As most know, two months ago the FBI seized the .com domain names for Full Tilt Poker, Poker Stars, and Cereus (Absolute Poker and Ultimate Bet). All companies immediately cut off U.S. customers but eventually the government reopened the domain names so that American customers could receive payouts. PokerStars apparently repaid U.S. customers almost immediately but Full Tilt Poker and Cereus were unable to do so. Cereus has effectively shut down but Full Tilt has been in limbo. Unlike PokerStars, Full Tilt did not keep post up money in a segregated account and consequently have been unable to pay back all American accounts. PokerStars returned over $120 million to Americans and is now is now refocusing its operations on players in Europe, Asia as well as Canada, but Full Tilt, which tried to do the same refocusing as PokerStars is in trouble. As a result of not being able to repay U.S. players, Alderney (a country in the Channel Islands), which holds a license for many of Full Tilt’s affiliates revoked the company’s license and effectively shut them down. The company can not receive payments or process games until such time as Alderney reinstates the license.
Needless to say, American repayment looked doubtful following Alderney’s decision and things looked particularly dire for American players when Pocket Kings Inc., the software provider for Full Tilt announced that up to 600 employees could be laid off as a result of the closure. However in recent days attorneys associated with Full Tilt said the company signed an agreement with a group of European investors who would put up enough money to pay back U.S. customers so that the license could be reinstated. The investors will take over a majority stake in Pocket Kings if the agreement goes through.
While the new investment may look promising for those owed money, one is left scratching their heads why anyone would want to buy the company. Along with the debt owing to U.S. customers, the American government has brought forward a $3 billion civil suit against the company and charged several of its directors with violations under the RICO act. So one has to wonder where the value is to these unnamed investors. No doubt the investors will try and pay back American players, fire all those charged and try and rebrand the company but it is questionable whether that will work. For one thing the value in Full Tilt is in the company name so rebranding it as something else likely won’t win over players who enjoy Full Tilt Poker. Secondly, the proprietary software such as Rush poker is being redeveloped in different ways by competing sites so when Full Tilt is back up and operating their competitive advantage may be gone. And lastly, the Full Tilt professionals, who helped develop the software, and some of who are part owners may want nothing to do with a site that is still on the U.S. watch list. Phil Ivey, for example, announced that he wouldn’t be entering the World Series of Poker as a protest against Full Tilt’s inability to pay U.S. customers and he actually launched a lawsuit against the company. However, almost everyone knows the reason Ivey has moved away from Full Tilt and is trying to have his name taken off the site is for PR reasons. Many in the U.S. are suggesting that Ivey should reimburse U.S. customers with the millions he was paid by Full Tilt over the years and his celebrity status will be severely tarnished if the company from whom he was one of the major poker pros reneges. Even players like Dwan and Allen Cunningham are keeping a very low profile. Some sites have suggested that Ivey changed his mind and will be at the WSOP as a result of the proposed takeover but one thing is almost certain is he won’t be wearing Full Tilt merchandise.
So where does this leave the new investors? While the U.S. government hasn’t said anything they will almost certainly be positive to the new takeover if American voters, err customers, are repaid amounts owing to them, but once that takes place it’s certain the Feds will demand their pound of flesh. As was the case with NETeller, Party Gaming, 888 Gaming and BetonSports to a lesser degree the American government won’t allow Full Tilt to operate successfully again under any name until the government is paid what they believe they have coming to them. They wanted a billion dollars from Party Gaming and eventually settled for hundreds of millions and an apology from Anurag Dikshitz so one can only imagine what they would demand from Full Tilt to settle and close the file. Don’t forget that unlike Party Gaming Full Tilt continued to cater to U.S. customers in direct violation of the UIGEA (or at least that’s what the Feds will claim). And it’s very unlikely that the new investors will still have interest if they have to pay the U.S. government $3 billion.
I spoke to a couple of people close to the Full Tilt situation and while they were unwilling to say anything at this time, it’s clear that they deem the situation dire. And Chuck Barnett from Mohawk Technologies in Kahnawake shared a press release whereby the Kahnawake Gaming Commission is keeping close tabs on a Full Tilt licensee operating on the reserve. The press release stated the following:
Since July, 2010, Kolyma Corporation A.V.V. (“Kolyma”), carrying on business as Full Tilt Poker, has held a Secondary Client Provider Authorization, issued by the Kahnawake Gaming Commission (the “KGC”).
The KGC issues a Secondary CPA only in cases where an operator holds a valid license issued by a primary jurisdiction and has its head office and focus of operations in that primary jurisdiction.
The KGC is aware that the Alderney Gambling Control Commission (“AGCC”), has recently issued Suspension Notices against several companies collectively operating as Full Tilt Poker.
In view of these recent actions, the KGC is reviewing all available information to determine whether the Secondary CPA presently held by Kolyma will be continued.
The one organization that has been surprisingly silent since the seizures is the Remote Gaming Association based in London. In the past the RGA has been very vocal about U.S. action against foreign gaming establishments but thus far the RGA hasn’t said a word. No doubt the RGA has figured out that the American government will do its own thing and complaints and inquiries from them fall on deaf ears. And when Party Gaming decided to settle with the government in spite of their pleas not to it was evident that the RGA has no power even among those in the EU. Of course U.S. disinterest in other countries isn’t unique. It was the same when the World Trade Organization ruled against the U.S. government and it’s been the same when other countries like Antigua cried foul. Even the recent announcement that Antigua may go back to the WTO because of the Cereus situation has resulted in nothing buy yawns. There was hope that things would be different under the current Democrat administration, since Obama said in his lead up to the presidency that he was going to work very closely with the WTO to ensure fairness but these recent arrests (along with other moves against payment providers earlier) are a clear message that the U.S. government crusade against online gambling will continue and is not partisan.
But the question of the day now is will U.S. customers get repaid? The answer depends on how naïve one believes the new investors are. If the investors truly believe that repaying American customers will resolve all the outstanding issues then no doubt Americans will be repaid with the blessing of the U.S. government although at some point they will have to pay the piper. If these investors, however, put in caveats to ensure that the U.S. government will drop all outstanding charges against them so long as U.S. customers are paid then its unlikely Americans will be repaid anything soon. If there’s one thing the Feds have shown over the last decade is that when they have their hooks in the water they won’t back off until the fish is reeled in and when it comes to extortion money... sorry fines they won’t back off until they receive money for their general coffers.
My hunch? It will be quite some time before Americans are repaid or Full Tilt Poker ever operates successfully again.
Contact Hartley via email at Hartley[at]osga[dot]com.
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