The Beginning of the Death of Online Poker in the US

[Lathum]

BOOM goes Full Tilt

Exclusive: Alderney suspends Full Tilt's*operating licence | eGaming Review

[Captain2711]

I would expect more from a guy named Jesus.

http://online.wsj.com/article/SB1000....html?mod=e2tw

[gstelmack]

I remain shocked that people are shocked at these kind of shennanigans surrounding gambling.

[Suicane75]

The accusation confuses me. I'm sure if they were skimming peoples accounts at that amount we would have heard about it.

[digamma]

Not skimming people's accounts. Just not backing the accounts with real dollars. As long as withdrawal requests come in as expected, they are fine. They can commingle the player funds with operating expenses. When the "run on the bank" happens though, they are caught red handed. They don't have enough to pay out the withdrawals because they've been using the actual cash to fund operating expenses and pay themselves.

[Ronnie Dobbs2]

[stevew]

Originally Posted by digamma

Not skimming people's accounts. Just not backing the accounts with real dollars. As long as withdrawal requests come in as expected, they are fine. They can commingle the player funds with operating expenses. When the "run on the bank" happens though, they are caught red handed. They don't have enough to pay out the withdrawals because they've been using the actual cash to fund operating expenses and pay themselves.

This was my conclusion as well. Also, there are probably several (hundred?)thousand people with less than the minimum withdrawal limit in their account. Essentially this money is Full Tilt's to keep until the point in time which the player exceeds the withdrawal number and elects to receive a check.

Also, doesn't this all fit in with the long timetable that people were reporting that Full Tilt was taking to process returns? If anything, the online banking ban thing was a godsend for them, cause it provided an easily explained barrier so they could delay cash outs.

[Radii]

Its crazy that Full Tilt had a status almost as strong and trusted as Pokerstars among the playing community. Absolute and UB are outright cheats, other sites are too small to trust, as long as you stay on FTP and Stars you're as safe as possible given the current status of online poker... turns out in the end there was Pokerstars and everyone else, craziness.

[Butter]

So, Lederer and Ferguson headin' to prison?

[QuikSand]

So far, this is just a civil complaint that has been amended to raise these charges. Might be criminal at some point, but apparently not yet. *shurg*

[panerd]

I don't know if its the WSJ or the Feds that are using the term Ponzi Scheme but it sures does get thrown around a lot lately. I thought a Ponzi scheme was an investment offer that misleads people and takes their money? How exactly is playing illegal poker an investment gone bad? Don't get me wrong I played online poker and don't have a problem with it at all but I would say this is hardly a Ponzi scheme. (Never mind the fact that the "bank run" was caused by the DOJ shutting the sites down to flex their muscles and cater to Harrah's and other members of the casino lobby)

PS: I am not a lawyer, only play one on FOFC.

[DaddyTorgo]

Originally Posted by Radii

Its crazy that Full Tilt had a status almost as strong and trusted as Pokerstars among the playing community. Absolute and UB are outright cheats, other sites are too small to trust, as long as you stay on FTP and Stars you're as safe as possible given the current status of online poker... turns out in the end there was Pokerstars and everyone else, craziness.

And who knows how safe pokerstars really is...

[RainMaker]

Originally Posted by panerd

I don't know if its the WSJ or the Feds that are using the term Ponzi Scheme but it sures does get thrown around a lot lately. I thought a Ponzi scheme was an investment offer that misleads people and takes their money? How exactly is playing illegal poker an investment gone bad? Don't get me wrong I played online poker and don't have a problem with it at all but I would say this is hardly a Ponzi scheme. (Never mind the fact that the "bank run" was caused by the DOJ shutting the sites down to flex their muscles and cater to Harrah's and other members of the casino lobby)

PS: I am not a lawyer, only play one on FOFC.

It's a pretty broad term. But for the most part, it's paying off creators with other people's investments and not the actual profits. I know it's tough to look at it as a typical investment, but they are holding your money essentially as a bank.

[Logan]

Eh, it's a stretch. I guess it's labeled that way because of the FIFO side of it more than anything else. If you put in $1000, and you don't play your way to a profit (the fictitious return), you're not going to be able to pull out $1200. The results of the game (trade) don't matter in a Ponzi scheme.

[Marc Vaughan]

Let me get this right - FullTilt took in peoples money then invested it (or paid it out) in other ways meaning they couldn't cover the full amount people had in the accounts.

