Where is the Collective Outrage?

by , Oct 3, 2011 | 8:00 am

tom schneider political humor

Tom Schneider


OP-ED

Ed. Note:  Shortly after Tom wrote this piece, the AGCC revealed that some $330 million had been seized pre-Black Friday. I sent an email asking if this changed the math, to which Tom replied, “That’s almost all that they owed to players, just short $60 million which is purportedly what they had in the bank.  Makes my case even stronger.”


Just yesterday, I heard the news that the Department of Justice accused Full Tilt Poker of running a Ponzi scheme.  A Ponzi scheme is defined as a pyramid investment swindle in which supposed profits are paid to early investors from money actually invested by later participants.

I object your honor.  Taking money I deposit and distributing it to owners is no Ponzi scheme.  But wait, let’s look at some facts/guesses.

Had our politicians not passed a law that restricted financial institutions from transferring money to and from poker sites, all players would still have their money. 

In reviewing the DOJ complaint and other sources, the following information jumped out at me:

Money owed to players  ($390 million)
Cash on Hand, Seized or Frozen Cash, Deposits not Received From Players
Money seized by US Government $115 million
Deposits not received from players* $180 million
Money frozen by banks $42 million
Money in Full Tilt bank accounts $60 million
$397 million
Shortfall to pay account holders None/Zip/No Shortfall

* I have heard from various sources that Full Tilt credited players’ accounts for $180 million that Full Tilt never received.  I assume they didn’t receive it because the banks wouldn’t transfer it to them, but nonetheless, many players received credit for money that was never taken out of their own bank account.

Did Full Tilt distribute massive amounts of money to their owners?  Well, yes. Over the last four years, owners received $443 million in distributions.  Some say ahem, throat clear, “profit distributions”.

Lederer $42 million
Ferguson $85 million (although only $25 million was paid)
Bitar $40 million
Other player owners $276 million
$443 million

Had our politicians not passed a law that restricted financial institutions from transferring money to and from poker sites, all players would still have their money.  Because of that law, $180 million did not get transferred to Full Tilt, $115 million was seized, and $42 million is frozen in various banks.  If Full Tilt had all of this money, they would actually have a surplus over what the players are owed.

I normally don’t write about things like this, because I find these kinds of stories boring. But, the real story to me is WHERE IS THE COLLECTIVE OUTRAGE!!!!!?  But who should be the recipient of our outrage?  My first draft of this article was blasting the Full Tilt people.  But when I looked at the numbers, I had to re-evaluate.Believe it or not, with all of these payments there is still a shareholder or two that owes Full Tilt money from loans made by Full Tilt to the shareholder/player. Huh?  That’s what a bad craps habit will do for you.

So why is Full Tilt the bad guy in this story?  Well, they did some things wrong…really wrong.  They did not keep player funds separate from the general funds.  This allowed the government to seize the cash without returning it so that players could be paid out.  Do I have a big problem with the unbelievable distributions to shareholders?  Nope.  As long as there was enough money to pay all of the players when we cashed out, why would I care how much someone makes providing a service that I want?

I was playing poker the other day with a friend of mine who had a lot of money on Full Tilt.  He didn’t tell me how much, but I wouldn’t be surprised if it was over $100,000.  His response to what do you think about Full Tilt?  “I haven’t been paying any attention to that stuff.  Whatever.”

This is an indication of how messed up the poker community is.

  1. Because we are always pitted against one another, we will never come together enough to have strength in numbers.   How can all the players of Full Tilt not band together and get some of their money back?  Whatever.
  2. We are the most apathetic bunch of degenerates I’ve ever seen.  Shut up and deal.
  3. We value money much less than the average person.  I will give you $200 to eat this $100 bill.
  4. We are more upset about Russ Hamilton (allegedly) cheating a few hundred people out of their money than we are about Full Tilt and the U.S. government making it such that hundreds of thousands of people can’t get their money back.

I think that many of the owners of Full Tilt had an insatiable appetite to spend big, be big and gamble big.  Most of them earned the reputation of geniuses and monster gamblers.  I do feel bad for a few of the investor-players that had no idea of what was going on.  They just got big checks and thought they had made a great investment.

