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Near the End for Online Poker in US ?

This week sees Phil Ivey sue Full Tilt adding to their woes and continuing delays to pay US players.
Does tempory closure of Merge to new US signups signal the beginning of the end of any US facing sites ?

In what has been yet another week of more bad news on the US poker front, the realism for many has finally set in that online poker in the US may just be in its dying days.

Last weeks postive news that some of Full Tilt bank accounts had been unfrozen and might prompt payments was swiftly swept to one side this week. The “revelation” that Full Tilt’s accounts and accounting issues were more of a problem has been all over other sites …

This is NOT a revelation, it’s been perfectly obvious that the manner in which funds were siezed and the fact that in a notable number of cases Full Tilt had been crediting players accounts before their money had actually left their bank accounts means they are in a proper accounting pickle.

As was reported on 2+2 and other forums like 4kingpoker, Full Tilt had been seemingly for months not actually managing to take funds from some players bank accounts instantly but were crediting their player accounts. In addition to the seizures some of the banks have also in effect not taken funds from players accounts leaving Full Tilt with a double whammy to the tune of around $60m.

Now this is in effect money that has never left the US players bank account (so they aren’t out of pocket) but would still as I understand it show on their player balance.

It doesn’t take a rocket scientist to figure out that this is complicated to account for the original deposit, deduct it from player balance and only payout the difference because effectively SOME players have been playing on $60m of Full Tilt’s money while there money hasnt been debited from their account and are not entitled to get that portion of their money “back” because it never left their banks in the first place.

Couple this with the fact that like others previously in the US and importantly those STILL in the US they want to minimise the movements of money attracting attention that means a hell of alot of money left lying around to have got seized, which wasnt specifically assigned to one player transaction or another.

Currently best estimates that there is $100-150m in legitmate player balances that need to be paid out including sorting the $60m in double accounting is proportionately quite a large accounting headache …

This reflects just how much of a processing backlog Full Tilt and potentially others had and infact some still have in the case of those still taking US players.

OK so will US Full Tilt players get paid out ?

IMHO still YES

Many other commentators feel this now makes it likely the Full Tilt will file for bankruptcy on balance and without looking to make a song and dance – I strongly disagree.

This is a pickle make no mistake but its an accounting pickle. 65%+ of Full Tilt’s pre Black Friday business is non US, still intact and doing well. They will NOT throw that away, in order to keep the confidence of the existing players and grow they know they will have to payout the US players eventually … IMHO they still intend to.

They are the second largest poker site with a bigger player base than the next 3 biggest sites combined.

ie. Full Tilt Player Traffic = iPoker + Party Poker + Ongame Network combined

Seriously the online poker world didn’t and certainly doesn’t now revolve around the US. If it takes more time for them to get out of the hole IMHO they almost certainly still will because their remaining business is profitable and is in effect the only competition that PokerStars has.

US Full Tilt Players Only to Get Cents on the Dollar ?

The other scare story seems to be that US players will likely only get 40-60 cents in the dollar when and “if” Full Tilt finally payout US players … This IMHO is just stupid.

For a start they have credited the accounts with rakeback payments, FTP points etc which to me suggests that they are trying to arrive at total amounts and correct balances on the player accounts.

If they had no intention of making good they wouldn’t waste their man power on this as even as a stalling tactic its a very labour intensive one.

My best guess is they will payout players in tiers and in stages, so maybe leaving some of the biggest players with a longer wait for their full balances but at the same time sorting out the vast majority of smaller recreational players.

That is NOT paying out only 40 or 60 cents on the dollar as final settlement it’s paying out in stages. Saying look we have issues, everyone can see the problem but we can start to payout some of the money doesn’t mean they won’t eventually pay out in full.

Maybe $xxm is how much Full Tilt can put their hands on without compromising the non US operation (which will ultimately fund the US payouts lets not forget) and then make additional payments as and when or if they get more investors.

Dont forget Full Tilt hasn’t run off with your money or pulled a fast one … Blame the DoJ for that.

I seriously doubt that it’s brand or it’s non US player base is something that anyone involved is going to want to give up on.

Phil Ivey suing Full Tilt Poker for the players ?

And finally the reality that Phil Ivey is not the saint of poker or the savour of US online poker players … Seriously he is out for himself and wants to save his bankable image.

Don’t get me wrong I have nothing against Phil Ivey, he is a great poker player and I would love to take things on face value … But lets get real here he is mostly worried about his reputation, future bankability and getting another deal / buying into another poker site.

To pin his $150m suit onto trying to get players money is to be honest a bit of a stretch, it makes what he would have done anyway look like player advocacy. But its not for the most part, it’s just what you or I would do if we were Phil Ivey the bankable brand that doesnt want to get tarnished by Full Tilt’s mess up.

He is also trying to distance himself from the workings of the company and almost imply he had no understanding of how things were being run. Now to a point I’m sure he didnt know the day to day in’s and out’s but to imply he had no idea that US facing poker sites were having to cut a few corners isnt naive its out and out unlikely.

