Thursday, September 29, 2011

Jesus, The Professor and the Ponzi Scheme

The Department of Justice amended its complaint against Full Tilt Poker, alleging the online site was a giant Ponzi Scheme.
When the site was shut down for U.S. players in April for illegally processing player deposits, many players expected to be fully repaid for the account balances which they could no longer use.
PokerStars repaid players in an expeditious fashion. Full Tilt did not, because it could not. According to the DOJ, player accounts totaled $440 million, but Full Tilt only had $60 million on hand.
And here's where the Ponzi Scheme accusation comes in: the site's owners and directors, including famous poker pros Chris "Jesus" Ferguson and Howard "The Professor" Lederer are alleged to have been paid millions over this time, $40m to Lederer and $25m to Ferguson (though he was promised much more because he owned nearly 20% of the company).
Full Tilt says it was not a Ponzi Scheme it just got in trouble because it got scammed by a payment processor and in other cases it elected to fund player accounts before the payments actually cleared. And when those payments didn't materialize, a huge hole grew. And when Full Tilt got shut down in the U.S. it had no way to fill that hole.
Obviously, no matter what happened, Full Tilt had an obligation to keep most if not all of player money in a liquid account (they can invest it and earn interest). But there are a couple extenuating circumstances here. We don't know for sure if Full Tilt intended to be a Ponzi Scheme or it just became one when they ran into trouble collecting funds.
But most importantly, internet poker should not be illegal. I lost less than $5 in this incident. I also lost my chance to play poker from my home, a hobby I greatly enjoy. But what I have been robbed of most of all is televised poker.
The World Series of Poker will likely survive because it can get other sponsors, but it may end up being the only poker show on TV. Because they cannot survive without the sponsorships from the poker sites.
But I've probably watched my last episode of Poker After Dark and The Big Game (although this still airs online), which is the best poker show for advanced players.
And that's what has me so angry. I can't even watch what I want on TV because of the government. And though many in the poker community are hopeful this will get repealed and internet poker will be legal and regulated, I don't think that will ever happen.
And it's a damn shame.

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