BUSINESS

Amaya says Scheinbergs reject any responsibility for $870m Kentucky damages

TAGs: Amaya Gaming, commonwealth of kentucky, Isai Scheinberg, Kentucky, mark scheinberg, Playtech, PokerStars, rational group

amaya-pokerstars-scheinbergs-kentucky-judgmentCanada’s Amaya Gaming says PokerStars’ former owners have rejected responsibility for the $870m judgment the Commonwealth of Kentucky was awarded shortly before Christmas.

On Monday, Amaya announced that it had filed a notice of appeal of that $870m judgment, which relates to PokerStars’ dealings with Kentucky customers in the period following the 2006 passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) and Stars’ forced exit from the US market following the 2011 Black Friday indictments.

Franklin Circuit Court Judge Thomas Wingate originally awarded Kentucky’s state government $290m in damages in November, only to treble that award the following month, as allowed by the centuries-old statute under which the state filed its claim.

At the time, Amaya announced it would seek to offload any damages on Isai and Mark Scheinberg, from whom Amaya purchased PokerStars’ parent company the Rational Group in 2014. Amaya now says it filed such a claim with the Scheinbergs in late January, seeking indemnification of the judgment in accordance with the 2014 sale agreement.

Amaya says its claim asked the Scheinbergs’ representative and escrow agent to freeze the $300m remaining in the escrow fund established under the sale agreement. However, Amaya says the Scheinbergs responded by “initially disputing all claims set forth in Amaya’s notice of claim.”

Amaya says it will continue to seek satisfaction from the Scheinbergs but warned investors that there are no guarantees that it will receive any of that $300m in the escrow fund, let alone the balance of the $870m sought by Kentucky.

As a result, Amaya announced that it had posted a $100m supersedeas bond to stay enforcement of the Kentucky court order while it appeals Wingate’s judgment. As required by state law, Amaya submitted collateral totaling $35m in cash and letters of credit worth $30m.

If nothing else, the news adds a level of credibility to Amaya’s claim that the Scheinbergs won’t be part of Amaya CEO David Baazov’s bid to take the company private.

News of the Kentucky development sent Amaya shares down less than 1% on Tuesday, after going on a mild tear on Monday following UK media reports that online gambling software firm Playtech was mulling its own takeover of Amaya.

Playtech has at least £800m in its war chest after UK and Irish regulators rejected the company’s proposed takeovers of financial trading firms Ava Trade and Plus500, allegedly over Playtech founder/principal shareholder Teddy Sagi’s criminal past. Playtech’s name has also been bandied about as a potential frontrunner to acquire rival gambling technology provider OpenBet.

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