Full Tilt Ponzi
September 20, 2011 10:00 PM Subscribe
U.S. Alleges Full Tilt Poker was Ponzi Scheme. The Justice Department has filed suite against popular online poker site Full Tilt Poker, asserting that money players believed to be stored in their accounts was actually diverted to the site's owners, with money from new players being used to pay off bets when necessary. Reaction from the poker community when the site was first shut down in April. Reaction now. Always good for a contrarian spin, Deadspin says the Ponzi scheme is really all the Justice Department's fault.
Really? Online funny money without oversight = scams? Shocking.
Seriously though, online poker should be legal, there is no reason it can't be run legitimately.
posted by furiousxgeorge at 10:17 PM on September 20, 2011 [10 favorites]
Seriously though, online poker should be legal, there is no reason it can't be run legitimately.
posted by furiousxgeorge at 10:17 PM on September 20, 2011 [10 favorites]
To be clear, Full Tilt Poker and Poker Stars aren't just fly-by-night back alley operations. They're the whole reason poker has become a thing in recent years. All those poker tournaments on TV? That's them.
posted by Sys Rq at 10:19 PM on September 20, 2011 [7 favorites]
posted by Sys Rq at 10:19 PM on September 20, 2011 [7 favorites]
I like the argument that the DoJ is at fault, like they somehow made Full Tilt steal their players' money, by pointing out that Full Tilt was doing something illegal. Hilarious.
posted by Blazecock Pileon at 10:20 PM on September 20, 2011 [6 favorites]
posted by Blazecock Pileon at 10:20 PM on September 20, 2011 [6 favorites]
That WSJ article is great, thanks. It's got tons of detail about the shady ways the money transfer folks tried to get around the 2006 US law banning financial institutions from processing online gambling money, and how Full Tilt kept the desperate situation secret from all but a few insiders as their options narrowed and narrowed:
Though cut off from most of its ability to move money, Full Tilt continued to run poker games, crediting players' accounts with cash even though the deposits weren't always processed, according to the government complaint. Often the money remained in the players' own bank accounts. This stopped most money from coming into the company, but it didn't stop dividends from electronically flowing out of the company to the bank accounts of Full Tilt's owners, according to several people with knowledge of the situation.
Blazecock, Deadspin's argument (which, yeah, leaves Full Tilt's owners hilariously off the hook) is that the initial crackdown should never have happened in the first place, and is clearly the cause of the rest of the negative chain of events.
posted by mediareport at 10:25 PM on September 20, 2011
Though cut off from most of its ability to move money, Full Tilt continued to run poker games, crediting players' accounts with cash even though the deposits weren't always processed, according to the government complaint. Often the money remained in the players' own bank accounts. This stopped most money from coming into the company, but it didn't stop dividends from electronically flowing out of the company to the bank accounts of Full Tilt's owners, according to several people with knowledge of the situation.
Blazecock, Deadspin's argument (which, yeah, leaves Full Tilt's owners hilariously off the hook) is that the initial crackdown should never have happened in the first place, and is clearly the cause of the rest of the negative chain of events.
posted by mediareport at 10:25 PM on September 20, 2011
Essentially the argument is that player accounts totaled $300 million dollars, while Full Tilt had only $60 million in assets.
Anyway, the ban on Americans transferring money from Americans to play poker online is complete bullshit. This was a law that was actually passed right before the 2006 elections as a last ditch effort by the republicans to deliver for evangelical Christians (who oppose gambling) hoping to shore up support. It didn't work.
The whole thing is completely ridiculous.
posted by delmoi at 10:30 PM on September 20, 2011 [3 favorites]
Anyway, the ban on Americans transferring money from Americans to play poker online is complete bullshit. This was a law that was actually passed right before the 2006 elections as a last ditch effort by the republicans to deliver for evangelical Christians (who oppose gambling) hoping to shore up support. It didn't work.
The whole thing is completely ridiculous.
posted by delmoi at 10:30 PM on September 20, 2011 [3 favorites]
It's not the Christians who are the driving force behind bans against online gambling - it's the casino industry. The ban is a load of crap. Unfortunately Full Tilt poker is as well.
posted by Poet_Lariat at 10:42 PM on September 20, 2011 [3 favorites]
posted by Poet_Lariat at 10:42 PM on September 20, 2011 [3 favorites]
I follow poker a bit and enjoy playing the occasional tournament at my friendly neighborhood casino. If I'm eating a meal by myself I like to watch games on justin.tv for a quick burst of mediated excitement and drama, etc.
But I've always wondered (and the WSJ article seems to confirm to a certain extent) that the real money in poker since the Moneymaker boom wasn't really in tournament winnings, but in sponsorships.
To put it another way, there are a number of "pros" who, frankly, can't play for shit. Whenever I watch them on TV they lose. They lose badly. Not going too far out on a limb here, but I think my limited skills are probably comparable to theirs.
The point is, I'm convinced there are a lots of "pros" who suck donkey balls when it comes to actual poker skills, but who got lucky with cards a few times to become big name stars. I've always assumed they made their millions purely off of endorsements or that, in fact, they were living hand to mouth based on the past glory of a tournament win five years back.
Obviously, it behooves the poker-sites to promote the idea that a person can always win and never go bust. However, you can't escape math.
Of course, some pros are amazing (Ivey, Duan, Annie Duke, Lederer to name just a few). But I've always wondered about those 2nd and 3rd tier jabronies who seem to make a living off of playing and losing badly on televised tournaments.
posted by bardic at 10:42 PM on September 20, 2011
But I've always wondered (and the WSJ article seems to confirm to a certain extent) that the real money in poker since the Moneymaker boom wasn't really in tournament winnings, but in sponsorships.
To put it another way, there are a number of "pros" who, frankly, can't play for shit. Whenever I watch them on TV they lose. They lose badly. Not going too far out on a limb here, but I think my limited skills are probably comparable to theirs.
The point is, I'm convinced there are a lots of "pros" who suck donkey balls when it comes to actual poker skills, but who got lucky with cards a few times to become big name stars. I've always assumed they made their millions purely off of endorsements or that, in fact, they were living hand to mouth based on the past glory of a tournament win five years back.
Obviously, it behooves the poker-sites to promote the idea that a person can always win and never go bust. However, you can't escape math.
Of course, some pros are amazing (Ivey, Duan, Annie Duke, Lederer to name just a few). But I've always wondered about those 2nd and 3rd tier jabronies who seem to make a living off of playing and losing badly on televised tournaments.
posted by bardic at 10:42 PM on September 20, 2011
Oh and the other thing, the law was actually supported by bit Casinos, who were losing money to online poker. Not everyone wants to go to a casino to play poker, where the rakes are generally higher and of course they have all those totally bogus games of chance (which I do find somewhat immoral)
posted by delmoi at 10:42 PM on September 20, 2011
posted by delmoi at 10:42 PM on September 20, 2011
Essentially the argument is that player accounts totaled $300 million dollars, while Full Tilt had only $60 million in assets.
..lot of that going on lately.
posted by bonobothegreat at 10:42 PM on September 20, 2011 [12 favorites]
..lot of that going on lately.
posted by bonobothegreat at 10:42 PM on September 20, 2011 [12 favorites]
It's not the Christians who are the driving force behind bans against online gambling - it's the casino industry.
