Three Outstanding Blog Posts

If Full Tilt’s response to the Phil Ivey lawsuit has done anything it is that it has made people hate Full Tilt even more. In just one paragraph Full Tilt has managed to obliterate their reputation in the industry.

Sure, a lot of people were pissed at them before they got into a pissing contest with Ivey but the fact that this is the only official statement out of the company in six weeks with players hanging in limbo has really set off some raw nerves.

Case in point are the three blog posts I ran across this week that I think everyone should read.

Kim Lund’s Full Tilt Poker’s Last Out is an excellent read. He is as surprised as I am that Tilt was commingling funds. And like him I just thought it was unthinkable because that’s just something you don’t do if you’re running an ethical gambling operation.

F-Train has a field day debunking any sort of Full Tilt excuse making. He has good fun ridiculing Tilt for trying to scapegoat Ivey. It was their incompetence that got them into the situation and they should start accepting blame rather than fire off pissy press releases when Ivey decides he’s had enough.

And Jesse May makes a complete mockery of Michelle Clayborne’s sanctimonious “Ivey is evil” press release.

I think a lot of the heat Full Tilt is taking right now is because we all thought Tilt were supposed to be the good guys. I worked for the company and Ray and Howard and the rest of the owners that I’ve met are all decent people who I was willing to give the benefit of the doubt to. Sure, I’ve busted FTP’s chops for staying in the US post-UIGEA. I’ve always held that both Stars and Tilt were illegally operating in the US.

But this whole incident drags the company down to UB/AP level. And I think for a lot of people, myself being one of them, it’s sort of like you’re let down by someone you used to trust them. I can’t say I ever thought highly (or un-highly) of UB or AP but I always felt a little uneasy about why they remained in Costa Rica when most of the legitimate rooms had relocated to Gibraltar and Malta. So when the scandals broke it was more like “Yeah, doesn’t surprise me.” But with Tilt I’ve been totally and completely amazed.

6 thoughts on “Three Outstanding Blog Posts”

  1. Share of ownership does not have to correlate to share of control. A company can issue “non-voting” shares, which have little or no voting power. In exchange for giving up their voting power, they typically get a bigger dividend than the voting shares. For example, so-called “preferred” stocks are almost always non-voting, or have only a fractional vote.

    In other words, a deal could be structured so that for example, the investor gets 30% of the ownership but 51% of the vote.

    Given his background in trading, I doubt Bitar thinks he can retain control of the company AND get bailed out. That just never happens. I also find it hard to believe that anyone has pie-in-the-sky notions of how much the company is worth. So if a deal was indeed on the table, and it was rejected, it was probably a shitty offer to begin with. There are always vampires looking for cheap blood in situations like this, and you get offers that make you wonder if they’re stupid or they think you are.

    Another possible scenario is that FTP and/or its principals is closer than anyone thinks to cutting some kind of deal with the DoJ, and any offer is contingent on the DoJ approving it, which maybe they wouldn’t for some reason.

    I’m not saying that Bitar et alia are behaving rationally, just that there are possible rational explanations for their behavior.

  2. Alan: I’ll try to listen but it sounds like it would be the other way around. From the very first rumor it was that FTP was trying to sell 50%. So I could see an investor coming in and wanting 70% for $150 million. That would then give them control of the company and they could make any management changes they wanted.

    The other way around where they only got 30% means that they could only request or make the management changes conditional on them putting up the money.

    I could be wrong but my guess is that existing shareholders would be left with 30% rather than 70% because that makes more sense.

  3. Bill:

    I would have to go back and re-listen to this week’s 2+2 PokerCast, but I seem to recall one of the guests on the program (episode 175) mentioning that a very significant offer of new capital was rejected by Full Tilt because the price was too high. I seem to recall a 30 percent share of equity being demanded in exchange for the capital infusion, but that offer was rejected.

  4. I haven’t been able to get a clear story what was turned down on the terms but if it’s as you say then I can understand Ivey’s frustration.

  5. I believe Full Tilt Poker may be finished – and once again it may be due to the greed of the owners. This was discussed in detail on this week’s 2+2 PokerCast. Full Tilt has already turned down at least one offer of a substantial capital infusion in exchange for a percentage of equity in what remains of the company. If Full Tilt accepted a capital infusion of say, 100 to 150 million dollars, they would have a sufficient amount of money to make all their American players whole. However, investors willing to put up that kind of money would demand as much as 30 percent of Full Tilt – along with a number of other conditions pertaining to how the company would be run going forward. (One can only imagine what those “conditions” would entail.)

    Apparently, Howard Lederer and Ray Bitar balked at giving up that much of the company as they feel that 30 percent of the company is too much. Of course, the problem with that thinking is that every time they turn down another offer of fresh capital, the value of Full Tilt further decreases and their non-U.S. traffic falls even more – further decreasing the overall value of the company. Full Tilt’s “brand” is losing value with every day that they don’t get this mess settled. This is probably why Phil Ivey blew his cork. After hearing that Lederer and Bitar turned down yet another capital offer, he said to himself: “That’s it! I want out. I’m through messing around with these idiots!”

    This is very reminiscent of the situation back in September of 2008 with Dick Fuld and Lehman Brothers. Fuld kept holding out, refusing to sell because he thought he wasn’t getting enough for his company. While Fuld kept balking, thinking that the Government would never let his firm go under, the share price of Lehman kept falling. By the time Fuld realized that the Government would not save Lehman, it was too late: Lehman Brothers was virtually worthless. I have a feeling that is what is going to happen to Full Tilt – they’re going under. Lederer and Bitar are going to keep holding out until they lose it all. American players will be lucky if they get any of their money back. Howard Lederer will go from being one of Bluff magazine’s “20 Most Influential People in Poker” to one of the most despised and hated people in poker.

    If the United States Government ever gets around to legalizing and regulating internet poker, the law should explicitly forbid “professional poker players” from having (or being allowed to have) any direct ownership in a licensed site. If any justification is needed for why “pros” should be excluded from ownership, one only has to point to UB/AP and Full Tilt.

  6. Great choices.

    Jesses early comment ‘that was written from a bunker’ possibly resonated more with me than anything else written about the whole black friday drama yet.

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