"Didn't you work for that poker ponzi scheme company?"
This was the first line of an email I received today from an old friend, a Hollywood veteran but a total civilian when it comes to poker, online gaming, and the casino industry. I don't fault him for wondering. It's a valid question, and one I'm sure to be asked again and again. He only knew about it because it was on the front page of the New York Times. And if the Times calls it a ponzi scheme, well, it must be.
"No. I freelance for the one that gave all the players their money back. I did have almost two grand in an account on the other site that I'll never see again. Gross mismanagement, yes. Pyramid-like qualities? Yes. Ponzi scheme? No."
After living with my boyfriend, an ex-Wall Streeter, for 5+ years and having my eyes opened wider to the financial world by the day, I can confidently say that Full Tilt Poker was not a ponzi scheme. Ponzi schemes do not generate revenue, as Full Tilt did for several years. No, Full Tilt fucked up in a million other ways, most notably the utterly brain-dead decision they made in late 2010 to continue crediting player accounts with deposits before actually receiving them. Not segregating player funds was another biggie. And paying out close to half a billion in dividends and continuing to send giant monthly checks to their owners even when management knew the company was insolvent does indeed take the cake. But that doesn't make it a ponzi scheme.
In this case, "ponzi scheme" is the DOJ's PR strategy. It's a sexy phrase. It's in the public consciousness. People might not know exactly what it is, but they know IT'S BAD. It's like that thing Bernie Madoff did! That greedy, rich, sick fuck. Marry "ponzi scheme" and "online gaming" and you've got a front-page story the public will lap up. You have a small group of owners who paid themselves $443 million and tens of thousands of ordinary poker players out $390 million worldwide. It plays well on the evening news. In this economic climate, any story where little guy gets fucked over while a select few make out like bandits is a mouth-watering cupcake topped with populist frosting.
That's why I'm getting emails from people who could give a fuck about online poker but know I have something to do with it.
By using this phrase in the opening salvo of their amended complaint, the Department of Justice effectively rebranded Full Tilt Poker as a ponzi scheme, regardless of whether or not that assertion is true. Much like no one will ever be able to separate Ultimate Bet or Absolute from "cheating scandal" (and that one was true), Full Tilt will inexorably be linked with those two words. U.S. Attorney Preet Bharaha made sure of that and won the PR war in the process.
Poker biz folks have spent the last 48 hours cringing at those two words. Not because they're Full Tilt sympathizers or condone the company's alleged crimes, but for the pall it is casting over an already-battered industry. The whole "this shouldn't reflect badly on everyone" argument doesn't exactly hold up when such a massive slice of the market is either under indictment or underwater. The question now is whether the industry can possibly recover from the nightmare it's facing. In other words, you thought the UB thing was bad? Get a load of this.
Full Tilt Poker will be liquidated. The DOJ made sure of that too when they released the amended complaint on the same day the Alderney Gaming Commission held its hearing on Full Tilt's suspended license. Not 24 hours after the DOJ dropped their bomb, rumors began circulating that the AGC would permanently revoke Full Tilt's gaming license. There will be no white knight. No one is going to touch this mess. Full Tilt's remaining assets-- the software itself, Rush Poker, and a bunch of office furniture in Dublin-- will all be sold off. And the inevitable civil claims against the owners' personal assets will drag through the courts for years. It won't stop until all those dollars are emptied from the owners' offshore bank accounts, and even then, it probably won't stop.
Is there a future for online poker in the U.S.? Not immediately. This Full Tilt mess just set us another two steps back. And with online poker now branded as a "ponzi scheme" in the public consciousness, politicians will be even warier about getting behind regulation and legalization. American land-based casino entities ultimately got what they wanted-- a "level playing field" (aka "no more Stars or Tilt, ever")-- but if they don't step up with some serious, SERIOUS lobbying dollars and bring the banking industry along with them, they'll never get anywhere with the feds. Online poker will never be politically popular enough to fly on its own.
Can anyone get the industry out of this mess in Washington? Well, it's certainly not the PPA. A limp-dicked lobbying operation almost wholly funded by Full Tilt and PokerStars, the PPA claimed to represent the interests of players, but in actuality, they only represented the interest of their two biggest donors. Why else would they come out against the Reid bill last December? Um, because it would put them out of business in the U.S. since they were in violation of the UIGEA? Ding ding ding! Doesn't that 15-month blackout period sound positively dreamy right about now? We'd already be nine months into it. I'd be gunning for a 2012 WSOP Main Event seat from my living room in San Francisco on Harrahs.com come spring, instead of wondering if I'll ever be able to play another hand of online poker. The PPA will forever be haunted by the specters of their former board members Howard Lederer and Chris Ferguson, and the hundreds of thousands in dirty dirty Full Tilt player-owner money they took in donations over the years.
Wait wait wait... hundreds of thousands? These donkeys took almost half a billion in dividends and only spent about $1 million greasing the legislative wheels? Did they learn nothing from the real ponzi schemers on Wall Street who are almost never prosecuted? Instead the industry was left hanging like Stringer Bell in The Wire after he gave that suitcase of cash to Clay Davis. And you all know what happened to him two episodes later.
What's left of the industry is moving on without the United States. PokerStars' traffic levels have almost completely rebounded from Black Friday. Young, mobile online players of means are leaving the country, a few hundred more each week. They're setting up shop everywhere from Vancouver to Malta and shipping tournaments just like old times. They post photos of their "grind cribs" and twitter ironic things about how much more freedom they have in Mexico than the U.S. Sure there will be the inevitable downswings and visa problems and deportations, but for now, like always, they'll just grab that money while it's there. It's what we all did in the poker industry. Grabbed as much as we could before the party was shut down, hardly pausing to consider what would happen later.
Later is here, everyone. And it's not looking good. Not for Americans, anyway.
11:50pm: OK, so the PPA didn't exactly *oppose* the Reid Bill per se. Their abysmal efforts in getting it passed just made it seem that way.
Chris Ferguson photoshop by 2+2 user chytry