Yeah, I was typing another comment saying that but for some reason the 'new comments' thing didn't work :P
posted by delmoi at 10:43 PM on September 20, 2011
Yeah, I was typing another comment saying that but for some reason the 'new comments' thing didn't work :P
posted by delmoi at 10:43 PM on September 20, 2011
This was a law that was actually passed right before the 2006 elections as a last ditch effort by the republicans to deliver for evangelical Christians (who oppose gambling)
I have to say that there are secular reasons to oppose gambling.
posted by Lovecraft In Brooklyn at 10:47 PM on September 20, 2011 [5 favorites]
I have to say that there are secular reasons to oppose gambling.
posted by Lovecraft In Brooklyn at 10:47 PM on September 20, 2011 [5 favorites]
The Justice Department has filed suit against popular online poker site Full Tilt Poker, asserting that money players believed to be stored in their accounts was actually diverted to the site's owners, with money from new players being used to pay off bets when necessary.
Essentially the argument is that player accounts totaled $300 million dollars, while Full Tilt had only $60 million in assets.
So they're a typical American bank?
posted by mek at 10:50 PM on September 20, 2011 [1 favorite]
Essentially the argument is that player accounts totaled $300 million dollars, while Full Tilt had only $60 million in assets.
So they're a typical American bank?
posted by mek at 10:50 PM on September 20, 2011 [1 favorite]
So Paul's like, "Hey, gimme my money." And then Peter got robbed.
posted by XhaustedProphet at 10:50 PM on September 20, 2011 [1 favorite]
posted by XhaustedProphet at 10:50 PM on September 20, 2011 [1 favorite]
Whenever I hear "ponzi" scheme, I think of ponzu.
Ponzu is gooooood.
posted by flapjax at midnite at 10:50 PM on September 20, 2011 [2 favorites]
Ponzu is gooooood.
posted by flapjax at midnite at 10:50 PM on September 20, 2011 [2 favorites]
Also I was looking at this story earlier and apparently Full Tilt poker was based in Alderney which is a British Crown Dependency I initially assumed that meant it was part of the U.K but according to Wikipedia it is not part of the UK or Brittan, and it seems as though laws are made by local councils and passed by assent of the British monarch?
So the question is... WTF? Are they basically as independent as Canada, which technically has The British monarch as a head of state? Or is the Queen actively involved in the governance of these Islands? I thought in Canada the queen only had the authority to appoint a governor general who has no real power? I find the whole thing very odd. Alderney has only 2,400 people.
posted by delmoi at 10:53 PM on September 20, 2011
So the question is... WTF? Are they basically as independent as Canada, which technically has The British monarch as a head of state? Or is the Queen actively involved in the governance of these Islands? I thought in Canada the queen only had the authority to appoint a governor general who has no real power? I find the whole thing very odd. Alderney has only 2,400 people.
So they're a typical American bank?When a bank lends $100 that debt becomes an asset of the bank. So even if the bank doesn't have the cash to cover all the deposits, they should have assets worth more then the deposits. In theory, the assets could go bad -- but in ordinary times the good assets will cover the costs of the bad assets. In non-ordinary times you get things like the collapse of IndyMac and Wamu
posted by delmoi at 10:53 PM on September 20, 2011
Is this really a Ponzi scheme? So what if Full Tilt is paying old debts with new customers' money? The salient feature of a Ponzi scheme is that it needs to keep growing its customer base exponentially, and I don't know how a poker web site would be structured like.
If the government wants to go after exponential growth scams, maybe they ought to go after Amway instead of poker players.
posted by qxntpqbbbqxl at 10:54 PM on September 20, 2011 [2 favorites]
If the government wants to go after exponential growth scams, maybe they ought to go after Amway instead of poker players.
posted by qxntpqbbbqxl at 10:54 PM on September 20, 2011 [2 favorites]
Top online and live pro player Tom "durrrr" Dwan, who was a well paid pro for FullTilt (and who also appeared prominently in their advertising), opened a very interesting thread on the twoplustwo.com poker forum where he has been answering specific questionssubmitted by forum members about what he knew and when he knew it. In short, he feels free to speak his mind now that the DOJ indictment is out. His comments have been very candid. I've been following the thread on and off this afternoon and it's made for an interesting read.
As someone who played a ton of online poker up until 2006 (and then quit online poker when the games went to shit following the passage of the UIGEA), I feel definitely feel some schadenfreude reading about this clusterfuck of a scandal. The lack of regulation and oversight by any meaningful entity left the door wide open for the sort of gross violation of trust we're reading about now. It's not that poker players are universally untrustworthy -- though clearly some are -- it's that unregulated access to hundred of millions of dollars is simply too much temptation to resist. From Dwan's account, FullTilt made a monumentally bad decision when they decided to credit players' accounts with deposits that were never actually completed, a decision that allowed them to continue to operate and collect rake (i.e., gaming fees) from players on their site, but also sealed their fate, as the players were playing with money that they never actually deposited. This was the Ponzi scheme alleged by the DOJ -- as long as the players never tried to withdraw all of their money en masse, things stayed afloat. Of course, that's not what happened...
I do feel very bad for all of the players that have money tied up in FTP -- they got screwed. Selfishly, I also feel bad that the money ostensibly "held" by FTP will NOT be returning my local poker economy in the form of buy-ins and tournament entry fees. The situation sucks all the way around...
posted by mosk at 10:57 PM on September 20, 2011 [9 favorites]
As someone who played a ton of online poker up until 2006 (and then quit online poker when the games went to shit following the passage of the UIGEA), I feel definitely feel some schadenfreude reading about this clusterfuck of a scandal. The lack of regulation and oversight by any meaningful entity left the door wide open for the sort of gross violation of trust we're reading about now. It's not that poker players are universally untrustworthy -- though clearly some are -- it's that unregulated access to hundred of millions of dollars is simply too much temptation to resist. From Dwan's account, FullTilt made a monumentally bad decision when they decided to credit players' accounts with deposits that were never actually completed, a decision that allowed them to continue to operate and collect rake (i.e., gaming fees) from players on their site, but also sealed their fate, as the players were playing with money that they never actually deposited. This was the Ponzi scheme alleged by the DOJ -- as long as the players never tried to withdraw all of their money en masse, things stayed afloat. Of course, that's not what happened...
I do feel very bad for all of the players that have money tied up in FTP -- they got screwed. Selfishly, I also feel bad that the money ostensibly "held" by FTP will NOT be returning my local poker economy in the form of buy-ins and tournament entry fees. The situation sucks all the way around...
posted by mosk at 10:57 PM on September 20, 2011 [9 favorites]
Everyone is surprised Chris Ferguson is one of the big bads. Lederer not so much.
posted by fraac at 10:57 PM on September 20, 2011
posted by fraac at 10:57 PM on September 20, 2011
Capitalism is a ponzi scheme.
posted by auto-correct at 10:58 PM on September 20, 2011 [11 favorites]
posted by auto-correct at 10:58 PM on September 20, 2011 [11 favorites]
If only they'd used Bitcoin!
posted by klangklangston at 11:03 PM on September 20, 2011 [13 favorites]
posted by klangklangston at 11:03 PM on September 20, 2011 [13 favorites]
FullTilt made a monumentally bad decision when they decided to credit players' accounts with deposits that were never actually completed, a decision that allowed them to continue to operate and collect rakeYeah. Why on earth would they do that? Did they have some rule like: you can play with money you deposit, but can't withdraw? What would stop someone from "losing" money to a friend and having them withdraw? Seems bizarre.
posted by delmoi at 11:03 PM on September 20, 2011
Is this really a Ponzi scheme?
If the only way to cover players withdrawing their winnings, is to sucker new players into making deposits, then that's pretty much the very definition of a pyramid scheme.
posted by Blazecock Pileon at 11:04 PM on September 20, 2011
If the only way to cover players withdrawing their winnings, is to sucker new players into making deposits, then that's pretty much the very definition of a pyramid scheme.
posted by Blazecock Pileon at 11:04 PM on September 20, 2011
Going by that Durrr thread, it's going to be fun to watch future games between him, Lederer, and or Jesus.
