Full Tilt Fall Out and Poison Ivey




As interesting as this train wreck has been since Black Friday the social media missives by Phil Ivey and Full Tilt the last couple of days has saddened me. The fight is compelling like the HBO movie Too Big To Fail, and the spectator in me hopes somebody green lights a similar movie about the online poker crisis that actually delivers the same sort of inside dirt. Each day I am more and more intrigued by the drama-bombs being dropped but I also get a little more depressed.

What was obvious a month ago is now even more so; the end is nigh for online poker for the foreseeable future. What's worse is the time-line for the American markets being open again gets incrementally pushed back the more the scandals unfold. You don't think congressmen have at least one eye on the type of corporations they once rubbed elbows with? The stink of this scandal may do more harm to the allies of the legalization of poker than we currently realize.

If Full Tilt has squandered millions of players money by mismanaging it and having a FEMA like approach to a 100 year type storm then I lose money, GCP loses money, and the industry is crippled, but that's not the real reason I'm saddened. It's still for all the players whose net-worths or close to it for all intents and purposes are gone. What I had on the site is chicken feed by comparison, what GCP loses if the American industry is shuttered for a long time, will hurt, but neither I nor the site I co-own had our bank accounts essentially plundered.

It seems that Full Tilt took their players funds and used them for other things. Just what they did, will color our perception of the criminality of management... was it just marketing, did it go as far as personal luxuries, or even feeding player's degen bankrolls. All are bad because they were using money that technically wasn't theirs but certainly some are far worse. Course, Full Tilt has been clamoring for regulation for years, and perhaps they'd thought it would come and the party would be over. Then they'd have to replace those funds but with an influx of new players that would be easy. Well, the party's over but regulation didn't turn off the lights the Justice system did.

The FEMA analogy is that Full Tilt possibly justified the use of all that money that players deposited by using a worst case scenario that wasn't quite worst case. Something along the lines of... we've been operating for 7 years, take the most withdrawals we've had in a month times it by 10, and that's all we need in the account. So we can use this money to grow the site, possibly and ironically fund lobbying efforts, expand into to new markets and up our profits. It's basically an interest free loan. Did they get as base to think that filming and funding a Phil Ivey worldwide craps tour was marketing? Let's hope not. Though if you remember at one point Phil Ivey wanted to break a casino by playing craps there. Sorry, folks you don't have that kind of money just by playing High Stakes Poker. Sadly, you only have the ego to think that is possible with the largess of Full Tilt's coffers at your back.

What sucks is Full Tilt made the same mistakes as FEMA always does and Japan was shown to do recently in that they didn't plan for the true worst case scenario. In Japan, that was an Earthquake, and a Tsunami, hitting nuclear reactors, for FEMA it's underestimating or having the gall to think you know what a 1000 year flood or hurricane is much less a 100 year flood (anybody playing poker will tell you how often you see something that only has a 1% chance of happening), and for Full Tilt Poker the worst case scenario was all their customers withdrawing their money at once. Yet, that scenario should have always been on the table with their at best quasi-legal status as an industry in this country. They haven't been paying taxes and they've been operating million (billion?) dollar businesses in the United States, they didn't anticipate that one day they could get shut down?

Pokerstars by way of regulation had to keep their players funds separate and never touched them but maybe they would have done so out of common sense. Full Tilt didn't do that out of foolishness. Sure, perhaps, they were gambling (as all the principals appear to be gamblers) to make billions out of their players millions but they didn't have the right to do that.

An irony here is it was likely until a couple of days ago, okay maybe not likely but possible, that Full Tilt could survive. They could rake their international clientele for the foreseeable future and eventually pay out their U.S. players with their profits. They could possibly sell all of or part of their site and assets to a third party who'd pay off the debt. But like the movie Too Big To Fail showed, in a time of crisis the chief figures were too busy gobbling themselves up in greed fueled panic, and deals being lost by the late-night greed of others. Phil Ivey's maneuver may really have stymied Full Tilt efforts.

People scoff at the notion that his lawsuit stopped a potential deal, but that could be true. If you look at Full Tilt, their biggest asset is not their diminishing player base, nor their excellent software (though both are still assets) but it's their star power and roster of poker elites. Nobody is Phil Ivey but Phil Ivey. Full Tilt's bundle of assets, making a third party buyer interested in purchasing them, is headline by Ivey. Let's say Wynn wanted in on online poker, met with the DOJ and said I'll buy Tilt, pay off their America players and only operate internationally and you go after who you need to. Basically break the business but I'll pay of the customers and picke up the pieces, in essence keep the brand and their endorsers (that evade jail time), and that might be a deal he'd be willing to make.

