When, on April 15, 2011 – so-called Black Friday – the US government took sweeping actions against the country’s online gambling operations, enforcing the 2006 Unlawful Internet Gaming Enforcement Act, a series of actions and reactions were set in motion – including the $870m lawsuit against PokerStars, lodged by the Commonwealth of Kentucky.

The Stars Group, which subsequently acquired PokerStars, was facing a huge cost relating to the recovery of alleged losses by Kentucky residents who played real-money poker on PokerStars’ website during a period between 2006 and 2011. But not anymore.

The Kentucky Court of Appeals stated that “allowing a complaint, like the one put forth by the Commonwealth, to move forward would lead to an absurd, unjust result.”

“We applaud the decision of the highly-respected three-judge panel of the Kentucky Court of Appeals,” said Marlon Goldstein, EVP and chief legal officer of The Stars Group. “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.”

The litigation was initially filed by the Commonwealth of Kentucky in 2010, around four years prior to The Stars Group’s acquisition of PokerStars. The filing relied on a centuries old statute that was intended to allow individuals who incurred gaming losses to bring an action against their winning opponents.

The Stars Group said it now intends to petition for the release of the $100m supersedeas bond it posted, which includes $5m in cash collateral and $65m in letters of credit securing the same. A supersedeas bond is a holding payment submitted by defendants wishing to seek appeal against a judgement with a ficudiary penalty.

Stars also said that approximately $300m continues to be held in an indemnity escrow fund established under the merger agreement governing The Stars Group’s acquisition of the PokerStars business. The group previously filed an indemnification claim relating to the Kentucky litigation, which is currently pending against the sellers of the PokerStars business, for all losses, costs and expenses related to the litigation. This claim and the release of the outstanding escrow funds will be resolved in accordance with the provisions of the merger and escrow agreements related to the acquisition.

In a statement, Stars said it expects the Commonwealth to either petition the Court of Appeals for a rehearing or seek discretionary review of the Court of Appeals decision by the Kentucky Supreme Court and intends to vigorously dispute any and all liability in the event the Kentucky Supreme Court grants review and hears the appeal.

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Following the $250m purchase of Exacta Systems earlier in the month, the casino and entertainment operator has received a slew of approvals from the Kentucky Horse Racing Commission.

This has seen the regulatory green-light be issued for six of the company’s properties to begin accepting in-person sports wagers on Thursday, September 7, 2023.

Each will host grand opening events featuring ribbon-cutting celebrations and relevant promotions, in addition to housing a ‘Bet & Jet’ feature that offers guests designated parking spaces for 15 minutes in order to quickly and easily place their in-person sports wager.

Governor Andy Beshear will place the first ceremonial sports wager in the state at 10am EDT at Churchill Downs Racetrack, which will gain 15 sports betting kiosks, a 168 square foot video screen and 20 large format televisions.

A 300 square foot video screen will be gained by each of Derby City Gaming & Hotel, Turfway Park Racing & Gaming and Oak Grove Racing, Gaming & Hotel.

The former pair will also feature 15 sports betting kiosks, compared to the latter’s 20, in addition to 12, 16 and eight television screens, respectively.

Elsewhere, Newport Racing & Gaming’s sportsbook space will comprise 10 kiosks and 20 televisions, while Ellis Park Racing & Gaming will gain five sports betting kiosks.

Alongside this, the Kentucky regulatory has also approved temporary licences for three online sports wagering service providers that will operate in partnership with the group’s racetracks. 

This will see FanDuel, Penn Sports Interactive and Fanatics be cleared to begin accepting online wagers when the region’s digital marketplace opens on Thursday, September 28, 2023.

“CDI is excited to bring our experience operating retail sports wagering experiences to Kentucky with many thanks to the Kentucky General Assembly, Governor Beshear, the KHRC and the Kentucky Public Protection Cabinet for their efforts in making this a reality,” said Bill Carstanjen, CEO of CDI. 