He's basically washing his hands of FTP and alleging criminal incompetence on the part of FTP founders and bigwigs.
Wonder how that'll affect his future sponsorship deals, although he could make millions based on his incredible skills alone.
posted by bardic at 11:08 PM on September 20, 2011
He's basically washing his hands of FTP and alleging criminal incompetence on the part of FTP founders and bigwigs.
Wonder how that'll affect his future sponsorship deals, although he could make millions based on his incredible skills alone.
posted by bardic at 11:08 PM on September 20, 2011
Why on earth would they do that?
Because they were hoping that they could take the loss and the interruption in funds would be only temporary; they started doing some shady shit to get around it. They were probably worried that if they flat out denied access to Americans that the company would go under.
Party Poker's decision in the face of the UIGEA is looking pretty savvy.
posted by ODiV at 11:08 PM on September 20, 2011
Because they were hoping that they could take the loss and the interruption in funds would be only temporary; they started doing some shady shit to get around it. They were probably worried that if they flat out denied access to Americans that the company would go under.
Party Poker's decision in the face of the UIGEA is looking pretty savvy.
posted by ODiV at 11:08 PM on September 20, 2011
I like the argument that the DoJ is at fault, like they somehow made Full Tilt steal their players' money, by pointing out that Full Tilt was doing something illegal. Hilarious.
Isn't this the usual Republican argument? Or the thing where racism and sexism will disappear when we stop talking about it? It seems to have a surprising success rate as an obfuscation tactic.
posted by yeloson at 11:09 PM on September 20, 2011 [4 favorites]
Isn't this the usual Republican argument? Or the thing where racism and sexism will disappear when we stop talking about it? It seems to have a surprising success rate as an obfuscation tactic.
posted by yeloson at 11:09 PM on September 20, 2011 [4 favorites]
But I've always wondered about those 2nd and 3rd tier jabronies who seem to make a living off of playing and losing badly on televised tournaments.
By the time you saw them lose on tv, they were already in the money.
And I know people who made a living playing poker and they were never on tv and had no sponsorships. You play mid-stakes games online, and you play multiple tables at once. You can make a decent living that way.
posted by empath at 11:18 PM on September 20, 2011 [4 favorites]
By the time you saw them lose on tv, they were already in the money.
And I know people who made a living playing poker and they were never on tv and had no sponsorships. You play mid-stakes games online, and you play multiple tables at once. You can make a decent living that way.
posted by empath at 11:18 PM on September 20, 2011 [4 favorites]
By the time you saw them lose on tv, they were already in the money.
That and any professional tournament player is still going to be losing a lot of the time and finishing out of the money in a significant amount of the tournaments he/she enters.
The people who make a living player poker lose an incredible amount of money at the poker table. The actual figures are staggering. It's just the amount they win is slightly more.
posted by ODiV at 11:26 PM on September 20, 2011 [2 favorites]
That and any professional tournament player is still going to be losing a lot of the time and finishing out of the money in a significant amount of the tournaments he/she enters.
The people who make a living player poker lose an incredible amount of money at the poker table. The actual figures are staggering. It's just the amount they win is slightly more.
posted by ODiV at 11:26 PM on September 20, 2011 [2 favorites]
I have to say that there are secular reasons to oppose gambling.
There are, but poker is pretty legitimately a game of skill. My social libertarian side doesn't like protecting people from themselves here.
posted by furiousxgeorge at 11:26 PM on September 20, 2011 [2 favorites]
There are, but poker is pretty legitimately a game of skill. My social libertarian side doesn't like protecting people from themselves here.
posted by furiousxgeorge at 11:26 PM on September 20, 2011 [2 favorites]
There are, but poker is pretty legitimately a game of skill. My social libertarian side doesn't like protecting people from themselves here.
oh, agreed. I have a problem with poker machines. Online gambling and normal poker seems fine, though.
posted by Lovecraft In Brooklyn at 11:38 PM on September 20, 2011 [1 favorite]
oh, agreed. I have a problem with poker machines. Online gambling and normal poker seems fine, though.
posted by Lovecraft In Brooklyn at 11:38 PM on September 20, 2011 [1 favorite]
Yeah, those are basically poker themed slot machines. They have about as much to do with poker as a poker pinball machine.
Thanks for that link to durrrr's answers on 2+2, mosk. It's a pretty interesting read.
posted by ODiV at 11:43 PM on September 20, 2011
Thanks for that link to durrrr's answers on 2+2, mosk. It's a pretty interesting read.
posted by ODiV at 11:43 PM on September 20, 2011
There are, but poker is pretty legitimately a game of skill. My social libertarian side doesn't like protecting people from themselves here.
Alpha plays a bigger role in poker than it does in mutual fund management, so if you're going to outlaw the one, you should probably outlaw the other...
posted by Vetinari at 11:47 PM on September 20, 2011 [1 favorite]
Alpha plays a bigger role in poker than it does in mutual fund management, so if you're going to outlaw the one, you should probably outlaw the other...
posted by Vetinari at 11:47 PM on September 20, 2011 [1 favorite]
The people who make a living player poker lose an incredible amount of money at the poker table. The actual figures are staggering. It's just the amount they win is slightly more.Due to really annoying rules about how you have to claim poker income, I typically reported "income" of approximately 40 times my net winnings on my taxes every year and then had similarly huge "losses" to report. Whatever amusement value reporting an income of over a million bucks offers was far offset by the negative effects on AMT and limited deductions brought on by the artificially high "income."
I was relatively lucky in that the majority of the money I had online was on PokerStars who paid out with no drama once the DoJ shut them down. Tilt owes me quite a bit of cash, but it could have been a whole lot worse. I have a lot of friends who simultaneously lost their job and tens of thousands of dollars on Black Friday. The $300 million shortfall represents a lot of people who have been seriously screwed.
posted by Lame_username at 1:11 AM on September 21, 2011 [2 favorites]
The extent that it's the DOJ's fault is that the sketchy and unreliable payment processor systems that led to the situation being described as a Ponzi scheme are a direct result of the UIGEA's crackdown on the legitimate payment processors that were being used beforehand.
Once I read more about the situation (especially Dwan's answers in the 2+2 thread), it seems that once FTP started crediting deposits without receiving the money sometime in 2010, they just didn't stop, and that's where the problem lies.
But this is the result of unregulated markets of any kind; greed trumps all.
Funny how a game so steeped in American lore can be illegal in America. Land of the free, pick yourself up by your bootstraps, live on your wits, amirite?
posted by nath at 1:11 AM on September 21, 2011 [1 favorite]
Once I read more about the situation (especially Dwan's answers in the 2+2 thread), it seems that once FTP started crediting deposits without receiving the money sometime in 2010, they just didn't stop, and that's where the problem lies.
But this is the result of unregulated markets of any kind; greed trumps all.
Funny how a game so steeped in American lore can be illegal in America. Land of the free, pick yourself up by your bootstraps, live on your wits, amirite?
posted by nath at 1:11 AM on September 21, 2011 [1 favorite]
As far as I know Full Tilt Poker have some sort of headquarters here in Dublin, Ireland. Certainly a Pocket Kings, a company here that does marketing and tech for them look set to lose 250 jobs.
posted by GallonOfAlan at 1:33 AM on September 21, 2011
posted by GallonOfAlan at 1:33 AM on September 21, 2011
I saw on one of the threads about this that sometimes Full Tilt would credit people's account for money that never left their banks. I don't understand how this never got picked up on. It seems like a pretty significant red flag in its own right. How could you do business with a company that can't even manage to take your money correctly?
