I suppose I am surprised a bit by what has transpired at Full Tilt Poker over the last several weeks. When you look at the effect that Black Friday has had on the three poker companies affected here, the events that transpired have to a large degree mirrored the culture of each poker room, at least in the experience of many.
First, let’s look at Cereus, who run or at least ran Ultimate Bet and Absolute Poker. If there’s such a thing as an ex-con in the poker business, these two definitely would qualify. They of course were mired in famous in house cheating scandals, and even though a few years did elapse, this still remained fresh in the minds of many players, many of which swore off these poker rooms forever as a result.
So when the crap hit the fan so to speak, there really wasn’t a lot of wondering going on, and players knew that they were in a heap of trouble. Right from the outset, U.S. based bankrolls began being sold at huge discounts to offshore players, and the rock bottom price they paid was probably way too high. Any price may have been way too high in fact. With a big chunk of their assets seized, their ship almost immediately began to go down.
So what of Full Tilt Poker and Poker Stars? Well I’ve always found a great difference between the two in terms of their management and in particular their regard for their players. To be honest, I’ve never been too fond of Full Tilt to begin with, and their quality of customer service in my eyes and the eyes of several others has been no better than terrible. I have really no idea how they did as well as they did as a matter of fact, as I’d never put up with the crap they throw at you, from both a player and an affiliate perspective. If and when you could reach them to debate their policies, which was often challenging as they were famous for just trying to ignore you, they made the rules and if you didn’t like them well that’s your problem.
So when players weren’t paid out like they were at Poker Stars, this didn’t really surprise me much. However, I was a little surprised at how bad their management had been in terms of their liquidity. You always think that your bankroll with a reputable poker room is safe, even with the risks that were involved. Now some of this is subject to seizure in transit, meaning money in the process of being withdrawn, and we had that happen not long ago and the poker rooms made good on it.
In this case though, Full Tilt’s exposure was way too high, and while you’d expect a small percentage of overall player funds to be exposed here, they at least are claiming that the number is much higher. When you add the discrepancy in funds credited and funds held of upwards of $60 million, meaning the difference between credited funds in players’ bankrolls and what the poker room actually received, it’s no wonder why the whole thing turned into chaos.
So as time passed, Full Tilt preached patience, while many of their depositors, most of them perhaps, found themselves in an ever increasing state of panic. They went from promising to take care of the situation to looking for someone to bail them out and give them the cash they needed to do it. They did generate some interest in this, although by some accounts they displayed the characteristic pompous attitude that has defined them.
Then, the crap really hit the fan. The American authorities did manage to punch them in the face a few times, and although pretty bruised, they were still on their feet and operating. Then the knockout punch came, not from the U.S. Department of Justice, but from the Alderney Gaming Control Commission, who licenses FTP. They shut down FTP completely, and now it wasn’t just a matter of Americans being affected, the entire operation became thrown in limbo, pending a hearing.
What I found most curious about this shutdown was that in the statement from the AGCC, they claimed that based upon the recent charges by the U.S. government, FTP was operating contrary to Alderney law. This is absolutely hilarious by the way. The Americans had been claiming that FTP has been operating contrary to their law way before the UIGEA, which itself was several years ago, and the particular law that FTP was found to violate had been on the books for some time.
It’s very common knowledge that FTP was operating contrary to American law, at least their authorities’ opinion of how it applied to this case. So how is it that, after all this time, and even after several weeks had passed since the most recent charges have been made, that they finally came to this insight?
My personal view is that they clearly caved in to pressure from some source. It’s possible that this may have come from the Americans, but some have speculated that some of their other licensees may have lobbied them to turn the screws on FTP for them to gain a competitive advantage. I’ve no knowledge of any of this but if this is true, it’s very ironic, since the idea behind getting licensed by such a tiny jurisdiction (Alderney for instance has a population less than 3000) is that they presumably can wield a lot more clout than elsewhere. So if they have been out-clouted here, that’s actually pretty funny, although I doubt the players at FTP share in this humor.
The real problem here is that if the Commission is truly concerned with the fate of the company and its stakeholders, this is the worst thing they could have done. This is like pouring gasoline on a fire. FTP’s struggles, as bad as they may have been, obviously worsened by not being permitted to do business, even short term.
On the brighter side, there is news that they have found a buyer, although at the time of this writing there haven’t been a lot of details released. Whoever takes over this company though not only has to deal with their current troubles, which include being shut down, having a lot of their assets frozen which they may never get back, owing $150 million or more to their U.S. based players which the investors will have to come good for, and the harm all of this has had to their reputation.
From our perspective as affiliates, I haven’t promoted FTP in quite some time, but I do have clients who do, and there’s not a single one who hasn’t backed off here. I had several reviews scheduled to be written for FTP, which have been pulled recently, and to be honest they would have required considerable additional skill to try to smooth things over without being dishonest. To put it mildly, promoting FTP right now is a delicate situation.
My expectation here is that if and when FTP gets back up and cleans up at least enough of this mess to be worthy of our interest again, it will have suffered serious damage. Not only have they exited the U.S. market, they have lost a lot of their non U.S. player base to other sites since the shutdown, with Poker Stars getting the lion’s share of this extra traffic. It may even be that merely promoting FTP can be seen as damaging to an affiliate’s reputation, especially with players more in the know.
There is always a silver lining and in this case it’s the fact that redistribution is pretty much always a good thing for affiliates. The volatility that’s been going on lately presents additional opportunities both for operators and for affiliates. A lot of people will be shuffled around here and while some affiliates may lose out here, there’s the opportunity for many to make some big wins through all of this by stepping up and looking to take advantage of the situation.
This situation is far from over though, and we’re all going to need to stay tuned to see how it all pans out, and while the industry as a whole has taken a hit here, with the exception of FTP related business, the rest of the industry stands to profit, in my view anyway.