Get Used to Change
There have been some sharp reminders of online poker's volatility recently. The good news was the pro-poker bill introduced to the U.S. House of Representatives by Texas Republican Joe Barton. On the other hand, there was also the abrupt shut down of Full Tilt Poker following their gaming license suspension by Alderney Gambling Control Commission. Both of these news items serve as a reminder to everyone in the online poker world to expect the unexpected until some type of U.S. legislation brings about a newer, calmer status quo for the game.
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The Barton Bill
Since the passing of the UIGEA in 2006, we at PokerTips have exhausted little energy getting excited about the various pro-poker bills introduced in the U.S. House of Representatives. For the most part, we've surmised (correctly) that these bills have had little or no chance of passing and have chosen to leave the hopeful euphoria to others. But a new bill introduced recently by Joe Barton, a Republican from Texas, has us cautiously joining in on the poker world's optimism for a piece of pro-poker legislation to be signed into law.
For a few of reasons, Joe Barton's bill seems to warrant a little more optimism than the litany of Barney Frank bills of yesteryear.
1. Black Friday helps, a lot. Prior to Black Friday, the impetus for change was not particularly motivated. Despite online poker existing in an underground world of foreign operators and shady payment processing practices, the game still thrived. Tens of thousands of Americans played online poker for real money every day. The casual player wasn't really concerned with poker's legal battle in the U.S.; they could still play the game, so why bother giving support to pro-poker efforts?
Black Friday created some significant momentum for poker's legal battle in the U.S. Barton's bill might benefit from this momentum since the online poker world is effectively a blank slate now.
2. It's the largest bi-partisan pro-poker effort to date. The fact that this bill was introduced by a mainstream Republican from Texas indicates a changing of the tide for online poker (technically Ron Paul is also a Republican from Texas but he is viewed as a fringe legislator that does not command much of a following from the rest of his party).
Eleven of Barton's colleagues are co-sponsors of the bill, seven of them Democrat, four Republican. Since the UIGEA, there has not been this much bi-partisan support for online poker. Those battling in favor of online poker had previously been a rag-tag group of libertarian-minded Democrats. Now we're seeing Republicans unafraid to spend political capital in support of online poker. This is a great thing for poker. The less of a strictly partisan issue online poker is, the better the chance it has of seeing some type of legislation signed into law.
3. The bill offers a clever trade-off. Staunch Internet gambling proponents could be motivated to vote favorably for Barton's bill. The bill contains wording that would increase enforcement against non-poker forms of online gambling. Representative Spencer Bachus, known for his opposition to online poker, has stated he is "not opposed" to Barton's initiative. By giving these opponents something favorable to point to (tougher laws against non-poker forms of Internet gambling), this bill could just get the support it needs to be signed into law.
The reality is, however, that online poker remains a very low priority for elected officials. While Joe Barton's bill is something to feel upbeat about, it will probably struggle to make it to a House vote. Barton's immediate goal is to have a hearing on the bill in the House Energy and Commerce Committee sometime before the end of the summer. The chances of the bill being voted out of committee, onto the House floor, into the Senate, placed on the President's desk, and signed into law all before the end of the the Congressional session (October 2012) is still fairly low, but it's a possibility.
Also, if the bill is able to make it through the House (or just gain enough positive support that the bill is not viewed as toxic), then there is always the chance that Harry Reid can attach it to some other must-pass legislation at the 11th hour, similar to how the UIGEA was passed in 2006.
Full Tilt Shut Down, Subsequent Sale Expected
The poker world was rocked last week on the news that Full Tilt's gaming license was revoked by the Alderney Gambling Control Commission. Immediately, Full Tilt went from having the second-largest player base for an online poker room to having no player base at all.
Non-US customers of Full Tilt now find themselves wondering the same thing as their American counterparts: are we ever going to see our Full Tilt money again? Any non-US players with this problem have no one to blame but themselves. The correct thing to do following Black Friday was cash out all monies and never play there again until their legal problems with the U.S. were a thing of the past. This became especially apparent when Full Tilt failed to repay their American customers. Why keep your money at a site who can't pay back their U.S. customers when there are publicly traded online poker companies with zero pending legal issues open for business (Party Poker, 888 Poker, etc.)?
However, news of a potential sale of Full Tilt to European investors raises the possibility that players might luck out. The company signed an agreement last Thursday with a group of investors who are putting up enough money to pay back players in order to acquire a majority interest in the company that was once evaluated as being worth $15 billion. The sale is currently pending and is not final.
As a result of this news, Phil Ivey dropped his lawsuit against Full Tilt. His lawyer stated that Ivey now believes, "Full Tilt is taking steps to see that the players are paid."
But it's hard to imagine the sale of Full Tilt going smoothly. They have lost their gaming license. They are being sued for hundreds of millions (potentially over a billion) by the DOJ. And their CEO is a fugitive of the U.S. government. The sale is pending an agreement between the DOJ and Full Tilt which may never happen.
It's also hard to imagine why anyone would want to buy Full Tilt. Do these investors think the site will immediately be restored to its glory days once they buy it and pay back players? If so, they may be delusional. Poker players, for very good reason, should and will avoid Full Tilt at all costs if and when they are able to resume business. Their brand is forever tarnished. And thanks to UB, the poker world may actually know better than to give Full Tilt a second chance.
Additionally, it's hard to imagine Full Tilt being given a license following legislation in the U.S. (whenever that happens). They will find themselves in the opposite position they enjoyed after the UIGEA was passed: on the outside looking in. Why are non-US players going to play at a smaller room void of U.S. players? We've already seen they won't. PokerStars and Full Tilt were wildly popular among non-US players despite the games being generally softer at the smaller sites void of Americans. Joe Barton's bill, should it pass, will likely allow for international player pools at sites licensed by the U.S. It won't take long before most of the world is playing on the sites licensed in the U.S. Full Tilt is very unlikely to find themselves included in that mix.
These European investors seem to think that if they shell out hundreds of millions to pay back players and put up a sign that says "new management" that everyone will flock back to the site. But anyone with any sense will hit the "cashout" button and run far, far away from the site (if they ever even get the chance).
As of the writing of this article, little is known about these investors or the exact conditions they need to go through with the investment. The speculation that the deal is contingent on a settlement between Full Tilt and the DOJ makes logical sense. However, this decreases the chances of the deal going through (unless a settlement with the DOJ was already in the works anyways...who knows). To be clear, while the DOJ has worked out a deal with PokerStars to get US player funds returned, they still haven't reached a full settlement with Stars. A sudden, full deal between the DOJ and Full Tilt seems difficult to say the least. Or perhaps the investors would just be satisfied with a partial agreement with the DOJ to just get US player funds returned. Again, who knows? Also, it is not known whether or not the class action lawsuit filed against Full Tilt by US players seeking their funds would influence the sale.
Those with a lot of cash at Full Tilt are drawing to a scenario where Full Tilt can reach a full settlement with the DOJ soon enough that would give the investors the confidence to buy Full Tilt or that the investors are stupid enough to buy Full Tilt while it still has a potential $1 billion+ legal liability. In the second scenario, for players to get their funds, the funds from the recapitilization would need to be released to players before the DOJ demands its pound of flesh.