Maybe I am misunderstanding something about this since I'm not a poker player, but it just seems nuts to me.
posted by feloniousmonk at 1:35 AM on September 21, 2011 [1 favorite]
Maybe I am misunderstanding something about this since I'm not a poker player, but it just seems nuts to me.
posted by feloniousmonk at 1:35 AM on September 21, 2011 [1 favorite]
But if a big amount of the money people tried to give to Full Tilt never got to them, where did it go? Did the financial go-betweens pocket it, in which case they're the ones doing the stealing? Or did the payments bounce back to the players, leaving them playing on balances that they never really paid, making the dollar value of what Full Tilt "owes" not real money? (Of course, that probably ended up moved from one account to another, so losing players who never really 'ante'd up' would actually be the ones owing the winning players, right?)
It was majorly stupid and wrong for Full Tilt to go on as if nothing was wrong with its cash flow, but not necessarily criminal, at least not on the scale the DOJ claims. Or am I misunderstanding this whole convoluted mess?
posted by oneswellfoop at 1:48 AM on September 21, 2011
It was majorly stupid and wrong for Full Tilt to go on as if nothing was wrong with its cash flow, but not necessarily criminal, at least not on the scale the DOJ claims. Or am I misunderstanding this whole convoluted mess?
posted by oneswellfoop at 1:48 AM on September 21, 2011
feloniousmonk - I've been following this pretty closely and while the post-UIGEA deposits and payouts were pretty "sketchily" done, I'm actually starting to have the feeling that as the DOJ investigated this file, these strange credits may have been the straw that caused the DOJ to act how it acted and when. They were sure to have had a pretty good idea that FTP's system had collapsed which of course added the double interest in a) dealing with companies that it felt were circumventing the law but also b) protecting the public interest. The DOJ's actions are what shook the tree, but the problem at FTP was already critical.
Pokerstars, by contrast, has been dream - they seem to have cooperated so far, and most importantly they proceeded with payouts to US players in an orderly fashion.
Anyhow naming the Board of Directors members - Federer, Ferguson, Bitar, and the other guy does hold out some hope that if/when the DOJ seizes or otherwise gains access to the specified money they will seek to use it to help pay out players that have been left in the lurch. Maybe only at 50 cents on the dollar, but still...
posted by mikel at 1:54 AM on September 21, 2011
Pokerstars, by contrast, has been dream - they seem to have cooperated so far, and most importantly they proceeded with payouts to US players in an orderly fashion.
Anyhow naming the Board of Directors members - Federer, Ferguson, Bitar, and the other guy does hold out some hope that if/when the DOJ seizes or otherwise gains access to the specified money they will seek to use it to help pay out players that have been left in the lurch. Maybe only at 50 cents on the dollar, but still...
posted by mikel at 1:54 AM on September 21, 2011
I don't understand how this never got picked up on.
My understanding is that it *was* picked up on -- Full Tilt was well aware that they weren't collecting that money, but that by taking that business when everyone was struggling to make deposits from the USA, they were stealing customers away from PokerStars, and so felt it was worth it to them.
Presumably, they felt they'd be able to collect it later at some point.
There have been reports on 2+2 of people having deposits credited to their account of thousands of dollars, then actually cashing this money out, despite it never having been deposited. Once the DOJ acted, Full Tilt was never going to be able to collect that money.
I should also mention the reporting at Subject: Poker on this story. Their coverage has been far and away the most informed on the issue.
posted by PeterMcDermott at 2:02 AM on September 21, 2011 [2 favorites]
My understanding is that it *was* picked up on -- Full Tilt was well aware that they weren't collecting that money, but that by taking that business when everyone was struggling to make deposits from the USA, they were stealing customers away from PokerStars, and so felt it was worth it to them.
Presumably, they felt they'd be able to collect it later at some point.
There have been reports on 2+2 of people having deposits credited to their account of thousands of dollars, then actually cashing this money out, despite it never having been deposited. Once the DOJ acted, Full Tilt was never going to be able to collect that money.
I should also mention the reporting at Subject: Poker on this story. Their coverage has been far and away the most informed on the issue.
posted by PeterMcDermott at 2:02 AM on September 21, 2011 [2 favorites]
The people who make a living player poker lose an incredible amount of money at the poker table. The actual figures are staggering. It's just the amount they win is slightly more.
Some of the revelations about how much their sponsored pro's were borrowing from Tilt might suggest otherwise.
posted by PeterMcDermott at 2:08 AM on September 21, 2011 [3 favorites]
Some of the revelations about how much their sponsored pro's were borrowing from Tilt might suggest otherwise.
posted by PeterMcDermott at 2:08 AM on September 21, 2011 [3 favorites]
So the question is... WTF? Are they basically as independent as Canada, which technically has The British monarch as a head of state? Or is the Queen actively involved in the governance of these Islands? I thought in Canada the queen only had the authority to appoint a governor general who has no real power? I find the whole thing very odd. Alderney has only 2,400 people.
Welcome to the wonderful world of the Treasure Islands!
Anyway, this case demonstrates once again that the safest way to win at poker is to steal the deposits. As more entertainingly shown in this movie (warning: spoiler).
posted by Skeptic at 2:54 AM on September 21, 2011 [1 favorite]
Welcome to the wonderful world of the Treasure Islands!
Anyway, this case demonstrates once again that the safest way to win at poker is to steal the deposits. As more entertainingly shown in this movie (warning: spoiler).
posted by Skeptic at 2:54 AM on September 21, 2011 [1 favorite]
A family member once watched a poker show on tv, and i wanted to gouge my eyes out. Most boring thing i've ever watched, with even more annoying sounds (the click, click, click of constant fidgeting with the chips). Watching a Starcraft tournament from Korea was a thousand times more enjoyable, and i don't really play that either.
Since i don't really play poker, i've never seen the "skill" mentioned, it seems more what cards you get, and trying to pretend you have a good hand. Also, people complaining about losing money gambling, that kind of makes me laugh, isn't that the inherent risk of gambling?
posted by usagizero at 3:02 AM on September 21, 2011 [1 favorite]
Since i don't really play poker, i've never seen the "skill" mentioned, it seems more what cards you get, and trying to pretend you have a good hand. Also, people complaining about losing money gambling, that kind of makes me laugh, isn't that the inherent risk of gambling?
posted by usagizero at 3:02 AM on September 21, 2011 [1 favorite]
People did not lose money gambling, usagizero. They had their deposits taken outside of a poker game. It is willful ignorance to say that it's all gambling, and you're doing it to make it seem like those cheated got what's coming to them.
Why this attitude? Just because they're gambling, or is it that they're gambling online? It's spiteful and it's bullshit. A company has stolen 12 figures from its customers and people are blaming the victims because it's poker. It really shouldn't matter.
posted by cotterpin at 3:43 AM on September 21, 2011 [6 favorites]
Why this attitude? Just because they're gambling, or is it that they're gambling online? It's spiteful and it's bullshit. A company has stolen 12 figures from its customers and people are blaming the victims because it's poker. It really shouldn't matter.
posted by cotterpin at 3:43 AM on September 21, 2011 [6 favorites]
A family member once watched a poker show on tv, and i wanted to gouge my eyes out. Most boring thing i've ever watched, with even more annoying sounds (the click, click, click of constant fidgeting with the chips).
Yeah, chess is the same. Just two guys, sitting opposite each other, moving bits of wood around a board. WTF is that all about?
posted by PeterMcDermott at 3:43 AM on September 21, 2011 [7 favorites]
Yeah, chess is the same. Just two guys, sitting opposite each other, moving bits of wood around a board. WTF is that all about?
posted by PeterMcDermott at 3:43 AM on September 21, 2011 [7 favorites]
Interestingly, if you win money playing in chess tournaments, the IRS treats it exactly like gambling winnings.
posted by thelonius at 3:47 AM on September 21, 2011
posted by thelonius at 3:47 AM on September 21, 2011
"Since i don't really play poker, i've never seen the 'skill' mentioned"
Anybody can win with good cards. Good players win with bad cards, and it takes a lot of practice and skill and a good dose of mathematics to be able to do this consistently. Good players with good cards will use their ability to maximize their profits on each hand.
