POKER

Black friday – Where are they now?

TAGs: Black Friday, Cereus Poker Network, full tilt poker, PokerStars

Poker News, Black Friday - Where are they now, Full Tilt Poker, PokerStars, Cereus Poker NetworkOn April 14th 2011 all was well in the vast Ivory Towers of the online poker industry’s three behemoths. Chris Ferguson still had 1,000 cowboy hats to choose from, Ray Bitar could buy as many hockey shirts as he liked, and no shit had gotten close to any fans. As day turned to night and back to day again in North America, things were going on behind the scenes that would change Pokerstars, Full Tilt and Absolute Poker/Ultimate Bet forever.

Were the indictments against PokerStars, Full Tilt Poker and Absolute Poker/Ultimate Bet true or was this a very late April Fool’s joke? Believe the latter and you would be badly mistaken. A lot has happened since April 15th 2011 and for any of you that went into hibernation, or if you simply want a recap of where we stand, here’s a run-down of where they stand and what the future might hold for the main contenders.

PokerStars

When the news broke that Stars were being indicted, we reckon the atmosphere was a lot different to the one at FTP and AP/UB. Yeah they might not be able to hook up with Steve Wynn for much longer but unlike Full Tilt Poker, the accounts were in order and player payments could commence whenever the Department of Justice ordered them to do so – which happened to be April 20. The fact they were licensed in the Isle of Man had a lot to do with them having the money in separate accounts as the strong licensing regime made them do so.

The Isle of Man has stood by PokerStars for the course of the allegations and the company “categorically denied” all charges leveled against them early on. When questioned, the Isle of Man has continually stated that no crime was committed on their shores and as far as they were concerned, PokerStars had done everything required of them. Of course none of this stopped Stars being raided in Costa Rica or ESPN axing their coverage of the PokerStars.net sponsored North American Poker Tour. The problem is that the DOJ brush comes with quite some tar attached.

Even though PokerStars declared it had already paid back some $100 million a month after Black Friday, the FBI was still getting itchy feet over various donations that had been made to lobby Nevada polls on online poker. They weren’t worried about it happening; it was the fact that they had no idea where the money came from. To this day we can’t imagine they’ve found it either.

PokerStars have been understandably silent on the U.S. front since the indictments. At the same time they’ve been far from quiet in terms of the rest of the world with mobile products being launched in a number of European jurisdictions and the launch of Zoom Poker AKA the Full Tilt Poker Rush Poker rip-off. This was the one company of the three that has continually kept the interest of players in their utmost thoughts. None of this means they’ll get away with taking bets from U.S. players and be allowed back in the future. Although as far as a “white knight” among the three, PokerStars is on its horse.

Full Tilt Poker (FTP)

Like PokerStars, the end of March/start of April was a time to give themselves a pat on the back. They had agreed a deal with Fertitta Interactive and they were going to take the US by storm with their unique ultra-cool brand of online poker – complete with free hockey shirts and cowboy hats for all new members. The rather large spanner in the works came only 15 days after the deal had been signed. Needless to say, Fertitta got out of there quicker than a 10-second UFC TKO.

At this stage, FTP was more than happy to give statements to the media with their first reaction from CEO Ray Bitar, admitting he was “surprised and disappointed by the government’s decision to bring these charges,” before the firm suspended “real money play in the US” until the case had concluded.

FTP, unquestionably, had a lot to lose with these indictments and it quickly became clear they had been operating rather differently to Stars. Poker tracking sites had already reported the site was experiencing a drop of 50 percent in cash games traffic and this was before the post-mortem had properly begun. Irish-based staff from Pocket Kings were already worried about their jobs just four days after the indictments broke and it just drove home how perilous a situation the firm was in. Calvin even mentioned the staff as one of his groups of “losers” to come out of Black Friday. That’s when you know things are bad.

Whilst all this was going on, and even though FTP had agreed a deal to pay back players, you still felt all wasn’t well. Unlike PokerStars, who had been backed all the way by the Isle of Man, the Alderney Gambling Control Commission (AGCC) decided enough was enough. They were worried the FTP crisis was “hampering and potentially adversely affecting its lawful operation elsewhere in the world,” and would “undertake its own investigation into these allegations”. This was in addition to investigating the viability of FTP’s license. More on that juicy morsel later on.

As we mentioned, the two biggest firms had signed their balance return deals by now. Stars made it clear at every turn they had started to pay back their own players. For FTP players there was no such luck. The company was more interested in sorting out their defence than serving the lifeblood of the network – the players. By now the profanity-ridden posts on TwoPlusTwo were a good enough indication that Ye Olde Ship Full Tilt was close to capsizing.

Statements were something that players, by now, were getting used to. A similarly worded one came a week later on May 4th and almost exactly the same. No money for U.S. players for now and an update pushed back yet another week. FTPDoug was becoming players’ only line of communication and the money was becoming about as real as an online avatar is. By the one month anniversary of Black Friday, Stars had returned $100 million. FTP…nada.

What followed was a have-they haven’t-they saga involving frozen bank accounts with money that was supposed to pay back a third of that owed to U.S. players. Phil Ivey then sued them in a civil court for around $150 million after claiming they failed to pass on warnings over the “illegal operation”. Later in June was when FTP death knell was struck.

We mentioned earlier the AGCC had undertaken its own investigation into FTP and it came to an inevitable head at the end of June with FullTilt.com’s licence being suspended. The statements from all and sundry came the day after with Pwin the one group that was sitting pretty with their 10 percent rise in stock. Some light at the end of the tunnel was the news Ivey dropped his suit but the bulb was soon smashed by class actions brought against FTP by players everywhere.