OK now having said this is it may speed up the payouts for players because its drawing attention to the problem but its just as possible that if settled it would leave FT with no money to payout players if Phil has it … Is he planning to refund players himself ?

Phil Ivey Statement

For many years, I have been proud to call myself a poker player. This great sport has taken me to places I only imagined going and I have been blessed with much success. It is therefore with deep regret that I believe I am compelled to release the following statement.

I am deeply disappointed and embarrassed that Full Tilt players have not been paid money they are owed. I am equally embarrassed that as a result many players cannot compete in tournaments and have suffered economic harm. I am not playing in the World Series of Poker as I do not believe it is fair that I compete when others cannot. I am doing everything I can to seek a solution to the problem as quickly as possible.

My name and reputation have been dragged through the mud, through the inactivity and indecision of others and on behalf of all poker players I refuse to remain silent any longer. I have electronically filed a lawsuit against Tiltware related to the unsettled player accounts. As I am sure the public can imagine, this was not an easy decision for me.

I whole heartedly refuse to accept non-action as to repayment of players funds and I am angered that people who have supported me throughout my career have been treated so poorly.

I sincerely hope this statement will ignite those capable of resolving the problems into immediate action and would like to clarify that until a solution is reached that cements the security of all players, both US and International, I will, as I have for the last six weeks, dedicate the entirety of my time and efforts to finding a solution for those who have been wronged by the painfully slow process of repayment.

Full Tilt were pretty scathing with their unusually prompt reply suggesting there is likely far more to Ivey suit than wanting to help players.

Full Tilt’s Response

“Contrary to his sanctimonious public statements, Phil Ivey’s meritless lawsuit is about helping just one player – himself. In an effort to further enrich himself at the expense of others, Mr. Ivey appears to have timed his lawsuit to thwart pending deals with several parties that would put money back in players pockets. In fact, Mr. Ivey has been invited and has declined to take actions that could assist the company in these efforts, including paying back a large sum of money he owes the site. Tiltware doubts Mr. Ivey’s frivolous and self-serving lawsuit will ever get to court. But if it does, the company looks forward to presenting facts demonstrating that Mr. Ivey is putting his own narrow financial interests ahead of the players he professes to help.”

Merge Temporary Closure to New US Signups

Merge Gaming have announces a network wide temporary clusure to new US signups for approximately 6 weeks. This is to address processing issues, backlogs and essentially get them some time to recover from the sudden 100%+ increase in their player base.

On the one hand this was almost inevitably going to have to happen, SportsBook and PlayersOnly announced similar measures a week of two ago and this signalled a likely catching up was needed by all sites. Bodog similarly has taken its focus away from US aquisition although techically still accepting players from the US.

This signals several things …

The need for US facing sites to redouble their efforts at attracting non US players to reduce their risks and manage the much higher costs of US players.

The capacity of US facing processors is severely stretched

Depending on your level of optomism this move is either a sensible precaution to bring back some stability and not to grow too fast.

Or more likely IMHO it points to the ultimately unsustainable US facing sites finding costs are too high, risk of seizure of more funds is too high and that with dwindling options for recreational players to deposit they will inevitably dry up.

90% of pokerstars & FullTilt US players have simply left the game, meaning that the other 10% who have joined new sites are the diehard profitable players and rakeback grinders.

These good and committed players plunge the fish factor to new lows and make sites nitty, tight and ultimately suck the money out of the system too quick if there are more grinders and sharks than there are fish and recreational players.

The reality is that the US facing sites are NOT attractive to non US players with now much fewer fish on Merge and Cake virtually all of the new players will be rakeback savvy grinders who dont help to give longer term stabilty to these sites.

The situation is unlikely to get better as Non US players will play at the now juicier and fisher non US sites. In turn making it harder for those sites to increase diversity making it an even harder cycle to break.

End for Online Poker in US ?

So are we really near the end of online poker in the US ? Well Yes probably for now

I predict that more and more skins on networks will withdraw from the US market, some may continue to service their current US players. But ultimately the appeal of US facing sites will only be to US players and they increasingly simply cannot fund an account.

Now at the this point I must say that Merge’s responsible announcement is by far the better of the options, leaving processing problems to get bigger is as FullTilt shows a bad bad plan. Players will just have to hope that with a cool off period of 6 weeks or so this means they can clear processing backlog.

But in honesty I cannot see ANY of the US facing sites suddenly getting alot of processing capacity and being able to take on a large amount of new US players.

While everyone is making a drama out of Full Tilt’s issues it’s as if they are all pretending because the remaining sites are still operating they’re not going to get in trouble.

I think they could get into trouble, probably will get some more funds seized at some point and these smaller sites are far more likely to be unable to survive or payout players.

As I predicted in the very first days after Black Friday – Online poker will become polarised with a non US market not wanting to mix with a US facing market.

Until the land based casinos get their dream come true and a regulated US market to themselves I dont think US players have alot to look forward to.

If you must play minimise your risks … dont play small skins on the remaining networks and DONT deposit more than you can afford to loose.

On the upside there will be alot of poker players discovering the total bliss that is playing live poker … The US land based casinos must think they’ve won the lottery.

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