Full Tilt Bailout in Jeopardy
THE WEEKLY SHUFFLE, 2012-02-12, by OzoneThe much anticipated deal between the DOJ and Groupe Bernard Tapie (GBT) to acquire the assets of Full Tilt Poker appears to have hit a major snag. A laywer for GBT said last week that former Full Tilt pros have put the deal in jeopardy by failing to repay debts they owe to the online poker room. The $80 million deal to acquire Full Tilt is now at a standstill as GBT seeks to collect $16.5 million in monies owed to the site by players such as Barry Greenstein, Phil Ivey, Erick Lindgren, and Mike Matusow. Laurent Tapie has said that a total of 19 pros owe the site money and that GBT will not be taking on these players' debts.
This is a highly disappointing turn of events for anyone with money stuck on Full Tilt Poker. For a time, it appeared the full repayment of players worldwide was a near certainty. We even offered 100 suggestions of things to do with your Full Tilt money last November following news that the DOJ had agreed to let GBT buy the Full Tilt assets. Now the debts of the very pros whom many Full Tilt customers looked up to are the last thing standing in the way of players getting their money back.
So how did this happen?
Full Tilt's practice of lending money to their site pros is part of what contributed to a federal judge declaring the company to be a "pyramid scheme" last fall. Essentially, Full Tilt was creating money out of thin air by crediting their pros with massive loans to play in their games. So for instance, suppose Phil Ivey wanted to get $1 million onto the site. It was much easier for him to just ask his friends in control of the company to loan him the money to his account. After all, his presence in their high stakes games was good for business anyway as it attracted hoards of observers.
This practice of loaning money to players evidently was running rampant during Full Tilt's heyday as an astounding 19 individuals owe the site money. Phil Ivey and Erick Lindgren together owe nearly half of the outstanding debt ($4 million each). David Benyamine is said to owe $2 million. It was a pretty slick move by GBT to announce who owes the site money in hopes of motivating the players to settle their debts.
Mike Matusow, who allegedly owes the site $700,000, said in a tweet, "for all my fans out there just to let u all know i dont owe full tilt anything why my name is mentioned i dont know."
Barry Greenstein, who is responsible for a $400,000 debt to the site, took to the TwoPlusTwo messageboards to make a statement on the matter. In it, he said, "I borrowed $400,000 to play on Full Tilt a few years ago, before PokerStars had high stakes games. I didn't pay it back, hoping that some people who owed me and had money on Full Tilt would pay me there so I could use that against the debt."
Greenstein further stated that, "Tapie Group contacted me last week and asked if I would pay them directly. Their attorney offered me the opportunity to pay in installments so I could have a chance to use money owed to me." His belief is that the money he owes Full Tilt doesn't have any bearing on the deal. Greenstein indicated that he has no intentions of settling his debt by way of paying GBT in saying, "I was concerned about taking money due to US players and giving it to the Tapie Group because it is understood that the Tapie Group won't be the one paying the US players."
It is strange that Greenstein feels he has a "moral obligation" to repay U.S. players. Money owed to Full Tilt is money owed to Full Tilt. The money these pros owe to the site rightfully belongs to the worldwide player base. Does Greenstein somehow think that if he settles his debt with GBT that the DOJ, which will be the responsible party for repaying U.S. players after the deal is final, might somehow stiff U.S. players money they are owed since he settled his debt with GBT and not them? If there is no deal done by GBT, no one will be repaid. Greenstein's response wreaks of questionable motives.
The deal between GBT and the DOJ to take over Full Tilt is unraveling. The negotiation has been halted by the need for $16.5 million to be repaid to Full Tilt by degenerate gamblers. There is no urgent motivation for these 19 pros to repay their debts. Like Matusow and Greenstein, many others will have some excuse for why they need not come up with the hundreds of thousands they owe to the site. There is no reason to expect that all 19 pros with outstanding debt will make good and as such, there is no reason to think the GBT bailout will go through. GBT's lawyer, Behn Dayanim, has said that, "The company is in worse financial condition than we anticipated."
Full Tilt was built on the strength of their ability to give recreational poker players a chance to play with the games top pros. In the end, these pros are the reason why recreational players all around the world will likely never receive full repayment (let alone with interest!) for the money they trusted to Full Tilt's foolhardy management. Full Tilt's sponsored pros aren't the heroes that poker television programs have made them out to be. Many of them are, at best, irresponsible, degenerate gamblers whose bad debt to Full Tilt may ultimately prevent players from getting their money back.
In the coming weeks, GBT will examine how likely they are to receive the $16.5 million from Full Tilt sponsored pros and make a decision whether or not to proceed with the acquisition. They are unlikely to make a lot of progress trying to collect massive sums of money from 19 different poker players, many of whom likely do not have the liquid assets on hand to settle their debts. Unfortunately for players who are owed money by Full Tilt, news in the coming weeks that GBT has decided to back out of this deal is probable.
The Weekly Shuffle is our Sunday column with our observations and commentary on the poker world. Have an idea for an article? Leave a suggestion on the feedback page.
PokerTips Blog Recent Posts
|How To Create A Great Atmosphere For Your Home Poker Game|
|27 Questions to Ask Yourself During a Poker Hand|
|The Pros Are Jumping on Twitch: Get In On the Ground Floor|
PokerTips Newsletter Sign-Up