The government calls this a 'Ponzi scheme' - strange I'd have thought they now qualified as a 'bank' and should really expect the government to pump huge wadges of cash into them ... after all thats exactly what the banks did to get the world into the current financial hoo haa

[MJ4H]

I don't think they really ever hid this fact. Poker Stars clearly advertised as the only company that completely segregated their player funds properly. This was the main reason I never had a serious amount of money on Full Tilt and encouraged others not to, as well.

[digamma]

Originally Posted by MJ4H

I don't think they really ever hid this fact. Poker Stars clearly advertised as the only company that completely segregated their player funds properly. This was the main reason I never had a serious amount of money on Full Tilt and encouraged others not to, as well.

This is actually the main issue in the government's case (at least with regard to these allegations). The government fashions it as a fraud allegation because they say that FT promised in both published information and private communications to customers that it segregated player accounts from operating accounts. By not doing so and continuing to use player accounts to pay themselves and others, they committed fraud.

So if there was some public disclosure that they did combine account pools, the government's allegations here really look thin. I don't know enough of the facts to know if that is true.

[Mizzou B-ball fan]

Even more ridiculous is that a government action to legalize poker would have likely put Full Tilt (and other companies) in position to make more money, create more tax dollars, and ensure player funds were guaranteed. Instead, they took this option. Now they'll be paying millions on prosecutions and player money is gone. Really a poor choice by the government.

[MJ4H]

Originally Posted by digamma

This is actually the main issue in the government's case (at least with regard to these allegations). The government fashions it as a fraud allegation because they say that FT promised in both published information and private communications to customers that it segregated player accounts from operating accounts. By not doing so and continuing to use player accounts to pay themselves and others, they committed fraud.

So if there was some public disclosure that they did combine account pools, the government's allegations here really look thin. I don't know enough of the facts to know if that is true.

I don't really know the facts, but I do know I always felt comfortable with Stars assurances and never heard any of the same from Tilt. I may be misremembering, but it seems like Stars always claimed they were the only ones that were segregating accounts. If not, at least everyone was claiming they were the only ones that were.

[molson]

Originally Posted by Mizzou B-ball fan

Even more ridiculous is that a government action to legalize poker would have likely put Full Tilt (and other companies) in position to make more money, create more tax dollars, and ensure player funds were guaranteed. Instead, they took this option. Now they'll be paying millions on prosecutions and player money is gone. Really a poor choice by the government.

I think I agree with that - but I wonder how many gambling websites could exist if they were required to have enough cash on hand to payoff all of the existing balances if they all came due at once (unless the government plans to just bail them out)....or how that would impact the fees/odds/attractiveness of those sites. Still, I agree, that's best for the market to sort out (with appropriate regulation).

[DaddyTorgo]

Originally Posted by Mizzou B-ball fan

Even more ridiculous is that a government action to legalize poker would have likely put Full Tilt (and other companies) in position to make more money, create more tax dollars, and ensure player funds were guaranteed. Instead, they took this option. Now they'll be paying millions on prosecutions and player money is gone. Really a poor choice by the government.

So your argument is that they should have legalized them? Had they done that you would have been in here crying from piller to post about how the government legalization of them was tacit to a stamp of approval and it's basically like the government was committing the fraud.

Your rightous indignation is misdirected - it should be at goddamn Full Tilt poker and the scumbags involved there who set up this fraudulent scheme to line their pockets, not the government for not legalizing them, and now for prosecuting them. If they had been legalized they still would have figured out a way to perpetrate the fraud, because it's apparent that was a huge driver for them (if not the only driver). I'm honestly perplexed by the fact that you're angry that the government didn't legalize them and that now they're going to prosecute them.

Hard not to see your agenda here.

[Mizzou B-ball fan]

Originally Posted by molson

I think I agree with that - but I wonder how many gambling websites could exist if they were required to have enough cash on hand to payoff all of the existing balances if they all came due at once (unless the government plans to just bail them out)....or how that would impact the fees/odds/attractiveness of those sites. Still, I agree, that's best for the market to sort out (with appropriate regulation).

Exactly. It would have likely put a few of these sites under and we'd still have litigation in those instances. But the majority of those sites could have easily recapitalized to meet any regulations knowing that the U.S. market would produce more than enough revenue to develop a good profitable base.

[Mizzou B-ball fan]

Originally Posted by DaddyTorgo

Hard not to see your agenda here.

I honestly got lost in all that. Just let me know what my agenda is so I can take full blame/credit for it.

[DaddyTorgo]

Originally Posted by Mizzou B-ball fan

I honestly got lost in all that. Just let me know what my agenda is so I can take full blame/credit for it.

