PokerStars Rational Group class-action lawsuit

A class-action lawsuit that had been filed against Rational Entertainment, which does business as PokerStars, has been dismissed by an Illinois court.

One of the biggest selling points for poker over other casino games is that you’re not playing against the house – instead, you’re taking on the other players. Sure, the casino takes a small percentage or a “rake” from each pot, but it’s not the same as slots or blackjack where you’re actively competing against the house itself.

For most serious poker players, this is what lets poker become a game of skill where they may be able to profit. For major online site PokerStars, it’s also turned out to be a very important legal distinction that got them off the hook in a potentially costly class-action lawsuit.

Action Dismissed

Chief Judge David R. Herndon of the United States District Court for the Southern District of Illinois granted a motion to dismiss the action filed against Rational Entertainment, effectively ending a class-action lawsuit filed by Kelly Sonnenberg, who had filed the complaint as the mother of a boy who had lost money playing online poker on the technically illegal website.

In the lawsuit, Sonnenberg had hoped to use Illinois’ Loss Recovery Act (LRA) to recover damages for the “hundreds of thousands – possibly millions – of Illinois poker players” who had lost while playing online poker. Under the LRA, those who lose in illegal gambling operations can be awarded as much as triple their losses from the winners under some circumstances.

One of the major factors in the Court’s decision was the fact that the LRA only allows damages to be recovered from the winner of gambling losses. Rational Entertainment – the parent company of PokerStars – argued that it was not, in fact, a winner in the online poker games, since it didn’t benefit from the outcome of each hand or tournament. Instead, it merely collected a rake.

Sonnenberg argued that the rake itself was enough to make PokerStars a winner in each hand, but the Court did not agree.

Third Party Provider

“The PokerStars Group is more akin to a third party service provider that provides a forum for others to play the game and does not have a stake in how the game is decided,” the court said in its decision.

However, the Court did leave open a small window for Sonnenberg to potentially resubmit her case.

“The Court finds that Sonnenberg has sufficiently alleged that the losses occurred in Illinois through the illegal gambling Internet site,” the decision continued.

However, given that the majority of the decision went their way, Rational lawyers David Deitch and Rachel Hirsch believed that resubmission of the case was unlikely, and a successful lawsuit even less so.

“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,” Hirsch said. “We think this ruling pretty much spells the end of this lawsuit.”

PokerStars also attempted to argue that their post-Black Friday multimillion dollar settlement with the federal government precludes claims against them, though the Court declined to rule on that argument.

The case could also set an important precedent for other states that have similar laws that allow for the recovery of illegal gambling losses, including Kentucky.

The case follows a similar lawsuit in Illinois against one-day fantasy sports site FanDuel, which was dismissed by District Judge Thomas R. Durkin last October. Deitch said that the two cases followed similar reasoning.

“This is another case that will protect responsible and lawful online providers from unscrupulous plaintiffs looking for windfalls from deep pockets,” Deitch said.