Flutter Entertainment saw its share price decrease 3.81% on Friday after it was hit with an $870 million penalty by the Kentucky Supreme Court. The court ruled against The Stars Group, which Flutter acquired earlier this year, concerning a case initially brought all the way back in 2010. It relates to losses incurred by Kentucky residents on PokerStars, which The Stars Group purchased in 2014.
The Kentucky Supreme Court ruled that $870 million plus compounding interest of 12% per annum should be paid, meaning the penalty could reach up to $1.4 billion. Flutter Entertainment, which owns Paddy Power and Betfair, could appeal the ruling after disputing its legal basis.
“Flutter is wholly surprised by today's ruling and strongly disputes the basis of this judgement which, it believes, runs contrary to the modern US legal precedent,” said the firm in a statement. “This litigation had sought recovery of alleged losses by Kentucky residents during a period between 2006 and 2011 relying on a centuries-old statute.”
The amount equates to around 4% of Flutter’s market cap, but it could create liquidity issues if the judgment is upheld. “Flutter will have been aware of the issue having done due diligence on The Stars Group but presumably thought it was behind them given an appeal court reversed the initial award in 2018,” said analysts at AJ Bell. “This may be prove to be an isolated incident, a complete outlier, but the US is a litigious society, including in the corporate sphere, and this news may have a sobering effect on the sector.”
The largest online operators in the UK increased revenue by 29% month-on-month to £542 million in October, according to new data from the UK Gambling Commission. The number of Brits betting online increased 7% between September and October, and they incurred heavier losses, causing the gross gaming yield to spike.
The government is planning a clampdown on the online sector. The Department for Digital, Culture, Media and Sport is leading a review of the 2005 Gambling Act, which could overhaul every area of gambling law. Lawmakers will consider banning sports sponsorship and limiting online casino stakes.
However, licensed operators have warned that a clampdown could push punters towards the unregulated market. A new report from PwC found that 200,000 Brits – many of them under-18s – staked £1.4 billion at black market sites in the past 12 months.
Industry group the Betting and Gaming Council, whose members include Bet365, William Hill, Flutter, Ladbrokes owner Entain, 888, Betfred, Betway, Unibet owner Kindred Group and other large gaming firms, said tighter controls could play into the hands of illegal, unregulated betting sites that prey on vulnerable punters.
Betfred has agreed to sponsor all three England teams at next year’s Rugby League World Cup. The bookmaker will sponsor the men’s, women’s and wheelchair teams for the eagerly anticipated tournament, which will be held in England. The Betfred logo will appear on the backs of the shirts of all England players.
Betfred already sponsors the Super League, Women’s Super League Championship and League 1. “Following our very successful association with rugby league at all levels in recent years, Betfred are delighted to become an official partner of the England men’s, women’s and wheelchair teams for the Rugby League World Cup in 2021,” said owner Fred Done.
Mark Foster, the RFL’s chief commercial officer, added: “Betfred have been outstanding sponsors for Rugby League for the last four years, and it’s fantastic that they will now extend that support to our England teams in 2021. It’s such an exciting time for our Men’s, Women’s and Wheelchair teams as they prepare to play World Cups on home soil.”