After the class actions came the AGCC hearing which eventually took place in London behind closed doors. Despite the best efforts of QuadJacks to obtain footage of what was actually going on at the hearing that saw delays push it back to late September. What went on behind those doors may make a very good book and even a film one day.

An announcement eventually came around a week after the hearing had finished with the FTP licence revoked by the AGCC. Neither side covered itself in glory here and it must be pointed out the AGCC’s weak regulatory system allowed FTP to operate as what the DOJ termed a “ponzi scheme” for some time. All of this was at the detriment of players and the complete opposite to how PokerStars went about their business.

It must be added that Bitar’s silence was eventually broken last month with an apology to all FTP players they wronged (read all about it here)

Ever since the indictments were first trotted out, the rumors of new investors had been flying around. As early as July, the Los Angeles Times were reporting the firm has been sold to European investors and it looks as though that’s the way the company will now play out. Investors have bought the firm’s award-winning software and this in itself will mean the firm could have a future. This is very unlikely to be anywhere near the U.S. market though.

Cereus Poker Network (Absolute Poker/Ultimate Bet)

If anyone in the gaming industry was blaming the firms for hooking up joint ventures with land-based companies then Cereus were sitting pretty. The only action to have gone on in that sense was their acquisition by Blanca Games. Cereus was unlikely to ever get the land-based tie up though given the number of cheating scandals that were uncovered. The nearest one to Black Friday took place in October 2010 and at the time CalvinAyre.com writer Steven Stradbrooke speculated that it “could produce a ripple effect that will negatively impact the entire online gambling industry”.

When the news broke, it was all quite quiet on the Absolute Poker (AP) and Ultimate Bet (UB) front as they tried to work out whether the DOJ was being serious. It was now the companies under the Cereus umbrella revealed themselves to be a very different monster to FTP and Stars. Whether they felt they had little to lose or purely didn’t give a flying f***, Cereus didn’t shut to U.S. customers. Players were able to access the site although at the same time couldn’t withdraw, deposit or transfer funds.

After one drunken bender of a weekend, AP and UB sent out notices stating they had sobered up and decided not to serve U.S. players. Whether they continued to show the DOJ their favorite finger was a matter of feverish speculation as players still claimed to be playing on the two sites. Ultimate Bet finally woke up and smelt the coffee by closing to U.S. players some five days after the original indictments. They didn’t officially close until over a month after Black Friday.

Absolute Poker celebrated Good Friday by coming out with their first statement. It was a statement that clarified little apart from that they wouldn’t be paying back players until they had had a full and frank discussion with the U.S. Attorney’s office. Like getting blood out of a stone and that was just the statements themselves.

Noises coming from shareholders signaled they weren’t particularly confident the company would survive the indictments with Absolute Poker co-founder Richard Borgner stating: “I hope the company survives. I’m not sure it can at this stage.” His sentiments went back to the cheating scandals, the post-UIGEA panic and fear that was instilled in most of the company’s employees. Inevitably, all the talk of the country staying in business meant job losses in Costa Rica weren’t far off and inside a month after Black Friday, the termination memo was out.

At the same time it got even worse for shareholders. Norwegian shell company Madiera Fjord, set up to facilitate debt payments, told AP/UB shareholders the companies had accumulated debts in “excess of $250,000” and they were “increasing by $100,000+ per month”. This was before the expected denial by Blanca that the poker business was bankrupt and the news that 20 percent of the staff would be back! The mess was further complicated by the former Cereus customer service chief threatening to go to the FBI if the staffs in Costa Rica weren’t paid. Remember that it was only May 5th and you can start to understand how much of a mess Cereus was in.

The decision to lay off 90 percent of their Costa Rica workforce led to offices being raided by the CR FBI and a number of uncorroborated statements pertaining to money being paid back were flying around message boards. May 11 was the day AP/UB finally came out with a press release that said they had start paying back U.S. players – a full 22 days after Stars and FTP had done the same. Any players that were less than convinced would have been heartened by the DOJ confirming the agreement a day later. It wasn’t until November that funds were unfrozen and the arduous process was supposed to begin. Your guess is as good as ours as to whether this actually happened.

Even though they had agreed to start paying back U.S. players, it soon became clear why they had been stalling. A post claimed that AP’s liquid assets were $5-6 million – a pitiful amount when up against the $24.2 million it owed to U.S. players alone.

News on AP and UB dried up significantly for the remainder of the year until five days before Christmas, AP co-founder Brent Beckley turned himself in with a plea agreement stating he would be getting just 12-18 months as opposed to the maximum 35 years he could get. Must have been some plea bargain!

CLOSING REMARKS

From a logical point of view, after looking back on the events it should have been easy for all of us to notice what would happen to the three sites. PokerStars was run well from the start and had the money in players’ pockets early on. They didn’t attempt to carry on serving U.S. customers and switched to a .eu domain the second the indictments came out. Full Tilt Poker on the other hand, the company was quite poorly run, not on the scale of the Cereus and seemed to have little regard for their players. The regulator should take some blame as they let them go on for a while with no funds separated and they simply didn’t have the funds in the end. AP/UB was the dodgy site we always knew them to be and the warning signs were there years before Black Friday happened. A year on from now we’re likely to have a new Full Tilt Poker to take on PokerStars. Neither is ever likely to hit the heady heights they were once at though and what is left of AP/UB is anyone’s guess.

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