The board of directors of Full Tilt did little to protect those investors and the people with money on the site.  Shame on them, and while I’m shaming people, how about shame on our government?  They took our money.  The $115 million that they seized, that’s ours.  How is that fair.  I can’t imagine they would do that to us if our money were in a bank.   Oh, and shame on our politicians for creating the law that made it impossible for poker sites to continue to run legally.  They are such pussies.  If they didn’t want poker to be legal, they should have voted to make it illegal, not make it so that financial institutions can’t accept transactions with a poker site, in essence, setting the trap.  More underhanded crap from Washington.

I don’t know why I’m so outraged.  I lost all of my money on Full Tilt a couple days before they were shut down.  Funny thing, 5 other players, who I consider to be great players, lost all of their money on Full Tilt within a couple days of the shut down.  It gets curiouser and curiouser.  Whatever.

The one thing I’m most curious about is Chris Ferguson.  Why Jesus?  Why did you let this happen to us Jesus?  Why did you need that much money?  It’s obvious that you didn’t spend it at the barber.  Your clothing budget couldn’t have been very much since you have worn the same long, black, scary leather jacket for the last ten years.  The poker community after review of all of the facts should take a vote on whether Jesus should be able to keep his name. Whatever, we probably couldn’t even organize that.  I’m tired, I don’t care, now get the cards in the air.

Oops, one last thing.  I’m not a professional reporter, so all of the supposed facts in this article could be wrong.  Don’t rely on me.  I’m in a hurry to get to a game.


Tom Schneider, author of Oops, I Won Too Much Money, is a professional poker player and financial adviser for Loudmouth Golf. You can follow his semi-sensical spoutings on Twitter @DonkeyBomber.



4 Comments to “Where is the Collective Outrage?”


  1. Beggingb
    says:

    Even if the money ‘adds up’ as suggested, there are still a number of reasons to be upset.  The fact that they knew about the processing problems for some time and did nothing but provide electronic credits while lining their pockets is one.  I also disagree with suggestions that FTP/AP/UB were like ‘banks or ins. companies’ and only needed to keep reserves on hand.  The players’ accounts were TRUST monies to only be held by the sites and applied or directed when told to do so by the player (by selecting a ring game or tnmt).  THEIR money was the webhosting (rake) fees.  All the great bankroll management articles on their site and yet they couldn’t properly manage millions of dollars of OTHER people’s bankrolls.  Even more absurd was not paying licensing feess and losing the overseas part of their cash flow so as to get completely shut down.

    The fact is, (other than PS) these sites EMBEZZLED from the players’ accounts. 

    JMHO


  2. Anonymous
    says:

    Interesting to see the breakdown of the numbers this way.

    To your point: “If Full Tilt had all of this money, they would actually have a surplus over what the players are owed.”
    This is assuming that FTP would have saved these funds that were not seized by the govt, and would have not made additional “profit distributions”, etc.

    There was enormous known risk to accepting online wagers the United States post-UIGEA.  This risk should have been borne by any company continuing to do business, not by the players depositing money – that thought their virtual currency was backed.

    Was FTP truly gambling on DOJ returning these seized funds at some point?


  3. F-Train
    says:

    Stopped reading as soon as you said “if the government hadn’t passed this law, players would still have their money”.

    Two points: (1) the government DID pass the law; (2) PokerStars players DO still have their money.

    That’s why there’s no collective outrage against the government.

    Tilt Accounting and CFO decided to treat all uncollected and seized funds as cash on hand, which almost certainly influenced the board to continue paying out distributions to owners at a clip of $10 million per month, even after there started being problems collecting funds in 2010.

    I know it’s easy to say “the DOJ confiscated 330MM and that’s what’s missing from player accounts on Tilt”, but that overlooks the fact that the DOJ seizures took place from 2007 to 2011 and that the Tilt payment processing woes (and player account shortfalls) only started in 2010.

    Tilt deserves all of the blame for its problems. PokerStars operated in the EXACT same environment.


  4. Dan Michalski
    says:

    @ftrainpoker:disqus  just because tom says something stupid, it’s nor reason to stop reading! in fact it’s usually a sign that more stupider stuff is forthcoming. i think he’s going for a thoughtfuLOL.