Full Tilt Poker Definition

With Full Tilt Poker's players getting paid back (after Pokerstars agreed to acquire Full Tilt Poker and settle with the US government) and after the successful securing of a settlement with the government, Howard Lederer may have been hoping to re-join the poker community. Things would not work out that way for Lederer. Full Tilt Poker games available in tournament format include no-limit hold’em, pot limit Omaha, Omaha Hi/Low, Seven-Card Stud, Razz, Triple Draw 2-7, Five-Card Draw, and several mixed games.

Full Tilt Poker Definition Game

The United States Government forced online poker sites to the fringes of the financial system. The U.S. government has long argued that online poker gambling is illegal under the Wire Act, a 1961 law that explicitly prohibits sports betting conducted over electronic communication. In 2006, Congress made it illegal for financial institutions to process funds for online gambling.

It should be no surprise that an online poker site would run into legal problems. The complaint against Full TItle Poker caught my eye because

District Court Southern District of New York revealed that it granted Full Tilt Poker, PokerStars, and Absolute Poker extensions to respond to the amended complaint filed on. Full Tilt Poker was synonymous with the “poker boom” era of the 2000s. Once one of the largest and most popular online poker sites, Full Tilt was a place to play real money poker games, owned by professional poker players. The brand was an inescapable presence in the poker industry during it’s heyday from 2004-2011.

“By March 31, 2011, Full Tilt Poker owed approximately $390 million to players around the world, including approximately $150 million to United States players. However, the company had only approximately $60 million in its bank accounts.”

Many Ponzi schemes started off as legitimate enterprises. When funding shortfalls or an unexpected loss hits, the managers try to hide the bad news. This creates a spiraling downfall leading from poor management to criminal behavior. In this case, Full Tilt was having trouble moving the cash around the financial system to collect wagers from players and make payments to the winners. It sounds like Full Tilt was funding winnings without withdrawing initial bets from the player accounts.

But was it a Ponzi scheme? While there is no official definition of a Ponzi scheme, these are what I think are the elements:

(1) A promise of financial reward.

(2) Current contributions to the scheme are not invested, but are spent to make good on returns promised to earlier contributors.

(3) The manager of the scheme maintains his ability to pay the returns only by getting other contributors.

(4) The contributors think the manager is investing their contributions to make the return (not necessarily in a fully legal way).

(5) If future contributors do not arrive in sufficient numbers, the Ponzi scheme will have too little money to pay current returns/redemption.

Full Tilt Poker Definition Free

Full Tilt was not an investment scheme. Sure you can argue about whether poker success is based on skill or luck, with luck being a key element of gambling. (I think it’s a combination of both.) But it’s not an investment and you are not buying a security. The contributors did not think the manager was doing anything with the money other than keeping it safe. They were winning or losing based on the hands the contributors played.

It does seem that current winnings were being paid from new contributions. According to the complaint, the mangers were taking more cash out than the business could support. The company had a funding shortfall because it was having trouble moving the wagers and winnings through the financial system.

You would hope that a leading federal prosecutor would know the difference between different types of fraud. Full Tilt was not a Ponzi scheme. As good as you may be at poker, your wagers are not investments.

Sources:

• Feds: Full Tilt Poker site was Ponzi scheme, customer accounts were looted of $440 million in the Washington Post
• U.S. Alleges Poker Site Stacked Deck by Alexandra Berzon in the Wall Street Journal
• First Amended Complaint in US v. PokerStars, Full Tilt Poker, et al. (pdf- pages)
• Further Thoughts on Whether or Not Social Security is Ponzi Scheme by Don Boudreaux on Cafe Hayek
• Full Tilt Ponzi by Felix Salmon
• Press Release from the US Attorney for the Southern District of New York (.pdf – 3 pages)

Amaya Gaming Group has announced that the merger of PokerStars and Full Tilt will happen on May 17, with the latter’s poker platform being retired permanently.

Amaya announced the plan in February. As of last year, the two sites had roughly 70 percent of the global online poker market, Amaya Gaming said during a quarterly earnings report. Though Full Tilt was still profitable from poker, its “market share has been in decline since its 2012 re-launch,” Amaya said earlier this year.

PokerStars acquired Full Tilt from the federal government in a 2012 settlement worth $731 million. Two years later, Amaya bought the combined company for $4.9 billion. The former CEO of Amaya is facing insider trading chargers stemming from that acquisition.

Thanks to the merger of the PokerStars and Full Tilt player pools, customers will now only have one account between the two sites, as well as for StarsDraft, BetStars and Duel. Full Tilt, which has other casino games in addition to poker, will still exist as a brand.

“In coming days, Full Tilt players will be emailed direct and personal information on how this will affect them specifically, which depends on a variety of factors including their jurisdiction and the status of their PokerStars account (if any),” Amaya said in a press release.

The merger will “make us more nimble as we can focus our technological innovation on one platform, rather than two, so we will be able to innovate more quickly and enter newly-regulating and existing markets swiftly,” Amaya said in February.

Amaya re-entered the U.S. market via New Jersey in March, and it has also been pushing for regulated online poker in California, and most recently, Michigan.

Full Tilt Poker Definition

The Canadian gaming giant also recently hired a lobbyist on Capitol Hill to presumably fight against Sheldon Adelson’s efforts to ban online gaming nationwide.

Full Tilt, formerly Full Tilt Poker, was shut down by the federal government in 2011 after being accused of operating as a “global Ponzi scheme.” The remission process that is reuniting victims of Full Tilt Poker with their lost money is still ongoing. Since the remission process began in early 2014, roughly $112 million has been returned to victims of the site. According to the federal government, $159 million was stolen from Americans when the site was run by Howard Lederer, Ray Bitar, Chris Ferguson and Rafe Furst.