“Sports betting as a tourism and economic development opportunity will further strengthen the state’s signature equine industry by bringing new guests into our live and historical racing venues.”

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On 16 March, Unregulated skill games were banned in the Bluegrass State when Governor Andy Beshear signed HB594 into law, becoming the first US state to pass a standalone ruling prohibiting unregulated gambling machines.

Reflecting on the new law in a statement, Miller called the action “a milestone victory for the legal gaming industry” as the machines “pose an existential threat”.

He also added that the AGA will use the Kentucky ruling as a ‘springboard’ to pursue similar legislation in other US states.

The CEO said: “Today, Kentucky Governor Andy Beshear signed HB594 into law, officially banning unregulated “skill” games throughout the Bluegrass State and notching a milestone victory for the legal gaming industry in our fight against illegal gambling. 

“Kentucky is the first state to pass standalone legislation banning unregulated gambling machines and joins Virginia in taking proactive government action to eliminate these bad actors.

“This win is a testament to what we can accomplish when we unite as an industry behind a common cause – and the American Gaming Association will use it as a springboard to pursue similar success in states throughout the country.

“Not only do these machines harm communities, but they also pose an existential threat to our industry. Last year, Americans wagered $511bn with unregulated machines and illegal sportsbooks and online casinos – costing communities more than $13bn in tax revenue.

“Combating illegal gambling in all its forms remains one of AGA’s top priorities. We hope you will continue to join us in this fight.”

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The group is questioning whether “an award of statutory damages violates due process when it exceeds by a factor of more than 30 any conceivable harm,” as well as if “the Excessive Fines Clause prohibits a state from punishing a defendant by imposing a penalty 50 times in excess of the defendant’s revenue earned from the prohibited conduct”.

Flutter says that if “left uncorrected” the decision will “invite states to pursue novel claims in state court for the combined value of injuries supposedly suffered by their citizens”.

The case relates to legal proceedings originally brought by the Commonwealth against certain subsidiaries of The Stars Group in 2010, prior to its combination with Flutter.

Towards the culmination of the past year, Flutter, which completed its merger with Stars Group months earlier, reported that the Kentucky Supreme Court has reinstated an $870m judgement, in a 4-3 decision, with compounding interest of 12 per cent per annum, therefore taking the damages claim to $1.3bn.

Initially filed eleven years ago, approximately four years prior to The Stars Group’s acquisition of the PokerStars business, the case sought recovery of alleged losses by Kentucky residents who played real-money poker on PokerStars’ website during a period between 2006 and 2011. To bring the action, Kentucky relied on a centuries old statute seeking the recovery of alleged gaming losses incurred by residents.

In the original December 2015 decision, the judge imposed an approximately $290m award, which was tripled to $870m excluding interest and applicable costs. Gross gaming revenues generated by TSG in Kentucky during the relevant period was approximately $18m.

Stating that the “monstrous damages cry out for this court’s review,” Flutter’s writ adds: “In cases involving punitive damages, this court has repeatedly admonished that awards exceeding actual harm by more than a single-digit ratio likely violate the Constitution. 

“Here, the Kentucky Supreme Court upheld a billion-dollar judgment that is utterly disconnected from any rational measure of real-world harm. 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. 

“Yet the Kentucky Supreme Court blessed a damages award that exceeded the actual losses four of Kentucky players by a factor of 34 and petitioners’ revenue by a factor of 50. 

“This case is the poster child for a grossly excessive punishment prohibited by the Due Process Clause of the Fourteenth Amendment and the Excessive Fines Clause of the Eighth Amendment.”

Adding: “In sum, the numerous errors in the Supreme Court of Kentucky’s treatment of important questions of constitutional law call out for this Court’s intervention, and this is the case in which to grant review.”

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$870m

The Stars Group has seen a $870m Black Friday ruling against the operator in the US state of Kentucky overturned by an appeal court, reversing in full a December, 2015, trial court judgement.