To put it another way, some players are really f'ing amazing and some are pretty bad while many are just average. If it was purely a game of chance like Roulette than you wouldn't have "good" and "bad" players. The math wouldn't allow it.
"trying to pretend you have a good hand"
This is very much a learned skill.
"isn't that the inherent risk of gambling?"
If you'd RTFA you'd see that the people didn't lose money gambling, they lost money that they'd fairly (albeit possibly illegally) won through play.
posted by bardic at 3:51 AM on September 21, 2011 [1 favorite]
Anybody can win with good cards. Good players win with bad cards, and it takes a lot of practice and skill and a good dose of mathematics to be able to do this consistently. Good players with good cards will use their ability to maximize their profits on each hand.
To put it another way, some players are really f'ing amazing and some are pretty bad while many are just average. If it was purely a game of chance like Roulette than you wouldn't have "good" and "bad" players. The math wouldn't allow it.
"trying to pretend you have a good hand"
This is very much a learned skill.
"isn't that the inherent risk of gambling?"
If you'd RTFA you'd see that the people didn't lose money gambling, they lost money that they'd fairly (albeit possibly illegally) won through play.
posted by bardic at 3:51 AM on September 21, 2011 [1 favorite]
Welcome to the wonderful world of the Treasure Islands!
The Tax Justice Network have a great website up presenting their research on this issue called Secrecy Jurisdictions; here's the report on Guernsey (PDF), to which Alderney is a subsidiary for these purposes IIRC (the website of the Alderney Gambling Control Commission seems to confirm that).
posted by Abiezer at 3:57 AM on September 21, 2011 [1 favorite]
The Tax Justice Network have a great website up presenting their research on this issue called Secrecy Jurisdictions; here's the report on Guernsey (PDF), to which Alderney is a subsidiary for these purposes IIRC (the website of the Alderney Gambling Control Commission seems to confirm that).
posted by Abiezer at 3:57 AM on September 21, 2011 [1 favorite]
I thought you had to move to southeast asia if you were going to be a creepy white guy who "made his living" from online poker.
posted by spitbull at 5:08 AM on September 21, 2011
posted by spitbull at 5:08 AM on September 21, 2011
So the question is... WTF? Are they basically as independent as Canada, which technically has The British monarch as a head of state?
Well, if wikipedia is to be believed, in 1949 the UK Parliament forcibly reorganized their internal government. So no.
posted by ROU_Xenophobe at 5:24 AM on September 21, 2011
Well, if wikipedia is to be believed, in 1949 the UK Parliament forcibly reorganized their internal government. So no.
posted by ROU_Xenophobe at 5:24 AM on September 21, 2011
"trying to pretend you have a good hand"
This is very much a learned skill.
Isn't that factor gone in online poker? You have to know when to bluff and perhaps how long to stay in, but you aren't actually pretending you have a good hand in a way that needs to convince people.
I personally don't see the appeal of watching other people play poker because it feels like I could just as well watch some computers play poker and where's the fun in that? As someone who's rubbish at poker (I can never remember the relative values of the hands, for a start), it feels like it reduces down to some computations that, once you have figured out, you just do over and over, like knowing when to call in Blackjack. We can certainly teach computers to play chess at a very high level, but I don't understand the computation they're doing. I have no idea how a computer analyses a position. It's a solved problem in the sense that I can play chess, loads of other people can play chess and computers can play chess, but it's not a problem with a transparent solution. Watching people play chess isn't that interesting in and of itself, I don't think. Like someone said above, it's watching two guys move some bits of plastic around. Talking or thinking about what could have happened, other lines or why move X was the right move is the interesting part.
posted by hoyland at 5:36 AM on September 21, 2011
This is very much a learned skill.
Isn't that factor gone in online poker? You have to know when to bluff and perhaps how long to stay in, but you aren't actually pretending you have a good hand in a way that needs to convince people.
I personally don't see the appeal of watching other people play poker because it feels like I could just as well watch some computers play poker and where's the fun in that? As someone who's rubbish at poker (I can never remember the relative values of the hands, for a start), it feels like it reduces down to some computations that, once you have figured out, you just do over and over, like knowing when to call in Blackjack. We can certainly teach computers to play chess at a very high level, but I don't understand the computation they're doing. I have no idea how a computer analyses a position. It's a solved problem in the sense that I can play chess, loads of other people can play chess and computers can play chess, but it's not a problem with a transparent solution. Watching people play chess isn't that interesting in and of itself, I don't think. Like someone said above, it's watching two guys move some bits of plastic around. Talking or thinking about what could have happened, other lines or why move X was the right move is the interesting part.
posted by hoyland at 5:36 AM on September 21, 2011
The precise constitutional nature of the Channel Islands is not a subject for casual inquiry. Suffice it to say that their relation to the UK is best exemplified by the requirement of the mayor of one parish on Jersey to present the Queen with two ducks chained together when she visits.
posted by cromagnon at 5:40 AM on September 21, 2011 [2 favorites]
posted by cromagnon at 5:40 AM on September 21, 2011 [2 favorites]
holy shit do we really have to explain to some genius who saw it on TV once why poker is a game of skill and not evil in every single thread about it? Read one thing about poker before asking dumb questions people. ARGH.
posted by Potomac Avenue at 5:56 AM on September 21, 2011 [8 favorites]
posted by Potomac Avenue at 5:56 AM on September 21, 2011 [8 favorites]
Funny that Durr is incredulous about the DOJ's claim that it's a Ponzi Scheme when, as someone who borrowed a ton from FT in order to play there, he's sort of a beneficiary of the pyramid-nature of the scheme, playing with money that doesn't exist. Though presumably the board members got a lot more in non-loan money, and kudos to him for offering to pay it back to players who were defrauded.
Fundamentally, Deadspin is right too. This never could have happened in a legal, regulated environment. Both FT and Poker stars (god bless em) have been begging for regulation for years but for some reason it makes more sense to the US Govt to force the millions of daily US online players to sneak around in the twilight zone unprotected and yet not technically breaking the law. At least in the copyright situation you are aware that torrenting or whatever is illegal--with poker the law itself is unclear, especially since the sites are operated from overseas. Meanwhile England and France haven't imploded with poker orphans running wild in the streets and have nationalized poker sites that feed yummy tax dollars and jobs into their economies.
I'm just praying that DC goes through with this online poker legalization. Maybe we'll become the Thailand of the East Coast!
posted by Potomac Avenue at 6:09 AM on September 21, 2011 [1 favorite]
Fundamentally, Deadspin is right too. This never could have happened in a legal, regulated environment. Both FT and Poker stars (god bless em) have been begging for regulation for years but for some reason it makes more sense to the US Govt to force the millions of daily US online players to sneak around in the twilight zone unprotected and yet not technically breaking the law. At least in the copyright situation you are aware that torrenting or whatever is illegal--with poker the law itself is unclear, especially since the sites are operated from overseas. Meanwhile England and France haven't imploded with poker orphans running wild in the streets and have nationalized poker sites that feed yummy tax dollars and jobs into their economies.
I'm just praying that DC goes through with this online poker legalization. Maybe we'll become the Thailand of the East Coast!
posted by Potomac Avenue at 6:09 AM on September 21, 2011 [1 favorite]
...their relation to the UK is best exemplified by the requirement of the mayor of one parish on Jersey to present the Queen with two ducks chained together when she visits.