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[Mizzou B-ball fan]

Originally Posted by DaddyTorgo

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That didn't help.

[RainMaker]

Originally Posted by Mizzou B-ball fan

Even more ridiculous is that a government action to legalize poker would have likely put Full Tilt (and other companies) in position to make more money, create more tax dollars, and ensure player funds were guaranteed. Instead, they took this option. Now they'll be paying millions on prosecutions and player money is gone. Really a poor choice by the government.

I think it goes both ways. Full Tilt never would have been exposed and players would have gotten their money regularly had the government not caused this "run on the bank". At the same time, Bernie Madoff would have been able to pay off investors and keep money around had the financial crisis not caused a "run on his fund".

On one hand you can say that Full Tilt intended to keep the accounts whole and had a right to use the funds because they couldn't anticipate a huge run on the bank like this. On the other, the sheer amount they were giving to board members makes it look like it was more about a ponzi scheme then using the funds for normal business expenses.

If there was supposed to be $450 million and $400 million were in the accounts, it's much more believeable than if only $50 million is in there.

I guess it comes down to whether you believe Full Tilt intended to run an honest business and pay back all their members in the long run, or if they were just using this business to funnel cash to people as much as they could knowing that the risk was small in the short term of people finding out.

[Schmidty]

I'm so tired of political bickering.

[Mizzou B-ball fan]

Originally Posted by Schmidty

I'm so tired of political bickering.

Where's the political bickering in this argument? It's a question of whether poker should be legalized from where I stand. I think anyone who injects morals into that argument is misplaced. But I also believe that there's a place for common sense and I don't believe the government has used common sense when dealing with this situation. And I'd add that this isn't a party thing either. The Republicans initiated this fight and the Democrats have done nothing in large part to reverse that action, so they obviously agree with it.

[Mizzou B-ball fan]

Originally Posted by RainMaker

I think it goes both ways. Full Tilt never would have been exposed and players would have gotten their money regularly had the government not caused this "run on the bank". At the same time, Bernie Madoff would have been able to pay off investors and keep money around had the financial crisis not caused a "run on his fund".

On one hand you can say that Full Tilt intended to keep the accounts whole and had a right to use the funds because they couldn't anticipate a huge run on the bank like this. On the other, the sheer amount they were giving to board members makes it look like it was more about a ponzi scheme then using the funds for normal business expenses.

If there was supposed to be $450 million and $400 million were in the accounts, it's much more believeable than if only $50 million is in there.

I guess it comes down to whether you believe Full Tilt intended to run an honest business and pay back all their members in the long run, or if they were just using this business to funnel cash to people as much as they could knowing that the risk was small in the short term of people finding out.

Certainly don't disagree with this, but we obviously only know one side of this argument. I'll be interested to see the defense in this case. Could set a lot of legal precedent depending on how it ends.

[albionmoonlight]

I've been involved in a smattering of fraud cases. And they really do fall into two types. You certainly have the deliberate fraud where the guys set up a system intending the whole time to use it to steal from folks.

But you also have a lot of fraud that starts out unintentional. Money that should be segregated is tapped into "just this once" to meet a payment, with every intention of paying it back with other revenues. But, as so often happens in these situations, they never can quite catch up. And soon they are doing everything they can just to stay afloat and cover up the initial fraud. And really end up engaging in full-scale fraud/theft by the end until it all comes crashing down.

That latter situation is why a lot of financial systems have rules about how much money needs to be kept in reserve and/or credited against client accounts.

Of course, since all of these online poker places are offshore, I really have no idea what laws, if any, will be implicated in this case.

Put me in the camp of "if this had been domestic, legal, taxed, and regulated," it would have been much harder for them to engage in fraud/theft. Not impossible (see, e.g., Madoff). But harder.

[Dreghorn2]

Just for interest sake, on the 2 + 2 poker forum in the BBV section there is a thread where Tom Dwan answers a series of questions from site members re: this whole mess.

A good read and a real background into what happened.

[Marc Vaughan]

Originally Posted by Dreghorn2

Just for interest sake, on the 2 + 2 poker forum in the BBV section there is a thread where Tom Dwan answers a series of questions from site members re: this whole mess.

A good read and a real background into what happened.

linky?

[Dreghorn2]

Originally Posted by Marc Vaughan

linky?

Apologies, i'm at work and can't access that site.

Just google '2+2 poker forum' and the thread is stickied in the Beats Brags and Variance sub forum.