When, on April 15, 2011 – so-called Black Friday – the US government took sweeping actions against the country’s online gambling operations, enforcing the 2006 Unlawful Internet Gaming Enforcement Act, a series of actions and reactions were set in motion – including the $870m lawsuit against PokerStars, lodged by the Commonwealth of Kentucky.

The Kentucky Court of Appeals stated that “allowing a complaint, like the one put forth by the Commonwealth, to move forward would lead to an absurd, unjust result.”

“We applaud the decision of the highly-respected three-judge panel of the Kentucky Court of Appeals,” said Marlon Goldstein, EVP and chief legal officer of The Stars Group. “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.”

$2,390

Two of Atlantic City’s land-based establishments have fallen foul of the New Jersey Division of Gaming Enforcement, after being found to have offered wagers on college football earlier in the year.

Such activity is illegal within the state, with Golden Nugget Atlantic City and Caesars Entertainment Corporation subsequently being found to have broken state regulation.

As a result Caesars, which permits sports wagering at its Bally’s and Harrah’s establishments within the region, was fined $2,000 for taking bets on a September 10 football game between Rutgers and Kansas.

Furthermore, the Golden Nugget was penalised $390, arising from bets associated with various, although unspecified, New Jersey college football games during the same period.

The law applies to every Garden State university and is designed to stop wagering on any college sporting events that take place in the state, regardless of whether or not those events are between New Jersey educational facilities.

Those customers who bet on the games in question will receive a full refund if they can be identified.

£20.1m

Nektan released its full-year financial report, for the period ending June 30, 2018, which saw both revenue and reach grow, whilst losses continued, despite being reduced.

Total revenue grew 52 per cent in the period, to £20.1m up from £13.3m, while net gaming revenue also increased significantly, up 48 per cent to £19.4m from £13.1m a year prior.

New first-time depositing players increased strongly, up 20 per cent year on year to 156,703, whilst total cash wagering was up markedly, by 43 per cent to £560m from £390m in the prior period.

However, losses continued even if adjusted EBITDA loss was reduced to £2.4m, down from a loss of £3.4m in FY 2017. The 12-month period also saw an operating loss of £5.5m, an increase on the £4.6m deficit posted in the previous period.

The figures include 12 months’ operation of Nektan’s US division, compared to six months in the prior year. Excluding the US, adjusted EBITDA loss in the period reduced to £1.4m from £2.7m, which saw an operating loss of £0.5m in H2 versus £0.9m in H1.

Gary Shaw, Nektan founder and executive director, commented: “During the year, Nektan continued to develop its mobile casino product offering, expanded into new geographic markets, launched new product offerings and grew significantly in each quarter.

“We believe that our proprietary technology is unique in the market place and we are now attracting major global partners who wish to use the feature rich gaming content we have worked so hard to populate our platforms with.”

2

Global hospitality and entertainment firm Delaware North has unveiled two casino-based sportsbooks within West Virginia, in addition to also launching its BetLucky.com online and mobile app for statewide sports wagering.

The retail sportsbooks are located at Wheeling Island Hotel Casino Racetrack in Wheeling and Mardi Gras Casino & Resort near Charleston, which opened this week opened after the completion of field testing.

The free BetLucky betting app, available at BetLucky.com or the Apple App Store, is the first to be available in West Virginia and can be used to wager anywhere within the state.

Luisa Woods, vice president of marketing for Delaware North’s gaming division, commented: “We think West Virginians and visitors to the Mountain State are going to love how easy it is to register and use the app.

“The platform was designed to be flexible, easy to use and reliable, with innovative features designed specifically to engage and entertain US sports fans. Patrons at the casinos can use the app or the betting tellers in the sportsbooks.”

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Building upon those, CDI has continued the trend throughout Q1 by completing the Presque Isle Downs and Casino, acquiring a 61.3% equity ownership interest in Midwest Gaming Holdings and securing certain assets related to the management of Lady Luck Casino Nemacolin.