That was fascinating; too bad she didn't get her cow.
posted by TedW at 6:10 AM on September 21, 2011
That was fascinating; too bad she didn't get her cow.
posted by TedW at 6:10 AM on September 21, 2011
Between televising card games and the rough gay porn that is MMA, ESPN has been abusing the term "sport" for some time now.
posted by dr_dank at 6:10 AM on September 21, 2011 [1 favorite]
posted by dr_dank at 6:10 AM on September 21, 2011 [1 favorite]
I was relatively lucky in that the majority of the money I had online was on PokerStars who paid out with no drama once the DoJ shut them down.
Are there any good links that describe the differences between the way PokerStars and Party Poker handled this and the way Full Tilt handled it? That would be great to have. And thanks to mosk and PeterMcDermott for adding such great stuff.
Fundamentally, Deadspin is right too.
I think so, too, but they weaken their case by completely ignoring the fact that Full Tilt behaved really stupidly after the fact. That's just dumb.
holy shit do we really have to explain to some genius who saw it on TV once why poker is a game of skill and not evil in every single thread about it?
Well, at least you know how MeFi transgender supporters often feel. There's that.
posted by mediareport at 6:23 AM on September 21, 2011
Are there any good links that describe the differences between the way PokerStars and Party Poker handled this and the way Full Tilt handled it? That would be great to have. And thanks to mosk and PeterMcDermott for adding such great stuff.
Fundamentally, Deadspin is right too.
I think so, too, but they weaken their case by completely ignoring the fact that Full Tilt behaved really stupidly after the fact. That's just dumb.
holy shit do we really have to explain to some genius who saw it on TV once why poker is a game of skill and not evil in every single thread about it?
Well, at least you know how MeFi transgender supporters often feel. There's that.
posted by mediareport at 6:23 AM on September 21, 2011
-"trying to pretend you have a good hand"
"This is very much a learned skill."
Isn't that factor gone in online poker? You have to know when to bluff and perhaps how long to stay in, but you aren't actually pretending you have a good hand in a way that needs to convince people.
It's not really about acting, even in live action acting is a small part of it. Good players create what's called the "illusion of action". This boils down to making it seem like they could be in any one spot with a wide range of hands (that is high ranking and low ranking hands) which results in their getting an excessive amount of action from their opponents. In reality, the skilled player is exercising a lot of discretion in the hands where they actually do play a wide range of values, i.e. generally the hands where they suspect that they can bet and take it either right then, or do so on a later street or there's a small chance they can walk into a big hand and it's cheap to stay in. Players do of course look to deceive each other on values of a specific hand, but they're more concerned with what their image is saying about the range of hands that they're expected to show up with at any particular spot in the game. This doesn't come across real well in TV, but it's a key concern when you're up against thinking players. After all, if your opponents know that in a given situation you can only have one of a small number of hands and they're correct, then you'll never get any action in that spot unless you're beat.
posted by BigSky at 6:30 AM on September 21, 2011 [3 favorites]
"This is very much a learned skill."
Isn't that factor gone in online poker? You have to know when to bluff and perhaps how long to stay in, but you aren't actually pretending you have a good hand in a way that needs to convince people.
It's not really about acting, even in live action acting is a small part of it. Good players create what's called the "illusion of action". This boils down to making it seem like they could be in any one spot with a wide range of hands (that is high ranking and low ranking hands) which results in their getting an excessive amount of action from their opponents. In reality, the skilled player is exercising a lot of discretion in the hands where they actually do play a wide range of values, i.e. generally the hands where they suspect that they can bet and take it either right then, or do so on a later street or there's a small chance they can walk into a big hand and it's cheap to stay in. Players do of course look to deceive each other on values of a specific hand, but they're more concerned with what their image is saying about the range of hands that they're expected to show up with at any particular spot in the game. This doesn't come across real well in TV, but it's a key concern when you're up against thinking players. After all, if your opponents know that in a given situation you can only have one of a small number of hands and they're correct, then you'll never get any action in that spot unless you're beat.
posted by BigSky at 6:30 AM on September 21, 2011 [3 favorites]
mediareport: Yeah, and women, and African Americans etc, I'm sure. Not that poker is some kind of identity on par with those but sheesh. It's like every time there was a thread about a graphic novel someone coming in and going COMICS ARE FOR KIDS LOL @ TEH NERDS.
Anyway, oh I mean obviously Full Tilt acted criminally here. In fact they acted a lot like Lehman Brothers et all in the financial crises.
The differences between Stars and Tilt seems to be:
Stars didn't loan money to their pros. (or least not much that we've heard. They paid pros salaries and probably buy-ins, but that's it.)
Stars had a better relationship with, or less shady taste in, middlemen. All of the money processed from US banks to Stars went through, none was run off with etc. so they didn't have to watch attempted deposits fail or disappear.
Stars has a bigger presence overseas. Because they were still making money from European Players, they could pay back US players. FT's market was majority US.
Stars is the biggest poker site in the world. They had more money on hand period.
(Please correct me if I'm wrong about those assumptions anyone!)
posted by Potomac Avenue at 6:37 AM on September 21, 2011
Anyway, oh I mean obviously Full Tilt acted criminally here. In fact they acted a lot like Lehman Brothers et all in the financial crises.
The differences between Stars and Tilt seems to be:
Stars didn't loan money to their pros. (or least not much that we've heard. They paid pros salaries and probably buy-ins, but that's it.)
Stars had a better relationship with, or less shady taste in, middlemen. All of the money processed from US banks to Stars went through, none was run off with etc. so they didn't have to watch attempted deposits fail or disappear.
Stars has a bigger presence overseas. Because they were still making money from European Players, they could pay back US players. FT's market was majority US.
Stars is the biggest poker site in the world. They had more money on hand period.
(Please correct me if I'm wrong about those assumptions anyone!)
posted by Potomac Avenue at 6:37 AM on September 21, 2011
Oh, and Party Poker blocked all US accounts in 2006 after the passage of the law that made it more illegal to run a US-facing poker site. They are publicly traded company operating entirely above board and extremely well regulated and full of UK and European and Asian players. They have nothing to do with this latest scandal. I, and everyone else who plays poker, have weekly fantasies about one day playing there again. :C missU pp <3 <3 <3
posted by Potomac Avenue at 6:40 AM on September 21, 2011 [2 favorites]
posted by Potomac Avenue at 6:40 AM on September 21, 2011 [2 favorites]
Somehow I'm still more pissed at the DOJ & Congress than I am at Full Tilt. I might feel differently if I had more than $80 locked up on Full Tilt, though.
I felt like Uncle Sam punched me in the stomach on Black Friday and I'm just a casual player.
posted by callmejay at 7:42 AM on September 21, 2011
I felt like Uncle Sam punched me in the stomach on Black Friday and I'm just a casual player.
posted by callmejay at 7:42 AM on September 21, 2011
Stars didn't loan money to their pros. (or least not much that we've heard. They paid pros salaries and probably buy-ins, but that's it.)I heard a few stories at the WSOP this year that suggested that they also did it to some degree but on a much smaller scale. This, in my opinion, was primarily because Stars was not run by fellow high-stakes players. This meant that the loans tended to be directly related to buy-ins and advertising related expenses. They also didn't have the super-high-stakes games running that drove most of the crazy money movement that happened at Tilt.
Stars had a better relationship with, or less shady taste in, middlemen. All of the money processed from US banks to Stars went through, none was run off with etc. so they didn't have to watch attempted deposits fail or disappear.My sense is that they used a lot of the same people, but that Stars cut things off when they didn't have relationships. There were a lot of times I heard that e-check processing wasn't available on Stars on a state by state basis. It appears that Tilt continued to accept e-check transactions even when they didn't have a processor to support them in the hopes that they would eventually find one. I can think of at least three times that I had to get a check mailed to me by Stars because they didn't have a payment processor in Virginia. One time they wired it through Wal*Mart and I had to pick it up in the local store. The Wal*Mart people were clearly put off by paying me $20,000 so I could go to a live tourney.
