PokerStars’ parent company, Rational Entertainment Enterprises, Ltd. (REEL), or more commonly known as the Rational Group, won itself a decision against a class action lawsuit in Illinois from a group of poker players who claim to have lost money from illegal gambling. Chief Judge David R. Herndon of the United States District Court for the Southern District of Illinois ruled in favor of granting Rational’s motion to dismiss the complaint filed by Kelly Sonnenberg.
Sonnenberg’s complaint against Rational centered on her attempt to recover damages incurred by Illinois poker players from playing online poker using the state’s Loss Recovery Act (LRA) that essentially awards triple the amount lost through illegal gambling to be recovered from the winner. The contention between the two sides seem to be centered on the word “winner” from these online poker games, which Sonnenberg felt Rational was and Rational felt it wasn’t.
As far as Rational was concerned, collecting a rake from each hand played in PokerStars doesn’t mean it was automatically a “winner”, nor did it participate in or benefit from any of the outcomes of all the hands played on its site. On the other hand, Sonnenberg argued that under the statute of the LRA, the rake was enough for Rational to be considered a “winner”.
Since the LRA authorizes recovery of money only from a “winner” of gambling losses, it had to decide and differentiate the two sides’ arguments. That’s when Chief Judge Herndon made the ruling, describing PokerStars as a third party service provider that provides a venue for players to play poker. More importantly, the ruling also stated that Stars did NOT have any stake on how the games were decided. Rational: 1, Kelly Sonnenberg: 0.
“This is a major victory for PokerStars and instructive for other online gaming providers facing similar attacks from plaintiffs seeking unjust windfalls,” said Jeff Ifrah, founder of Ifrah Law, which represents the Rational Group.
On top of that, Judge Herndon also decided that since there was no assertion made in Sonnenberg’s lawsuit that the defendants “won any bets or participated in the games themselves”, Rational couldn’t be considered a “winner” under the statutes of the LRA. Rational: 2, Kelly Sonnenberg: 0.
“Chief Judge Herndon has stated unequivocally that an online poker room operator who does not participate in the games is not a ‘winner’ under the LRA,” Rachel Hirsch of Ifrah Law said. “We think this ruling pretty much spells the end of this lawsuit.”
Now that the issue in Illinois appears to have been settled, Rationale’s lawyers are confident that similar pending cases in other states would end with the same ruling, noting that recognizing the principle of a rake and how it’s not considered a “win” for the betting site falls under the statutes of loss recovery laws in those states. It could potentially be a landmark moment for PokerStars and all other online providers who now have the “protection” of a judge’s ruling to defend itself against what Deitch describes as “unscrupulous plaintiffs looking for windfalls from deep pockets”.
