A hearing will take place Monday in Frankfort, Ky., as the state of Kentucky continues its effort to claim a $1.3 billion ruling from a Flutter Entertainment subsidiary over an online poker lawsuit that’s lasted over a decade.
On March 25, the Kentucky Supreme Court unanimously declined a request to reconsider a 4-3 ruling it made back in December. That ruling overturned an appellate court’s decision in Stars Interactive Holdings’ favor and reinstated an $870.6 million verdict on behalf of the state that was handed down six years ago.
With interest, the amount the state claims it’s owed is about $1.3 billion.
Back in December, Kentucky Gov. Andy Beshear said the state would seek to collect the full amount.
Monday’s hearing regards a $100 million bond Stars Interactive posted years ago when it appealed the initial ruling. Based on an order issued last week by Franklin Circuit Judge Thomas Wingate, it does not appear a final ruling will be made Monday.
Flutter Taking Multiple Steps in Wake of Ruling
While Kentucky tries to garner the full amount awarded by the state courts, Flutter is considering whether to appeal to the US Supreme Court.
As it takes that path, Moody’s reported this week that Flutter has begun seeking consent requests from lenders and noteholders “to waive and amend, as applicable, certain events of default” that could come about because of the Kentucky case.
Those requests will require a majority of the lenders involved in the company’s term loan B and senior unsecured noteholders. The financial ratings service said it’s highly likely Flutter will get the consent requests approved.
While Flutter also considers its legal options, the company also believes that any amount paid to Kentucky will be far less than what was awarded in the courts.
The company has estimated that its gross gaming revenue from Kentucky players during the period in question was about $18 million.
Although the final outcome and timing remain uncertain at this stage, Moody’s estimates that the company has sufficient liquidity to cover all scenarios but cautions that paying a large amount without refinancing would deteriorate its liquidity profile,” Moody’s announcement stated.
For now, Moody’s said its ratings on Flutter aren’t impacted. However, should the US Supreme Court decide not to hear the case or if it were to uphold the Kentucky ruling, Moody’s noted that the potential credit impact would be “credit negative” for Flutter.
Kentucky-PokerStars Case Background
The lawsuit dates back to 2007 when Kentucky officials began investigating offshore online poker sites, including PokerStars. In the suit, the state claimed Kentucky players on the site lost $290.2 million from the rake PokerStars took from each hand. The actual losses were more significant, but officials could not substantiate an actual total.
The state cited a Loss Recovery Act, a law dating back to the late 18th century that allowed gamblers to sue to recover their losses. If gamblers failed to pursue a case within six months, an outside party could file and seek treble, or triple, damages.
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