Bill Ordine is a veteran journalist who has worked at the Philadelphia Inquirer and Baltimore Sun in both news and sports as an editor and reporter. He has been writing about gaming and poker for more than two decades and has covered some portion of the World Series of Poker Main Event every year since 2004. He authors a column on travel to casino destination for the Inquirer that also appears in syndication, and his articles on gaming have appeared in many other publications, including the Los Angeles Times.
Since the online poker world was shaken by an April 15 federal government crackdown, poker’s so-called Black Friday, there has been constant bleating by the customers-players over the tens of millions of dollars that was on deposit with poker websites and that they may never see again.
The source of most of the players’ angst is Full Tilt Poker, formerly a high-flyer in the Internet poker universe that is in smoldering ruins today. It’s been generally acknowledged that U.S. players are still owed about $150 million from Full Tilt. Tens of millions more are owed to international customers.
However, recent revelations in a 103-page Department of Justice amended civil complaint that skewered some of Full Tilt’s poker-celebrity owners also shed light on a heretofore little-discussed facet of the poker website shutdowns and the frozen assets.
Here’s the blockbuster — some, perhaps even many, customer-players had been profiting from the payment processing problems that had vexed the online poker industry for months and years prior to April 15, and led to online poker’s tumble. That profit to players was about $130 million, apparently over eight or nine months, according to the DoJ.
To explain, here’s a short history of how a billion-dollar industry was felled.
Federal law passed in 2006, enacted to curb online gaming, essentially went after the flow of money from players to the online casinos. That money routinely passed through intermediary payment processors. As federal regulations and enforcement constricted the cash flow through the payment processors, Full Tilt allegedly found itself with less cash on hand than its player-customers had in their accounts. Of course, only bad things can follow . . . and they did rapidly when the DoJ shut down several websites, including Full Tilt, to American customers on April 15.
Now, here is the stunner from Tuesday.
In paragraph No. 113 of the amended complaint, the DOJ alleges:
Beginning in or around August 2010, Full Tilt Poker was often unable to find payment processors to withdraw funds from
the bank accounts of its United States players. Instead of disclosing this fact, Full Tilt Poker secretly began to credit funds to players’ online gambling accounts that Full Tilt Poker had never actually collected from players’ bank accounts. As players gambled, and lost, these phantom funds, Full Tilt Poker developed an undisclosed shortfall of approximately $130 million owed to players that Full Tilt Poker had never collected because, in reality, these funds were never withdrawn from players’ bank accounts.”
Let that sink in for a moment.
This means that for about eight to nine months, some of Full Tilt’s player-customers were able to play with virtual chips while the cash that was supposed to be backing those chips was still safe in the customers’ bank accounts. In poker parlance, this is known as a freeroll.
And those Full Tilt player-customers who tried to deposit, say, $1,000 during the time specified, were credited with that amount in their Full Tilt accounts without having the money debited from their bank accounts, played online poker and successfully cashed out before April, 15, conceivably wound up with free money.
Right here, a reasonable person has a question.
Players were being credited with millions of dollars with which they could play for free and no one noticed?
Well, apparently it was noticed. Since the DoJ revelations on Tuesday, website commenters on 2-plus-2, the most popular online meeting place for poker players, have noted that the phenomena had indeed been discussed in online forums from time to time. But no one was making too much noise a
bout it. This is a little like an ATM machine down the block dispensing free $20 bills and the neighborhood manages to keep it hush-hush.
While this $130 million freeroll was occurring, the situation was not conspicuously noted in the poker media, nor had it been part of the online poker news discussion following the April 15 shutdown. But with the DoJ spelling it out on Tuesday. By then, a discussion thread on 2-plus-2, with players accusing some of their fellows of bad behavior, had grown to more than 15,000 comments by late Friday.
It may prove impossible to determining how many Full Tilt customer-players profited from the $130 million freeroll. Of course, some of that $130 million has evaporated as part of the assets frozen on April 15. But clearly, some of that $130 million wound up in players’ pockets as free money.
None of this is meant as an apologia on behalf of Full Tilt. If the DoJ charges are true, there was wrongdoing aplenty. And surely most Full Tilt player-customers are genuine financial victims of the Full Tilt meltdown. But the $130 million in free play that some Full Tilt players received from August to April illustrates that in any poker game, someone is almost always taking advantage of an angle.