By Beth Musgrave
FRANKFORT — Kentucky’s General Fund is getting an unexpected $6 million windfall from the online gambling industry.
Two gambling websites, PokerStars and FullTilt Poker, will pay the state $6 million in a legal settlement that stems in part from the state’s ongoing effort to crack down on online gambling, Gov. Steve Beshear announced Wednesday.
The extra money will give the state a cushion if General Fund revenue does not meet projections in June, the last month of the fiscal year.
In 2008, the state sued to take over more than 140 gambling websites, saying the companies were operating illegally in Kentucky. It was the first lawsuit of its kind in the country.
Beshear has said online gambling undermines the state’s horse racing industry and charitable gaming. It is estimated that online gambling generates more than $20 billion a year, which is largely untaxed.
Internet groups protested the legal action, questioning how the state could shut down websites that are not located in Kentucky.
While the state was pursuing that lawsuit in Franklin Circuit Court, federal prosecutors in Maryland and New York brought similar actions in federal court in 2011 against PokerStars and Full Tilt Poker. Kentucky joined the federal lawsuits. The $6 million settlement comes from those federal lawsuits.
The lawsuit in state court is ongoing.
“As a result of our bold and steadfast determination to protect Kentucky consumers, our signature horse racing industry, and legitimate charitable gaming interests, unlicensed and unauthorized internet gambling has been substantially curtailed in Kentucky, and we’ve created a framework for the rest of the country to manage the issue in their own jurisdictions,” Beshear said in a statement.
Justice and Public Safety Cabinet Secretary J. Michael Brown, who filed the lawsuit on behalf of the state, said that the state will continue to go after online gambling websites operating in Kentucky illegally. PokerStars and Full Tilt Poker, which are believed to be the two largest online gambling websites, no longer operate in Kentucky.