As I have been speculating/predicting for some time now, that Full Tilt’s inability to pay back customers is a cash flow issue, seems to have been finally confirmed. Recent reports indicate that Full Tilt has struck a deal with the US DOJ that has unfrozen about a third of the money currently tied up in the seizure. But even that’s not enough to start paying players back and Full Tilt is still hedging on when they’ll be able to.
eGaming Review is further reporting that Full Tilt is seeking a $150 million dollar investment which confirms rumors that Bitar and Co. have been shopping FTP around. FTPDoug more or less confirmed both news bits in a 2+2 post.
According to the EGR story:
The Full Tilt source explained this resulted from players’ poker balances being credited with money held in bank accounts seized by authorities before Full Tilt itself had been made aware of the seizures. “Because of the broad-sweeping nature of the Black Friday seizures, you had a seizure combined with a backlog and this has resulted in millions which all of a sudden became owed,” the FTP source said.
I’ve re-read this several times and I’m not entirely sure what they’re trying to say. Basically it sounds like they’re saying that everything I’ve written up to this point is dead-on. They were holding the money in bank accounts and just crediting player balances. Basically segregation of funds via accounting. But when the DOJ seized the accounts there wasn’t enough left in the unfrozen accounts to make good on the money owed to players.
The whole part about a backlog sounds a bit confusing to me because it doesn’t really make sense. The backlog was in them sweeping funds from seized bank accounts into protected bank accounts. That’s why so much money was floating out there. That’s just poor cash management. The way it’s worded it seems like they’re trying to downplay their own carelessness. Because of this was a day or two days or whatever backlog it would only be a few million and they could easily just write off the losses like they’ve done in the past. But having a third of the money owed to players freed up and FTP is still out there looking for investors to infuse cash into the company before they can pay players back sounds like a far more substantial sum than just a few days worth of backlog is involved.
FTPDoug’s post on 2+2 was quite interesting. FTPDoug says:
4. Why are the Full Tilt Pros remaining silent?
It is not their choice. But they are constrained by the pending legal actions.
They do have a choice. They can listen to FTP attorneys who put FTP’s interests first or they can walk away from their sponsorship deals and say what’s on their mind. I can see why people with serious equity might also be best served by keeping their mouths shut but your average red shirt pro who was getting an hourly rate plus rakeback has nothing to fear from the DOJ anymore than any other sponsored US pro for any other poker room.
Daniel Negreanu has voiced his opinions about Black Friday and other rooms and presumably both Stars and Tilt signed similar agreements. So why can’t Full Tilt pros? And why is Full Tilt making that statement? Shouldn’t each individual pro have their own level of legal risk? Or is it more of a case of Full Tilt telling their pros to shut their mouths?
And one of FTP’s most prominent pros has spoken up. Phil Ivey claims he’s filed a lawsuit against FTP (actually, Tiltware) in protest of their dragging their feet. He’s also vowed to sit out this WSOP since many people will not be able to play because FTP has their funds.
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.
Now, I’ve heard some cynics out there speculating that Ivey might be distancing himself from FTP but Phil Ivey has always been somewhat distant from the company despite being a shareholder. Ivey doesn’t like to do press and getting him to even do photo shoots for marketing at FTP was difficult. So he was never someone who lived for FTP. He makes tons of money on his own, they got him to join before poker really blew up, and while he might not have been entirely unhappy with the rising value of his FTP equity over the last few years, he knows he has a career beyond FTP.
Also interesting was FTP pro Tom Dwan backed him up on Twitter.
Yo @philivey poker isn’t a sport… Rest of your statement is awesome though.
FTPDoug in his 2+2 statement also says:
We acknowledge that our lack of communication reflects poorly on us, and rightfully so. We have been too optimistic in estimating how long it would take to sort through the issues we have faced since Black Friday. And as frustrating as the delays have been for us, we recognize that it cannot compare to the frustration you have been feeling.
We further recognize that our lack of communication has led to much speculation and many unsubstantiated rumors, which have often been contradictory. With this message, we hope to clear up as much confusion as we can, while at the same time keeping in mind the constraints imposed on us as a result of the cases brought in the Southern District of New York.
As a final note, we understand — and have always understood — the effect that our brief statements have had not only on our customers, but also on our reputation. It has not been easy to stay silent and watch the damage being done to our company brand and personal reputations, but we need to be mindful of the complicated and serious legal issues raised in the pending cases.
I can sympathize with the position they’re in legally but this constant reference to the DOJ case as a reason for poor communications doesn’t seem to hold much water. Other poker rooms under indictment have been able to communicate. Why has FTP be given a gag order?