[Subby]

Originally Posted by DaddyTorgo

Your rightous indignation is misdirected - it should be at goddamn Full Tilt poker and the scumbags involved there who set up this fraudulent scheme to line their pockets, not the government for not legalizing them, and now for prosecuting them. If they had been legalized they still would have figured out a way to perpetrate the fraud, because it's apparent that was a huge driver for them (if not the only driver). I'm honestly perplexed by the fact that you're angry that the government didn't legalize them and that now they're going to prosecute them.

I think both sides share some blame. Had the federal government legalized online poker, it is likely that regulations would have been in place to prevent this. As it is, there are no regulations in online poker - just a lot of gray. If Full Tilt wanted to borrow from player deposits to pay for operating expenses, there are no regulations forbidding that. That said, Full Tilt had to know that not segregating operating funds from player deposits was a terrible business decision. It's one thing to invest a percentage of those deposits to create an additional revenue stream. It is quite another to pay out seven and eight figure bonuses.

[Radii]

Originally Posted by Dreghorn2

Apologies, i'm at work and can't access that site.

Just google '2+2 poker forum' and the thread is stickied in the Beats Brags and Variance sub forum.

Its in NVG:

Q&A: Durr answers questions about FTP - Poker News - News, Views and Gossip

durrr = Tom Dwan.

[Lathum]

somewhere Dutch Boyd is smiling.

[Dreghorn2]

Originally Posted by Radii

Its in NVG:

Q&A: Durr answers questions about FTP - Poker News - News, Views and Gossip

durrr = Tom Dwan.

Oops, right.. NVG not BBV, my mistake.

[digamma]

Seeing random tweets that Poker Stars has agreed to purchase Full Tilt. Haven't seen any traditional media confirmation yet.

[CleBrownsfan]

So when can "we" play?!?!?!?

[SirFozzie]

Originally Posted by CleBrownsfan

So when can "we" play?!?!?!?

when the nanny state says we can... and the existing casinos lobby hard enough to be given the business of course.

[digamma]

Apparently not true.

[Lathum]

not much would make me happier than being able to play on Pokerstars agaon

[Lathum]

two plus two hacked

Dear Two Plus Two Members, On April 26th at approximately 11:20 AM pacific time, the Two Plus Two Forums were closed as a result of a hacker who has displayed the ability to access e-mail addresses and encrypted passwords. He also indicated the ability to decrypt passwords. While it is unclear the extent of data to which he gained access, e-mail addresses and passwords on the Two Plus Two forums should be considered compromised. If you have used your 2+2 password on any other site, you are advised to change it. For your security, we are closing the forums until the breach is patched. Upon reopening the forums you will be forced to change your password – it is counterproductive to do so now. We hope to be back up as soon as possible. Best,Two Plus Two Interactive

[INDalltheway]

If it's not one thing it's another. Makes me wish I never got into the game or it would have been really unprofitable. I would seriously do about anything though to be able to have Sunday session playing on both Tilt and PS.

[CleBrownsfan]

Originally Posted by Lathum

not much would make me happier than being able to play on Pokerstars agaon

I'm right there with you. So many hours of entertainment...

[GoldenEagle]

Two Plus Two is still down.

I think, looking back, we all knew it was going to be taken away from us eventually. There was too much money flowing out of the US for someone not to notice. I think online poker will be back in some shape in the future, I am just not sure when. I don't think PokerStars will ever re-enter the US market, unless a major US casino buys them out.

[cartman]

Sounds like folks might get their money out of Full Tilt Poker after all.

Latest News on PokerStars Deal To Acquire Full Tilt Poker | Legal News

[GoldenEagle]

Here is an interesting Grantland article if you have time to read it: The PokerStars purchase of Full Tilt, the $731 million settlement, and the state of poker - Grantland

There is a chance that a bill will be introduced to legalize online poker. I have no clue if it going to pass, but now seems to be the best time for it. I have split feelings on whether I want to come back or not.

[larrymcg421]

Been a while since I've played poker, but looking forward to doing it while on my vacation here in Florida.

[Mizzou B-ball fan]

Originally Posted by GoldenEagle

Here is an interesting Grantland article if you have time to read it: The PokerStars purchase of Full Tilt, the $731 million settlement, and the state of poker - Grantland

There is a chance that a bill will be introduced to legalize online poker. I have no clue if it going to pass, but now seems to be the best time for it. I have split feelings on whether I want to come back or not.

Would love to see poker return to the U.S. Lots of tax revenue and the players are more than happy to pay it.