Stars has a bigger presence overseas. Because they were still making money from European Players, they could pay back US players. FT's market was majority US.This was a huge factor. Tilt was like 80% US players, Stars was much more diversified.
The one big thing that you missed was that Stars apparently really did keep player balances segregated in separate accounts like everyone was supposed to.
I'd also add that Tilt was started and run primarily by poker players in a loose cabal. Stars was started by Isai Scheinberg and his brothers and run more like a family business. Isai is a computer guy (used to work at IBM) and is not much of a poker player at all. He is not widely known in the poker community at all. I've only heard of Isai and his son Mark being actively involved in running the site -- I've never even heard the brother's names.
posted by Lame_username at 7:48 AM on September 21, 2011 [3 favorites]
I, and everyone else who plays poker, have weekly fantasies about one day playing there again. :C missU pp <3 <3 <3Man, playing 15/30 & 30/60 on Party back in the day was like standing outside with a bucket when it was raining money. It will never be like that again even if Party comes back in some brave new world. The standard of play has risen so much since then. I look back on my hand histories from those days and laugh.
posted by Lame_username at 8:03 AM on September 21, 2011 [4 favorites]
So at what point do people finally come to the realization that all of capitalism itself is a giant Ponzi scheme, not just these various small components of it that periodically get scandalized?
posted by aught at 8:10 AM on September 21, 2011
posted by aught at 8:10 AM on September 21, 2011
Whenever I am at a hotel or at in parent's house I inevitably end up watching a little poker on ESPN 2 and I totally recognize all these guys. Weird. This actually makes that Jesus looking dude even more badass somehow.
posted by nathancaswell at 8:13 AM on September 21, 2011
posted by nathancaswell at 8:13 AM on September 21, 2011
But if a big amount of the money people tried to give to Full Tilt never got to them, where did it go? Did the financial go-betweens pocket it, in which case they're the ones doing the stealing?
The reason that this is a Ponzi scheme and not just a run-of-the-mill failure is that the money grew feet and walked away... to Swiss bank accounts!(NYT, halfway through states where the money was walking) A Ponzi scheme has to have a fraud component, and gobs of money disappearing overnight is the fraud in this case. Other reporting sources are saying that members of the board seemed to have roughly $40 million apiece go to them which came directly out of players' accounts.
An online poker website can be hugely profitable. Keep the accounting true, take your cut and call it a day. You know, like regular casinos. Brick and mortar casinos don't bother with cheating anymore because they make plenty of money by keeping the odds on their side.
posted by Mister Fabulous at 8:27 AM on September 21, 2011 [2 favorites]
The reason that this is a Ponzi scheme and not just a run-of-the-mill failure is that the money grew feet and walked away... to Swiss bank accounts!(NYT, halfway through states where the money was walking) A Ponzi scheme has to have a fraud component, and gobs of money disappearing overnight is the fraud in this case. Other reporting sources are saying that members of the board seemed to have roughly $40 million apiece go to them which came directly out of players' accounts.
An online poker website can be hugely profitable. Keep the accounting true, take your cut and call it a day. You know, like regular casinos. Brick and mortar casinos don't bother with cheating anymore because they make plenty of money by keeping the odds on their side.
posted by Mister Fabulous at 8:27 AM on September 21, 2011 [2 favorites]
The biggest difference between FTP and Pokerstars was that Pokerstars kept/keeps properly segregated accounts between player deposits and money-at-play vs rake, tourney rake, and operating funds. I don't give a damn if PS or anyone else loans money to pros or has a huge distribution - it just have to come from non-player money.
I would venture to guess that Pokerstars has behaved so well in all of this that they may be able to negotiate a US license when online poker regulation comes to the US (which is surely will, and sooner than later). In a way, this was a secondary goal of the whole DOJ action - regulation is coming, but the existing situation had to be cleaned up before it does. There is an overlap of interests between a poker site and a future US regulator in terms of clearing out this payment processing layer...
posted by mikel at 9:25 AM on September 21, 2011 [1 favorite]
I would venture to guess that Pokerstars has behaved so well in all of this that they may be able to negotiate a US license when online poker regulation comes to the US (which is surely will, and sooner than later). In a way, this was a secondary goal of the whole DOJ action - regulation is coming, but the existing situation had to be cleaned up before it does. There is an overlap of interests between a poker site and a future US regulator in terms of clearing out this payment processing layer...
posted by mikel at 9:25 AM on September 21, 2011 [1 favorite]
Alderney is part of the Bailiwick of Guernsey. I like the word "Bailiwick".
Also, shady shit needs to be regulated, not outlawed.
posted by whuppy at 9:44 AM on September 21, 2011
Also, shady shit needs to be regulated, not outlawed.
posted by whuppy at 9:44 AM on September 21, 2011
I saw on one of the threads about this that sometimes Full Tilt would credit people's account for money that never left their banks. I don't understand how this never got picked up on. It seems like a pretty significant red flag in its own right. How could you do business with a company that can't even manage to take your money correctly?
I'm guessing it was probably a mixture of not enough people putting the information together and also some willful ignorance. Most people who put in $50 or $100 might not have even noticed and some who deposited larger amounts might have kept quiet out of greed. A lot people who consider themselves to be "serious" players were more likely to use player to player transactions precisely because of issues with payments going through from American sources.
I don't think anyone but FTP knew the real scope of the issue and maybe not very many people inside the company either. When I first heard about it, and before I read the details, I assumed it was a temporary and minimal stopgap measure they put in place based on calculating the cost of losing some players against never getting paid for a minority of deposits. It turns out they were basically intending to pay for those incomplete deposits with future earnings instead of current earnings, which I would argue is hugely negligent and incompetent. And that's probably a charitable interpretation.
Some of the revelations about how much their sponsored pro's were borrowing from Tilt might suggest otherwise.
Yeah, that's maybe a handful of players, though. Most people making money playing poker aren't doing it with endorsements/commentary/book residuals/loans from employers. Of course, most players aren't making money from poker at all.
The one big thing that you missed was that Stars apparently really did keep player balances segregated in separate accounts like everyone was supposed to.
Yeah, this is really important and AFAIK a term of all the poker sites' licenses. The fact that Full Tilt was not segregating player balances was hugely unethical and stupid and I'm glad they got their license revoked even though I had about $350 on there.
posted by ODiV at 9:46 AM on September 21, 2011 [2 favorites]
I'm guessing it was probably a mixture of not enough people putting the information together and also some willful ignorance. Most people who put in $50 or $100 might not have even noticed and some who deposited larger amounts might have kept quiet out of greed. A lot people who consider themselves to be "serious" players were more likely to use player to player transactions precisely because of issues with payments going through from American sources.
I don't think anyone but FTP knew the real scope of the issue and maybe not very many people inside the company either. When I first heard about it, and before I read the details, I assumed it was a temporary and minimal stopgap measure they put in place based on calculating the cost of losing some players against never getting paid for a minority of deposits. It turns out they were basically intending to pay for those incomplete deposits with future earnings instead of current earnings, which I would argue is hugely negligent and incompetent. And that's probably a charitable interpretation.
Some of the revelations about how much their sponsored pro's were borrowing from Tilt might suggest otherwise.
Yeah, that's maybe a handful of players, though. Most people making money playing poker aren't doing it with endorsements/commentary/book residuals/loans from employers. Of course, most players aren't making money from poker at all.
