Full Tilt Poker's New Brand Identity: Ponzi Scheme

"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.

**Update**

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

Phil Ivey Suing Full Tilt, Won't Play WSOP

A dramabomb did detonate on the first day of the 2011 World Series of Poker. It just wasn't the one anyone expected.

For weeks, the poker community has been speculating as to which members of Team Full Tilt would show up at the WSOP and whether or not they would don the red and white patches that have become synonymous with their public personae. Although former Full Tilt president Howard Lederer did return to the United States a few days ago to attend to a personal matter (his mother's memorial service), most folks in media row believe he wouldn't dare show his face inside the Rio until a plan was in place for Full Tilt's U.S. customers to be paid out. Other Team Full Tilters, however, weren't quite as concerned about potential face-to-face confrontations at the Rio with angry players. I spotted a patchless Phil Gordon early this afternoon at the Bad Beat on Cancer booth. A few hours later I saw John Juanda in the satellite area and he was wearing a patch. The $25,000 heads-up event that began at 5 p.m. today was littered with red pros, many of them logoed up including Erick Lindgren, Patrik Antonius, Brandon Adams, Huck Seed, David Benyamine and Juanda. Lederer didn't play, of course. Neither did Chris Ferguson or Andy Bloch. But the most glaring absence was Phil Ivey. This is a man with some serious bracelet bets, not to mention a solid favorite against the field.

As Dutch blogger Remko "happyfreaked" Rinkema wrote on his Twitter account earlier today, "Biggest upset of the first day is obviously Phil Ivey not showing up. Is he out for the summer?"

Turns out, he is.

As the first round of the $25k drew to a close, Ivey posted a statement on his official Facebook page that ignited a frenzy. Although the veracity of the statement was briefly in doubt, it was quickly confirmed by the Entities at Wicked Chops Poker via a conversation with Ivey's manager. Released in six parts, here is the complete text:

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 wholeheartedly 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.

In a word, (well, actually two,) holy shit.

Ivey's page was immediately flooded with supportive statements from players and fans. It's the first official word anyone's heard regarding the payout situation from a member Team Full Tilt, who have all supposedly been muzzled by lawyers. Ivey, no doubt, has a substantial sum of his own money tied up on the site. The seven-figure-per-month dividend checks have stopped coming. So why not file a lawsuit? Not only is it a good PR move to do Bill Clinton's "I feel your pain" routine and align himself with the disgruntled U.S. players, but he's also one of the (very) few Full Tilt Pros who can actually continue to support himself in the lifestyle he's grown accustomed to by playing poker. Ivey loves the game, he'll put in the hours, and he'll take on anyone. Did Howard Lederer cart his bags of money over to Bellagio and step up to the plate in high-stakes cash games over the last couple of years? Of course not. And why would he? Lederer is smart enough to understand that at this point, he lacks any sort of edge in those lineups.

Ivey's statement, however, was not the only drama circling Team Full Tilt today. After losing his Round 1 match to David "Bakes" Baker in the $25k, 2010 WSOP-Europe Main Event champ James Bord hung out on the rail and waited for John Juanda to finish his match before confronting him with a barrage of obscenities. I believe the words "thieving prick" and "disgusting human being" were tossed around before Bord threatened to attack Juanda in the parking lot. Security intervened, and the two were physically separated.

It will be interesting in the next few days to see if similar confrontations pop up. I'm never one to condone violence, but people are angry, quite a few are broke, and after 45 days without moving even a small step closer to returning player balances, they want answers. They're mad as hell, they're not going to take it anymore, and today, Phil Ivey was effectively canonized as their patron saint. Could other Full Tilters fall in step? Yeah... somehow I doubt that. The situation, however, is reaching UB proportions and will grow worse by the day inside this building until someone from Full Tilt other than a low-level PR monkey steps up and starts communicating.

Slow news day, huh?

**Update**

11:45pm: Pauly, Benjo and I recorded a Tao of Pokerati podcast on the Ivey/Juanda drama. Check out Episode 2: Ivey suing Full Tilt and Juanda harassed.