A $1.3bn (€1.07bn) fine that’s been levied against two Flutter subsidiaries by the state of Kentucky will be “unenforceable” because the two units are based in the Isle of Man, Flutter’s chief financial officer has insisted.
Last December, the Kentucky Supreme Court reinstated an $870m fine against units of The Stars Group, which last year merged with Flutter. The fine now totals more than $1.3bn due to continually accruing interest.
The penalty had been overturned by the Kentucky Court of Appeals in 2018. But last month, the Kentucky Supreme Court refused a petition by Flutter for a rehearing.
Flutter is now hoping to take the case to the US Supreme Court. But the Supreme Court only accepts between 100 and 150 of the more than 7,000 cases it is asked to review every year.
“The number of cases that are taken on by the US Supreme Court tend to be very, very limited,” conceded Flutter chief financial officer Jonathan Hill as the company reported strong first-quarter results.
He said he thinks Flutter has a “small chance” of having its case accepted.
“The critical thing you need to remember here is that the two subsidiaries against which this judgment was entered into are Isle of Man companies,” said Mr Hill.
“They have the legal right to certain protections of Isle of Man law, which basically, like English law, state that multiple damage judgments are unenforceable in the Isle of Man,” he added.
“If we get to the US Supreme Court, they could null and void the entire judgement against us,” said Mr Hill. “The $100m bond which is being called by the Commonwealth would be due back to us.”
He said Flutter and its subsidiaries would continue to “vigorously” defend their position.
“The way that this has been calculated would not be enforceable through the Isle of Man or UK courts,” said the Flutter executive.
“Obviously, if they come through the courts in the UK and the Isle of Man, we’ll see what happens there,” said Mr Hill.
Mr Hill insisted that “no harm was done” by the events to which the legal action relates.
“This refers to a period during which PokerStars made $18m in revenue. And during this period, the people of the Commonwealth of Kentucky lost an aggregate $24m,” he said. “There was no harm created by this.”
The legal action by the Commonwealth of Kentucky was initiated in 2010. It sought recovery of alleged losses incurred by residents of the state who played real-money poker on the PokerStars website between 2006 and 2011. PokerStars was bought by The Stars Group (TSG) in 2014.
Mr Hill made the comments as Flutter, headed by CEO Peter Jackson, said its revenue in the first quarter of this year soared 33pc to £1.5bn (€1.7bn) as it benefited from a surge in activity in most of its markets. It saw a 42pc increase in online revenue.
In the US, revenue approached $400m and was up 135pc and it had – mostly via its FanDuel unit – an average of 1.6 million monthly customers, making it twice as big as Flutter’s Australian arm.