Of course they can talk but at first they didn’t want to admit that they were as screwed as they are. Now they have to admit it because the DOJ releasing a big chunk of the funds seized and FTP still can’t start paying players back is too big of an issue to dismiss. So they finally admit that they’re looking to raise capital even though the rumor has been circulating within the poker industry for weeks.
I just don’t see how they couldn’t admit that 2 or 3 weeks ago. It has nothing to do with the DOJ case. Can any attorney come up with a hypothetical where they wouldn’t be allowed to talk about this in relation to their DOJ case? Why can they announce now that banks that weren’t even subject to the DOJ seizures cut FTP off but they couldn’t tell the public that several weeks ago when it actually happened?
Again, I will reiterate what I’ve said before, I believe that FTP players will get their money back eventually. There are just way too many reasons for it rather than against it. But that being said, this situation is being handled horribly. As much as they want to make it seem like they understand the player’s frustrations all they’re really concerned about is covering their own asses. The WSOP is about to kick off and some players won’t be able to play this year.
As TonyG has suggested they should at least make a good faith payout. Perhaps they feel that making multiple payouts will seem like they’re still allowing players to play but they could do this under the close supervision of the DOJ. All of the silence, all of the delaying, it all feels like FTP really doesn’t care about the players.
12 thoughts on “Full Tilt’s Money Woes”
@John: I was one of the first. And I explained exactly how FTP could have gotten itself in this situation. This most recent news just goes to show that it was worse than I thought. FTP was even more reckless with player funds than I imagined if any of this is true.
There is also the rumour that Tilt spent a large portion of the players’ money on advertising campaigns on a routine basis, replacing this money from future revenue.
As revenue has fallen away, it has perhaps become much more difficult to replace this money.
Not exactly a short list of people speculating/predicting recently that Full Tilt is facing a pretty serious cash flow crisis, so don’t break your hand patting yourself on the back.
Any reason you still have Full Tilt affiliate ads still plastered all over your sites? Seems a little irresponsible to refer potential non-US players to a site that’s struggling with increasingly serious issues. But I guess money is money is money.
Like Stephen says, I’m starting to hear that they had several months where they just credited player’s accounts without being able to debit the player’s bank account. That’s just monumentally poor risk/money management.
I think that’s what they’re trying to make it sound like, but this story
suggests that they’ve had a shortfall of $60 million in the past due to crediting player accounts with deposits but being unable to process the payment. Who knows how much was currently outstanding, but that’s money that they will never be able to recover, and most of that would have been for losing players (winners don’t have to deposit as often).
They also have the segregation issue – if no money was segregated, then there is no way they can prove any money in any account belonged to players, so the DoJ has no valid reason to allow any funds to be released from any account they’ve seized.
If this goes on much longer, non-US customers are going to start worrying about the safety of their money. If you get a ‘run on the bank’, Full Tilt is done and those who were slow to withdraw or unable to will be left with pennies on the dollar. If that.
Doesn’t it sound odd that FT are blaming the backlog of deposits made from the time the accounts were seized and the time FT was aware of the seizures? I would guess that took about 5 minutes. Such a large scale seizure cannot go unnoticed for a serious amount of time. So I find it hard to believe that all FT players are not getting paid out because of a small amount which was caught in the middle. Sounds like Bill was spot on with the lack of fund segregation, and now they have to find an excuse…
@F-Train: We have posted an update on the Full Tilt situation – http://www.egrmagazine.com/news/1668342/full-tilt-update-ftp-insists-irish-account-unfrozen.thtml
PS. good article Bill, very interesting read
@F-Train: I think TonyG has a valid point. If they have ANY money they should try to pay it out. Even if you’re getting 10 cents on the dollar today with a promise of the rest to come later that would be better than nothing.
The story about the DOJ unfreezing a Tilt account in the range of 33MM-50MM was debunked as false yesterday by the Subject:Poker guys via confirmation of falsity by the USAO. Tilt can’t pay out what they don’t have.
And I wouldn’t go citing Tony G as much of a source for anything. He’s demonstrated clear ignorance on the situation a number of times.
We both know the reason behind the silence. It is not legal issues, it is not the love of their players, it is the arrogance that is inherent throughout the whole top level management at FTP. Bitar has been dragged through the mud but his lieutentant in arms Gil Coronado seems to be getting away scott free. He is the man who does the payment deals and the one who ultimately manages the treasury, yet nothing. There are many people who could supply and I am sure will supply details on the senior management at FTP to the DoJ. Maybe if they treated their staff more appropriately they would find themselves with more supporters, and less people running for the hills crying “we told you so”.
I have every sympathy with the US players that are not getting paid out, but when it comes to Tilt, it really couldn’t happen to a nicer bunch!
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