The Stars Group Inc. today announced that the Kentucky Court of Appeals has ruled in its favour and reversed in its entirety the $870 million judgment issued against it by a Kentucky trial court judge in December 2015. The Stars Group is the owner of the PokerStars brand, which it acquired in 2014.

The Commonwealth of Kentucky had sought recovery of alleged losses by Kentucky residents who played real money online poker on the PokerStars website during the period between 2006 and 2011. To bring the action, Kentucky relied on a centuries old statute that was intended to allow individuals who incurred gaming losses to bring an action against their winning opponents. However, this law was never intended for the state government to sue and collect such losses from the operator of the games for its own benefit. The 2015 verdict of the Franklin Circuit Court was issued by Judge Thomas Wingate, who ordered Amaya Gaming, the then owners of PokerStars, to pay $290 million to the state. The following month, Wingate trebled those damages to $870 million.

In its judgement, the Court of Appeals stated that allowing a complaint like the one put forth by the Commonwealth would lead to an absurd and unjust result. Marlon Goldstein, Executive Vice President & Chief Legal Officer of The Stars Group, also reacted to the court’s verdict. He said, “We applaud the decision of the highly-respected three-judge panel of the Kentucky Court of Appeals. 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.”

PokerStars was not the only victim of this action. Other online poker operators like Bwin.party were involved. Many of them paid up the eight-figure amounts. However, the end is not close by for the Stars Group. It is expected that the Commonwealth of Kentucky will either petition the Court of Appeals for a rehearing or seek discretionary review of the Court of Appeals decision by the Kentucky Supreme Court. The state will vigorously dispute any and all liability in the event the Kentucky Supreme Court grants review and hears the appeal.

Therefore it is unlikely that the Stars Group will be able to release any of the funds that have been locked up as a result of this litigation. It had put up $100 million to stay enforcement of the trial court's order during the pendency of the appeals process. Also, approximately $300 million was put in an indemnity escrow fund established under the acquisition agreement.