The one big thing that you missed was that Stars apparently really did keep player balances segregated in separate accounts like everyone was supposed to.
Yeah, this is really important and AFAIK a term of all the poker sites' licenses. The fact that Full Tilt was not segregating player balances was hugely unethical and stupid and I'm glad they got their license revoked even though I had about $350 on there.
posted by ODiV at 9:46 AM on September 21, 2011 [2 favorites]
Anyway, oh I mean obviously Full Tilt acted criminally here. In fact they acted a lot like Lehman Brothers et all in the financial crises.
I'm more sympathetic towards Tilt. The operation wasn't run by financial wizards -- it was run by poker players. It looks as though, until very recently, they were making money hand over fist and paying themselves accordingly. At some point, due to the stoppage of their financial processors, they weren't getting as much money onto the site as they should have done.
If they were smart, they'd have stopped paying themselves at the same rate. I think they were blinded by the money they'd made in the past, and couldn't believe the tap would stop flowing, so they didn't stop paying themselves.
I don't believe there was ever a real seperation of player money from tilt money. They went from being cash rich to cash poor -- and then the DoJ raids happened.
If the DoJ thought it was a classic ponzi scheme -- set up with intent to defraud, why haven't they brought criminal charges? I suspect they know that they'd never be able to make that case if they were held to the standards of a criminal court.
The differences between Stars and Tilt seems to be:
Stars didn't loan money to their pros. (or least not much that we've heard. They paid pros salaries and probably buy-ins, but that's it.)
Stars pros didn't own the business. I'm guessing that it's harder to say no to your owners than it is to salaried employees.
Stars had a better relationship with, or less shady taste in, middlemen. All of the money processed from US banks to Stars went through, none was run off with etc. so they didn't have to watch attempted deposits fail or disappear.
This is definitely true though.
posted by PeterMcDermott at 10:35 AM on September 21, 2011
I'm more sympathetic towards Tilt. The operation wasn't run by financial wizards -- it was run by poker players. It looks as though, until very recently, they were making money hand over fist and paying themselves accordingly. At some point, due to the stoppage of their financial processors, they weren't getting as much money onto the site as they should have done.
If they were smart, they'd have stopped paying themselves at the same rate. I think they were blinded by the money they'd made in the past, and couldn't believe the tap would stop flowing, so they didn't stop paying themselves.
I don't believe there was ever a real seperation of player money from tilt money. They went from being cash rich to cash poor -- and then the DoJ raids happened.
If the DoJ thought it was a classic ponzi scheme -- set up with intent to defraud, why haven't they brought criminal charges? I suspect they know that they'd never be able to make that case if they were held to the standards of a criminal court.
The differences between Stars and Tilt seems to be:
Stars didn't loan money to their pros. (or least not much that we've heard. They paid pros salaries and probably buy-ins, but that's it.)
Stars pros didn't own the business. I'm guessing that it's harder to say no to your owners than it is to salaried employees.
Stars had a better relationship with, or less shady taste in, middlemen. All of the money processed from US banks to Stars went through, none was run off with etc. so they didn't have to watch attempted deposits fail or disappear.
This is definitely true though.
posted by PeterMcDermott at 10:35 AM on September 21, 2011
It turns out they were basically intending to pay for those incomplete deposits with future earnings instead of current earnings, which I would argue is hugely negligent and incompetent. And that's probably a charitable interpretation.
ODiV, Charles Ponzi basically intended to pay for new investments with future earnings instead of current earnings. No difference, so no need for charitable interpretation.
posted by IAmBroom at 12:24 PM on September 21, 2011 [1 favorite]
ODiV, Charles Ponzi basically intended to pay for new investments with future earnings instead of current earnings. No difference, so no need for charitable interpretation.
posted by IAmBroom at 12:24 PM on September 21, 2011 [1 favorite]
Oh! I remember New Yorker profile of the founder of Full Tilt. He was quite a sympathetic character, a dopey genius who could never get a girlfriend and was in grad school for over 10 years. Then he got rich and suddenly became popular with the ladies. In retrospect, he did seem to have some contempt for ordinary mortal poker players, so it's not entirely surprising that he'd steal from them.
Here is the same magazine's response to the revelations.
It's very interesting that the government says you can't run an online poker site...but if you do run an online poker site, it can't be fraudulent.
posted by miyabo at 3:17 PM on September 21, 2011
Here is the same magazine's response to the revelations.
It's very interesting that the government says you can't run an online poker site...but if you do run an online poker site, it can't be fraudulent.
posted by miyabo at 3:17 PM on September 21, 2011
Never been tempted to pay online poker, but I live in California where live poker rooms are legal. Because Cali's founders were poker players themselves.
No chips, no felt... no thanks.
posted by Pirate-Bartender-Zombie-Monkey at 5:00 PM on September 21, 2011
No chips, no felt... no thanks.
posted by Pirate-Bartender-Zombie-Monkey at 5:00 PM on September 21, 2011
It's very interesting that the government says you can't run an online poker site...but if you do run an online poker site, it can't be fraudulent.
Pretty much, just like the IRS expects you to report illegal income.
posted by muddgirl at 5:18 PM on September 21, 2011 [1 favorite]
Pretty much, just like the IRS expects you to report illegal income.
posted by muddgirl at 5:18 PM on September 21, 2011 [1 favorite]
Here's a link to all the court filings and documents from the Recap the Law project:
U.S. v. Pokerstars, etal.
The action is a civil forfeiture which was recently amended to include the allegations discussed.
posted by GPF at 5:05 AM on September 22, 2011
U.S. v. Pokerstars, etal.
The action is a civil forfeiture which was recently amended to include the allegations discussed.
posted by GPF at 5:05 AM on September 22, 2011
If the DoJ thought it was a classic ponzi scheme -- set up with intent to defraud, why haven't they brought criminal charges? I suspect they know that they'd never be able to make that case if they were held to the standards of a criminal court.It is fairly common to file criminal charges after the civil litigation proceeds, especially in situations where they don't know all the facts yet. I wouldn't be surprised at all if the criminal charges already filed against the sites are amended to include the new allegations before all is said and done. By holding off on that, they have significant leverage to force a settlement and get the principals to cough up cash in exchange for a preemptive deal on the criminal charges.
The "Ponzi Scheme" language is a bit misleading since a Ponzi Scheme requires ripping off investors. This is more like a crooked lawyer who spends all of his money held in trust on personal stuff. Still fraud, but not really technically a Ponzi Scheme.
posted by Lame_username at 5:25 AM on September 22, 2011
I swear I read in some article that one of Full Tilt's lawyers complained that "Ponzi Scheme" is misleading - if anything, this is plain old embezzlement.
Yeah, that's sooo much better!
posted by muddgirl at 6:09 AM on September 22, 2011
Yeah, that's sooo much better!
posted by muddgirl at 6:09 AM on September 22, 2011
It's very interesting that the government says you can't run an online poker site...but if you do run an online poker site, it can't be fraudulent.
miyabo, let me posit it another way...
The government says you can't carry a fully-automatic weapon around, but if you do, you can't use it to murder people.
The government (of my state) says you can't run a brothel, but if you do, you can't use it to launder drug money.
So, not so hypocritical, by those examples.
posted by IAmBroom at 2:16 PM on September 22, 2011 [2 favorites]
miyabo, let me posit it another way...
The government says you can't carry a fully-automatic weapon around, but if you do, you can't use it to murder people.
The government (of my state) says you can't run a brothel, but if you do, you can't use it to launder drug money.
So, not so hypocritical, by those examples.
posted by IAmBroom at 2:16 PM on September 22, 2011 [2 favorites]
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Rick'sthe shady gambling website!"posted by bardic at 10:05 PM on September 20, 2011 [2 favorites]