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New Full Tilt Statement as Shortfall Reported Much Larger Than Thought

Recently, Subject: Poker publicized that Full Tilt Poker’s $60 million deposit shortfall, the amount of still uncollected funds from player deposits dating back months ago, is in reality closer to a $128 million problem. The shortfall stems from player deposits which were instantly credited by Full Tilt even though the site was unable to debit the money from player bank accounts due to payment processing woes. Essentially, the site loaned $128 million to players on the assumption that they would be able to debit the money from their bank accounts at a later date.

Full Tilt is very unlikely to recover these funds. As Subject: Poker points out, the site make an explicit agreement with the DOJ not to accept U.S. player deposits. The debts range from four months to a year old. Most players are not even aware that they owe money to the site. So even if the hurdle were overcome with the DOJ, the site would face serious troubles trying to debit monies from player bank accounts from deposits made months ago.

Yesterday, Full Tilt released their second statement in as many weeks. Here is the statement in its entirety:

As is obvious from the events that have transpired since April 15th, Full Tilt Poker was not prepared for the far-reaching, US government enforcement effort of Black Friday.

The events of Black Friday came on the heels of prior government enforcement activities and significant theft. Over the two years preceding Black Friday, the US government seized approximately $115M of player funds located in U.S. banks. While we believed that offering peer-to-peer online poker did not violate any federal laws—a belief supported by many solid and well-reasoned legal opinions — the DOJ took a different view. In addition, as was widely reported, a key payment processor stole approximately $42M from Full Tilt Poker. Until April 15th, Full Tilt Poker had always covered these losses so that no player was ever affected. Finally, during late 2010 and early 2011, Full Tilt Poker experienced unprecedented issues with some of its third-party processors that greatly contributed to its financial problems. While the company was on its way to addressing the problems caused by these processors, Full Tilt Poker never anticipated that the DOJ would proceed as it did by seizing our global domain name and shutting down the site worldwide.

Over the last four months, Full Tilt Poker has been actively exploring opportunities with outside investors in order to stabilize the company and pay back our players. At least six of those groups, including hedge funds, operators of other internet businesses and individual investors, have visited Dublin to inspect the operation. We have recently engaged an additional financial advisor through an investment banking group to assist us in our search for an infusion of cash as well as a new management team to restore the site and repay players. While any deal of this nature is necessarily complex given the current regulatory environment, our players should know that Full Tilt Poker is fully committed to paying them back in full and restoring confidence in our operations.

One observation of this statement is that it’s pretty heavy on anti-DOJ rhetoric. Clearly, Full Tilt is hoping to keep players at bay by directing their anger over the site’s financial problems at the DOJ. But one need look no further than PokerStars to see that the DOJ’s actions do not in any way directly equate to player money being compromised.

The more time that passes the more it becomes clear that Full Tilt was an inept operation, a giant house of cards basically. Strangely enough, $128 million of outstanding player money really isn’t outstanding at all; it’s been in player bank accounts all along. While that’s a great beat for the guy who thought he deposited $50 and lost it in the site’s games, it’s a terrible beat for the players who deposited little and won a lot. Those hard fought winnings may ultimately prove to be a mirage.


 



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