Revenue for the period reached $265.4m, jumping from $189.3m, with adjusted EBITDA climbing 52 per cent compared to the previous year, as it soared to $74.6m from $49.2m.

CDI did however explain a significant drop in net income: “The company’s first quarter 2019 net income was $11.6m, comprised of $11.9m in net income from continuing operations and $0.3m in net loss from discontinued operations, compared to $182.0m in the prior year quarter, comprised of $14.1m in net income from continuing operations and $167.9m in net income from discontinued operations.”

Adding: “The company’s first quarter 2019 net income from discontinued operations decreased by $168.2m compared to the prior year quarter related to net income from Big Fish Games, driven by the $168.3m after-tax gain on the sale of Big Fish in January 2018.”

Breaking down its performance further, CDI’s gaming segment, including casino properties, saw a 51.2 per cent year-on-year increase to $170.1m from £112.5m,

That from its Churchill Downs segment, incorporating live and historical pari-mutuel racing at Churchill Downs Racetrack and Derby City Gaming, was significantly boosted to $21.4m (2018: $2.3m) “due to a $18.7m increase from the opening of Derby City Gaming in September 2018”.

CDI’s final reporting segment of online wagering, encapsulating TwinSpires, igaming and online sports betting, saw revenue drop slightly to $63.4m (2018: $63.6m), with active players growing 2.4 per cent while net revenue per active player declined 3.3 per cent.

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The Greenville, North Carolina headquartered firm has soared past the $100m mark in money raised for charity through its series of charitable gaming partners.

The huge sum has gone on to directly benefit those charities utilising Grover Gaming Electronic Charitable Gaming systems in New Hampshire, Kentucky, Ohio, North Dakota and Virginia in the past five years.

Those partner charitable and fraternal organisations represent hundreds of lodges and groups such as the Loyal Order of the Moose, Veterans of Foreign Wars, the American Legion, the Benevolent and Protective Order of the Elks, the Fraternal Order of Eagles, and many others.

Kevin Morse, director of market development for Grover Gaming, commented: “Electronic Raffle and Electronic Pull-Tab devices in these jurisdictions really enable these charities to flourish and provide for their core purposes, unlike those in states that do not allow electronic charitable gaming.”

Funds raised by partner firms through charitable gaming is used to benefit the communities they represent, and lessen the burden of those in need by funding family centers, hospitals, retirement homes, schools and other worthwhile causes.

“We are proud that our charitable partners have reached this incredible milestone,” explained Garrett Blackwelder, president of Grover Gaming.

“Seeing firsthand how their contributions benefit places like the Mooseheart Children’s School, the Eagles Diabetes Research Center, and so many others, keeps us committed to providing the most entertaining gaming experiences in the industry.”

Earlier this year Grover Gaming appointed Scott Henneman as its new vice-president of business development and governmental relations.

In the new role Henneman is to be charged with representing the company in its expanding role in electronic lottery and charitable gaming markets internationally, as it strives to deeps its roots in those two verticals, particularly within the US and Canada.

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Since the US Supreme Court’s ruling in May 2018, sports betting legalisation is currently being considered in 23 states across the country.

March Madness is a 68-team single-elimination college basketball tournament which hosts 67 games over a period of 19 days, and got underway with ‘Selection Sunday’ this past weekend.

The AGA has stressed that amongst its key findings are that 47 million American adults are to wager $8.5bn on March Madness, with $4.6bn set to be wagered on a collective 149m brackets by more than 40m people.

Furthermore, almost 18m people will wager $3.9bn at a sportsbook, online, with a bookie or with a friend, which when broken down further will see 4.1m place a bet at a casino sportsbook or using a legal app, 2.4m bet illegally with a bookie and 5.2m bet online, likely at illegal offshore sites.

Amongst the favourites to come out on top in this year’s tournament are Duke, with 29 per cent of bettors favouring the university, ahead of Gonzaga (nine per cent), Carolina (eight per cent), Kentucky (seven per cent), Virginia (five per cent) and Michigan (five per cent).

