Analysis: Bovada Sued In Kentucky Over Illegal Betting

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Bovada illegal

Bovada is being sued over illegal betting in Kentucky in a multimillion-dollar case.

So it appears someone heard the gaming industry’s plea for help against unregulated gambling operations. No, it’s not the Department of Justice. – it’s Billi Jo Woods.

Woods is the named plaintiff in a lawsuit filed August 8 against Morris Mohawk Gaming Group, Alywin Morris, Calvin Ayre, and Harp Media BV. You may be more familiar with the venture they are alleged to operate: Bovada. Bovada is one the most prominent illegal offshore sportsbooks and online casinos in the world. It offers gambling products in the United States in violation of federal law.

The lawsuit filed in the Eastern District of Kentucky seeks class certification and alleges that there is at least $5 million in damages at stake. The plaintiff’s theory of recovery is one that is undoubtedly familiar with the gaming industry now, as it nearly cost the owners of PokerStars more than $1 billion, plus untold hundreds of thousands or millions in nearly a decade of legal fees.

What is Bovada illegal betting case about?

The lawsuit is based on a Kentucky gambling loss recovery statute from the 1800‘s that in certain conditions allows a person who lost money to sue to recover their money. While gambling loss recovery statutes are still on the books in many states, Kentucky’s allows for trebling (tripling) of damages in some circumstances.

The introduction to the complaint outlines the crux of the complaint. The defendants are identified as the owners and operators of various Bovada domains. The complaint states that by operating online casinos, the defendants have violated Kentucky law and have “illegally profited from tens of thousands of consumers.” The plaintiffs are seeking to recover the losses of those individuals and their attorneys’ fees.

Kentucky law, federal court

The basis for this claim is federal diversity jurisdiction. There are essentially two ways to file a lawsuit in federal court.

The first is to have a federal question (e.g. a case about the Constitution or some federal statute.) Alternatively, there is what is called diversity jurisdiction where at least one defendant is a resident of a different state, and the “amount in controversy” is at least $75,000 or in the case of a class action, $5 million. Diversity jurisdiction allows the resolution of state law questions in federal court.

Who are the players in Bovada case?

The named plaintiff is Woods, a citizen and resident of the Commonwealth of Kentucky who reportedly “gambled and lost thousands of dollars gambling on Bovada’s websites.” Woods began gambling on illegal Bovada sites and continued doing so into July 2023.

Morris Mohawk Gaming Group is a company based on the Kahnawake Mohawk Territory outside of Montreal in Quebec, Canada. The complaint alleges that the group receives “substantial revenues” from various internet domains including several associated with Bovada.

The complaint also names Morris, the group’s CEO, and Ayre, who is listed as the “owner and chief operator of Bodog,” which lists the illegal Bovada sites as within the “Bodog Network.” The final listed defendant is Curaçao-based company, Harp Media BV, which is an alleged partial owner of Bovada’s sites.

Facts of Bovada illegal betting case

The complaint alleges that the defendants own and operate Bovada, which allows users to open accounts where they can deposit money either via cryptocurrencies or via credit card. Once deposited, money is alleged to be instantly available for use on hundreds of gambling games. The complaint alleges that “all outcomes in Defendants’ games are based entirely on chance.”

It is alleged that Bovada has “evaded the laws of Kentucky and other states,” while advertising to Kentucky residents that is is a “legitimate online business.” The complaint cites one of Congress’s letters to the Department of Justice urging them to take action against unregulated gambling operators.

The complaint relies on Kentucky Statute KRS § 372.020 which states:

If any person loses to another at one (1) time, or within twenty-four (24) hours, five dollars ($5) or more, or anything of that value, and pays, transfers or delivers it, the loser or any of his creditors may recover it, or its value, from the winner, or any transferee of the winner, having notice of the consideration, by action brought within five (5) years after the payment, transfer or delivery. Recovery may be had against the winner, although the payment, transfer or delivery was made to the endorsee, assignee, or transferee of the winner. If the conveyance or transfer was of real estate, or the right thereto, in violation of KRS 372.010, the heirs of the loser may recover it back by action brought within two (2) years after his death, unless it has passed to a purchaser in good faith for valuable consideration without notice.

KRS § 372.020

Two sections later in the Kentucky Revised Statutes is a provision that allows for the trebling of damages under this section when the suit is brought by anyone other than the loser or creditor. So the named plaintiff here would receive trebled damages on their losses, but could on the losses of everyone else, at least in theory.

Does this ring a bell, poker players?

If all this sounds familiar, it should be because the Commonwealth of Kentucky only relatively recently settled a lawsuit with the parent company of PokerStars for several hundred million dollars after years of litigation, where the state prevailed at various levels of the Kentucky court system.

The settlement came just after the company had filed a petition at the Supreme Court alleging that the judgment violated the U.S. Constitution’s Excessive Fines Clause. The settlement meant that the issue never was resolved.

What next for Bovada illegal betting case?

In all likelihood, this case has years ahead of it. There are defendants all over the world, and the documents filed with the complaint do not even identify an address for serving Ayre with the complaint.

There is an international convention that deals with international service that will likely mean that the case will proceed slowly. Generally an international defendant needs to be served within 90 days of the complaint being filed. If service of the complaint is waived, it would grant the defendants 90 days to respond. They will have 20 days from the date they are served to answer the complaint.

The plaintiff and potential class likely face some challenging obstacles ahead. The most immediate is likely to be ever getting service on the defendants, but even long-term enforcement of any potential judgment is likely to be much more difficult than enforcing a judgment against defendants located within the United States.