TORONTO – Amaya Inc. stock hit a new 52-week low Thursday after a Kentucky court issued a US$870-million verdict against the company for losses at its PokerStars online gambling website.
The Montreal-based gaming company (TSX:AYA) said it will appeal the judgment, which it described as being based on an arcane law dating back more than 200 years and completely disproportionate to the alleged offence.
Kentucky had filed a suit against Amaya to recover alleged losses by state residents who played the real-money options on PokerStars between 2006 and a crackdown in 2011 that effectively ended most online poker in the United States.
Amaya bought PokerStars in 2014 in a US$4.9-billion deal. The company said that regardless of the final award in the Kentucky case it would seek recovery against the former owners if compelled to pay.
Canaccord Genuity analyst Kevin Wright said the purchase included US$300 million put in escrow by the previous owners to deal with the case, which had been filed before the agreement was made.
The company also said that the ruling seems to contravene the same court’s previous ruling that damages should be based on the net losses of players. The company claims those losses totalled roughly US$18 million, subtracting winnings, bonuses and free play that the players won.
The company’s stock hit a 52-week low of $16.51 in early morning trading after the news broke, before recovering to $17.50, down 98 cents or 5.3 per cent at the close.
Amaya’s stock peaked about $37 earlier this year before losing a quarter of their value in early November after the company said the strong American dollar was hurting the purchasing power of its customers.
In its statement Thursday, Amaya also took issue with the fact that the state of Kentucky, rather than the individual PokerStars players, was the lead plaintiff in the case.
“This is a frivolous and egregious misuse of an antiquated state statute to enrich the contingent-fee plaintiff’s attorneys hired by the Commonwealth and not the people of Kentucky,” said Amaya lawyer Marlon Goldstein.
“Given that PokerStars only generated gross revenues of approximately US$18 million from Kentucky customers during the five years at issue, a damages award in excess of US$800 million is notable only for its absurdity.”
Amaya’s online gambling brands include PokerStars, Full Tilt and StarsDraft, and the company has licences to offer its games in more than a dozen countries across Europe as well as Quebec and New Jersey.