It came as somewhat of a shock when it was announced a couple of days ago that Groupe Bernard Tapie’s (GBT) bid to buy the assets of Full Tilt Poker fell through but what was more startling was the news that PokerStars was in the running to purchase Full Tilt for $750 million. I spoke to people in the industry and while some weren’t anxious to discuss the situation until the arrangement was finalized, I did find a couple of sources who were willing to talk anonymously. According to one of those sources, who is very close to the situation, PokerStars’ interest in purchasing Full Tilt has nothing to do with the assets or player lists of the now defunct Full Tilt (after all most non American Full Tilt players have already gone to PokerStars and both PokerStars and any rejuvenated Full Tilt would still banned from accepting U.S. players), but rather PokerStars is interested with the agreement the company has reached with the DoJ which is far more valuable to them.
Apparently the DoJ was never that sold on GBT’s bid to buy the company. Many in the government believe Alderney jumped at GBT’s initial offer and tried to sell it to the DoJ and public because the jurisdiction had egg on their face and were worried how it would reflect on other licensees they had. But the DoJ wanted someone who would pay back all customers immediately and they also wanted compensation for their efforts in bringing down Full Tilt. The DoJ had already extorted err . . . ‘negotiated’ a settlement of $300 million from Party Poker and one of its founders Anurag Dikshitz plus they reached a settlement with 888 Gaming for their past wrongs. In exchange for those settlements charges against the companies were dropped and it appears they have been given a clean slate to pursue a license if and when online gambling is legalized stateside. The DoJ weren’t convinced that GBT had the assets to pay back all players and were specifically concerned that GBT would stiff Americans owed money and concentrate on repaying Rest of the World (ROW) players because Americans were already cut off from playing at Full Tilt, with or without new owners.
Nevertheless, by all accounts the DoJ had agreed in principal to let GBT purchase Full Tilt but they were still talking behind the scenes to other potential buyers who had the assets to pay back everyone immediately and give the DoJ their pound of flesh. The DoJ fears were realized when GBT made it clear that they weren’t prepared to fully reimburse American players immediately and ROW players that were owed money would only be able to withdraw only $100 from their accounts without penalty and the remainder would be subject to a rollover requirement. Moreover, there was a time frame in which the ROW players could play through the amounts owed and if they didn’t meet the requirement there would be a penalty. Both the DoJ and Alderney were worried that this concocted scheme of repaying players could result in a lawsuit against Full Tilt and everyone involved in the agreement. According to the source, someone at the DoJ contacted PokerStars and the 2 sides started working out a deal whereby PokerStars would purchase the assets of the company for $750 million. Under the agreement all players owed money would be reimbursed right away (a little over $300 million) with no strings attached and the remaining $400 million plus would go to the DoJ.
The question on everyone’s mind is why in the world PokerStars would want to buy Full Tilt’s assets and more importantly how it’s worth even close to $750 million. After all, the goodwill in the Full Tilt brand is more or less gone and PokerStars is by far and away the biggest poker site in the world even today. The 2 sources told me that the answer is in the details that probably will never be released to the general public. The DoJ most likely is prepared to make a deal with PokerStars similar to what was arranged with Party Poker. If that is indeed the case then the lawsuits filed by the DoJ against Isai Scheinberg and Paul Tate will be dropped and PokerStars will effectively be given a pardon which will allow them to pursue a license to operate in the U.S. It’s highly unlikely they will endeavor to get a license themselves but will team up with one or more existing casinos. Don’t forget that Wynn had originally agreed to partner with PokerStars to offer a poker product to Nevada residents when the online product is legalized in the state and even though Wynn pulled out after Black Friday there will almost certainly be some renewed interest if PokerStars is given immunity. And as for Full Tilt they were willing to partner with Station Casinos so PokerStars would now have a couple of major partnerships already lined up and it seems just a matter of time before Nevada does legalize online poker. 888 Poker has already signed a partnership with Caesars and that deal was never cancelled since 888 was already effectively granted immunity after coming to an agreement with the DoJ after the passing of the UIGEA. As such, the agreement would be worth $750 million to PokerStars if they truly believe that online poker stateside will come sooner rather than later. And Wynn and Station will want to make sure the previous agreements are renewed so that Caesars doesn’t get a huge head start in offering online poker in Nevada.
Another motivation for the DoJ to come to an agreement that would repay players right away is that this is an election year. No doubt many in the government still recall how pissed off poker players effectively defeated Jim Leach in 2006 in his bid for re-election in Congress and the last thing Barak Obama needs is the PPA starting a campaign to defeat him because of Black Friday. If anything the agreement will likely win support from poker players because they are being repaid and one must remember that the DoJ exposed Full Tilt as a ponzi scheme.
If the deal goes through as expected, the rumor is that the repayment to American players will begin in early summer. Let’s hope so.