paid the state $15 million to make the case go away.

Then in 2012, Kentucky was given a $6 million payment by the federal government from assets seized from Full Tilt to fend off action that would have stalled the remissions process for victims of the Full Tilt fiasco.

Kentucky, it appears, repeatedly called for PokerStars previous owners Isai Scheinberg and Pinhas Schapira to appear for deposition, before deciding that the sale of the company to Amaya in the summer of 2014 effectively severed their liabilities, passing the buck onto Amaya.

Amaya Would Seek Reparations from Scheinberg

While Amaya contests any liability, it suggested in a press release this week that should it ultimately be found liable, it would seek reparations from PokerStars’ former owners.

“Amaya intends to vigorously dispute any liability that may be ordered at the trial court level, and believes that there are a number of compelling legal arguments reserved for consideration, including, without limitation, the lack of standing to bring this proceeding in the name of the Commonwealth and the Court’s failure to properly apply the law,” read the Amaya presser.

“To the extent the PokerStars entities may be ultimately obligated to pay any amounts pursuant to a final adjudication following exhaustion of all appeals and other legal options, Amaya intends to seek recovery against the former owners of the PokerStars business,” the statement continued.

Inflated Figures

Amaya has also asked the judge how he arrived at such a high figure. While the judge himself has proposed a $290 million settlement, Kentucky’s lawyers believe PokerStars is liable for $250 million in illegally raked funds, a figure they believe should be trebled as a penalty flouting the law, making it $750 million.

Amaya says PokerStars received nowhere near that amount from Kentucky residents.

“During the five year period at issue, PokerStars generated aggregate gross revenues in the Commonwealth of Kentucky of approximately US$18 million,” it said. “Nonetheless, the Commonwealth sought an award as high as US$290 million and requested it be trebled. The trial court subsequently indicated that this amount is incorrect and has not yet entered a final order awarding damages.”

Meanwhile, the Poker Players Alliance (PPA) has filed a motion to join the lawsuit, because it believes that any money recovered by Kentucky should be returned to the players, rather than being funneled into state coffers. The lawsuit amounted to no more than a “cynical, big government money grab,” said the organization.