The Stars Group has welcomed a ruling in its favor by the Kentucky Court of Appeals which has reversed in its entirety the $870m judgment issued against it by a trial court judge in December 2015. The Court of Appeals stated: “[a]llowing a complaint, like the one put forth by the Commonwealth, to move forward would lead to an absurd, unjust result.”

The litigation that is subject to the appeal was initially filed by the Commonwealth of Kentucky in 2010, approximately four years prior to The Stars Group’s acquisition of the PokerStars business, and 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 that was intended to allow individuals who incurred gaming losses to bring an action against their winning opponents, but was never intended to authorize the Commonwealth to sue and collect such losses from the operator of the games for the Commonwealth’s own benefit.

As a result of the ruling, The Stars Group intends to petition for the release of the $100m supersedeas bond posted by it to stay enforcement of the trial court’s order during the pendency of the appeals process, which includes $5m in cash collateral and $65m in letters of credit securing the same.

“We applaud the decision of the highly-respected three-judge panel of the Kentucky Court of Appeals,” stated Marlon Goldstein, Executive Vice President & 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.”

As previously disclosed, 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. There can be no assurance that such claim will result in any amounts in the escrow fund or otherwise being remitted to The Stars Group or that any of its estimates of potential losses will reimbursed by the sellers or otherwise.

The group 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.