Ivey probably didn't like the idea of being bought and sold as a commodity. He probably would like to make his own deal now that the marketplace is changing rapidly. He approach Full Tilt about leaving and it sounds like Full Tilt said no dice. Sure his attorney's are spinning it like Ivey's lawsuit is for the people, but really it's for him and nobody else. While Full Tilt, and believe me I'm not siding with them on this as they all seem to be villains of some degree, is trying to salvage their business and pay out their customers Ivey's telling the world that Full Tilt's best asset, namely him, may not be asset. Now instead of buying the brand, "the pros", and the vestiges of the player pool, a buyer may not get any of that.

Meanwhile, Full Tilt is seemingly mute to the plight of the players, yet can fire off a terse response to Phil Ivey's lawsuit. Another in a series of missteps. They can't win the PR battle until they pay the money. So they had better options, and one was to continue not to play the P.R. game until they addressed the players first with more informed statements. True, they had a visceral reaction to Phil Ivey being hailed as a people's champion yet his lawsuit is all about him. While it's okay to point that out, it also shows the weakness of Full Tilt's hand. If there were buyers Full Tilt is also responsible for chasing them off.

Or, if they wanted to craft a response, do it better. They should have directed it as part and parcel to a statement of the players and made the lawsuit seem an afterthought. That part could have said something like, "our goal is to pay our players. If Phil Ivey's goal is really the same, the lawsuit is irrelevant and we ask him to retract it. If he wants in on paying out the players he needs to work with us. We appreciate the sentiment, we share the sentiment. We don't see how him suing us for the same amount we owe the players will accomplish that goal. We'd also like to see the public statement where he says he will personally distribute all monies won in the lawsuit to the players. As stated that's our goal and we have the best system in place to do that. We are not so sure Phil Ivey can handle that without huge overhead so work with us Phil. Phil, we invite you to come back into the fold and work with us during the World Series"

They'd tactfully call out Phil Ivey's true intentions and puts the onus on him. Should he positively react to that and make a follow up statement to do just that, then we can anoint him the king and savior of poker (as many have done anyway). Course, then he'd actually still have to do it. Kind of like Tom Dwan's remark that he'll distribute his Full Tilt earnings to the players... nice sentiment but really how's that going work?


The truth is know Ivey's not after the player's monies he's after his own money and trying to cut in line ahead of the women and children for the lifeboats. He's become rich off of us, why shouldn't he get rich off of us again.

Then we got guy's like Brunson's kid making a joke of the lawsuit and plenty of players still not understanding it's not a laughing matter to all the people with their life rolls gone. The bickering has begun with Mike Matasow attacking Phil Ivey, and yet as all the knuckleheads speak out it. Still, more and more silence from the people that matter like Jesus Ferguson and Howard Lederer. This is just become a bigger and bigger shitstorm. And as it grows, the chances that Americans will ever see their money again is more and more diminished. Even after Full Tilt apparently plundered their players money in an effort to grow their business with the hope of repaying it (once they'd conquered the world) the player's best hopes at getting that money back was with Full Tilt.

As Ivey and his ilk in fight, sadly the rest of the world is going to cash out and Full Tilt is likely going to fail without a buyer. Yes, the indictment is what crippled Full Tilt, but to deny the few assets they had left like Phil Ivey jumping ship isn't going to hurt them (as seems to be a belief on the poker forums) is naive at best. The lawsuit, even if we give all benefit of the doubt to Ivey and accord him the best of intentions, will only hamper us from getting our money.

Comments

I like your argument but ultimately I think it is naive to blame the Ivey announcement for why full tilt cannot sell or get investors in its superior software, its exclusive patent portfolio (see Rush Poker, Multi-Entry tournaments, and I'm sure many other developments announced and still in the works). The much more simple and logical explanation is that full tilt realizes it is failing in getting the money it needs from a third party, and they desperately want someone to blame for their shortcoming, and Ivey is a very convenient scapegoat. At the end of the day, sure Ivey's announcement and lawsuit are clearly negative and not positives for full tilt, but I have yet to meet anyone who thinks the lawsuit has any merit whatsoever (not even sure if Ivey really believes that), and Ivey's rift with the site is worth mentioning, and in the end full tilt blaming anyone other than full tilt for their problems is a very lame attempt to hide their own guilt, resulting from 100% hubris and really stupidity for all the reasons in your post. I just think if you really think it over, Ivey's news isn't keeping someone from buying full tilt. Their ineptitude, unbelievably poor preparation and risk management, and lack of funds is.
C.S. said…
BTW, Hammer Player has a good post on the movie I referenced "Too Big To Fail" with an insider's perspective. I enjoyed. Go here to check it out:

http://hammerplayer.blogspot.com/

From what I've seen of his blog, so far, well thought out and intelligent posts that make for good reading.
-Wild Bill

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