Bill Miller, AGA’s president and chief executive officer, explained: “During this year’s tournament – the first in post-PASPA America – sports fans are expected to bet 40 per cent more than they did on this year’s Super Bowl.

“Unlike any other sporting event in the country, March Madness attracts millions who fill out brackets, make casual bets with friends or wager at a legal sportsbook, which Americans can now do more than ever before.”

Since the fall of PASPA in excess of $5.9bn has been wagered across the now eight states offering legal, regulated sports betting, enabling consumer protections and generating valuable tax revenue for state, local and tribal governments across the country.

“These results indicate there’s still work to do to eradicate the vast illegal sports betting market in this country, and we’re committed to ensuring sound policies are in place to protect consumers, like the 47 million Americans who will bet on March Madness,” added Miller.

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After being granted class B supplier licence by the British Columbia Gaming Policy and Enforcement Branch, Spin details that it is to deploy its interactive gaming content, built upon its ROC remote gaming server platform, via BCLC’s online site www.playnow.com.

Since implementing online gaming BCLC’s igaming segment has enjoyed year-on-year revenue growth, seeing its 2017/18 fiscal year revenues exceeding $180m.

Spin states that its “versatile ROC platform” combined with an “extensive game content library,” is to place the company in an “excellent position to expand its North American footprint in Canada” via BCLC’s PlayNow site.

Kent Young, Spin Games’ chief executive officer and founder, explained: “We are delighted to announce our receipt of this landmark gaming license, as it represents a key approval for Spin, that allows us to establish a critical online presence in the British Columbia market.

“As the only authorised online gaming provider throughout the British Columbia province, BCLC’s PlayNow site provides cutting-edge igaming options to Western Canada players, and we are proud to be able to enhance their online gaming services with our award-winning products.”

Adding: “Spin’s successful licensure by GPEB also signifies a key milestone for our company, as expanding our regulatory licenses is a critical part of our future growth and success.

“We are currently pursuing gaming licenses in multiple commercial and tribal jurisdictions throughout North America, and look forward to working with other operators and regulators to expand their online gaming resources.”

This is the second agreement made in quick succession by Spin Games, after aligning with Louisville, Kentucky, headquartered gaming, racing and online entertainment firm Churchill Downs Incorporated, to strengthen its BetAmerica.

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The US provider of remote gaming server technology and interactive content has entered into a multi-year partnership with CDI’s interactive gaming subsidiary, which will see it deploy a range of gaming content to the CDIG BetAmerica sportsbook and casino website and mobile apps.

Kent Young, spin games’ chief executive officer and founder, commented: “We are pleased to be partnering with CDIG for online wagering. With their world-renowned brands and extensive sports betting player database, CDIG is a prominent new entrant into the expanding North American igaming market, and we are honoured for the opportunity to help them grow their online gaming services with our world-class gaming content.”

Following an integration to connect Spin’s ROC remote gaming server platform, undertaken via SBTech’s gaming platform, Spin Games deployed its interactive gaming content in the BetAmerica sportsbook and casino.

This has seen content go live with within New Jersey, where CDI launched BetAmerica last month featuring brands including IGT, PlayDigital, NetEnt, Spin Games, Everi and Konami, with Pennsylvania set to go live later this year, subject to regulatory approval.

Ian Williams, president of online gaming at CDIG, added: “We are delighted to work with Spin Games who bring a wide range of tier one game suppliers to the table, including Konami and Everi, who our customers already recognise from brick-and-mortar casinos.

“We also look forward to launching best of breed branded slots like Slingo Extreme and Ripley’s Believe It or Not! in our BetAmerica sportsbook and casino.”

Earlier this week CDI reported casino, racing and online wagering revenue increases for the fourth quarter and full year of 2018, as the company looks to a series of acquisitions to make a significant impact for the 12 months ahead.

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