Fulltilt poker busted as a ponzi.

Now players are fucked because the govt forced them to play offshore by banning online gambling.

Another loss for status quo, another win for Ron Paul

9/20/2011 1:02:41 PM

another loss for people who are addicted to gambling

[Edited on September 20, 2011 at 1:06 PM. Reason : no offense to you personally face]

9/20/2011 1:06:32 PM

so how many poker pros are going to prison here?

9/20/2011 1:23:10 PM

Quote :

"Now players are fucked"

oh you mean they weren't before when they were pissing away their money on online gambling?

9/20/2011 1:26:12 PM

9/20/2011 1:27:31 PM

^^, ^^^^ excellent contributions, the both of you.

[Edited on September 20, 2011 at 1:28 PM. Reason : I DON'T LIKE TO CALL OUT QNTMFRED, BUT WHEN THE SHOE FITS.]

9/20/2011 1:28:21 PM

Any t-dubbers losing money on this?

9/20/2011 1:31:25 PM

I don't understand how or who figures out ponzi schemes.

Obviously it takes a long time to build up a sizable scheme, does the news come out AFTER the ponzi scheme runs its course and they run out of money? Or does the news come out DURING the middle of a ponzi scheme?

9/20/2011 1:45:30 PM

^some one doesnt get their money, and things cascade from there.

In madoff's case, he could cover quite a bit, but the economic collapse was too deep and everyone panicked. He told his sons, who "had no idea" and subsequently turned him in.

9/20/2011 1:49:48 PM

Quote :

"U.S. government lawyers believe that Full Tilt Poker started to face a growing cash crunch in 2010 because it could not collect funds from U.S. players due to the federal government’s efforts to disrupt the payment processors that facilitate the flow of funds in the online poker industry. Indeed, Bharara’s office believes that by August 2010 Full Tilt’s payment processing network had been severely disrupted and that the company could no longer withdraw money from U.S. players’ bank accounts. So instead, the feds claim, Full Tilt continued to credit player accounts without disclosing its inability to fund those credits, letting players make online poker bets with $130 million of “phantom funds” that resulted in a massive shortfall when other players won the bogus money in poker games."

http://www.forbes.com/sites/nathanvardi/2011/09/20/feds-call-full-tilt-poker-a-massive-ponzi-scheme/?feed=rss_home

[Edited on September 20, 2011 at 1:54 PM. Reason : .]

9/20/2011 1:52:28 PM

So the Feds figured this out in the middle of the ponzi scheme.


They saw that they only had $60 million in their bank account and had $390 million in global liabilities.

[Edited on September 20, 2011 at 1:54 PM. Reason : .]

9/20/2011 1:53:42 PM

I don't understand how this was a ponzi scheme though, that nobody knew about...

Did they advertise that they never took a percentage? I mean how can you expect them to have operating costs and not use the money you gave them? Sure you could win money... but everyone can't just throw into the pot and expect the pot to be like your poker game at a buddy's house. It's no different than a poker tournament at a casino where the buyins exceed the total payouts...

^Man that doesn't sound like a ponzi scheme... sure as shit isn't a true one. They extended credit when they shouldn't have, and had too high of operating costs. Just shitty business, its not like they intention all set out to have coke and hooker parties, and laughed all the way to the bank, right?

[Edited on September 20, 2011 at 2:00 PM. Reason : .]

9/20/2011 1:56:43 PM

Quote :

"U.S. government lawyers believe that Full Tilt Poker started to face a growing cash crunch in 2010 because it could not collect funds from U.S. players due to the federal government’s efforts to disrupt the payment processors that facilitate the flow of funds in the online poker industry"

Was this a ponzi scheme, or was the cash crunch a direct result of the federal government trying to "crack down" on online gambling? Seems pretty clear to me.

9/20/2011 2:00:51 PM

Quote :

"Federal prosecutors in Manhattan said on Tuesday they were filing legal papers as part of a civil money laundering complaint that alleged Full Tilt Poker improperly used funds of online poker players to pay members of its board of directors, including famous poker players Howard Lederer and Christopher “Jesus” Ferguson, $440 million since April 2007."

and

Quote :

"So instead, the feds claim, Full Tilt continued to credit player accounts without disclosing its inability to fund those credits,"

This should have been the public's alarm bells. Getting credited with money that was never taken out of your account.

9/20/2011 2:01:57 PM

Bitcoin Poker.

9/20/2011 2:02:38 PM

Yeah, this isn't a ponzi scheme. This is a business that got fucked by the government changing laws and couldn't collect coma large percentage of it's clientele

9/20/2011 2:03:51 PM

9/20/2011 2:04:07 PM

Quote :

"Yeah, this isn't a ponzi scheme. This is a business that got fucked by the government changing laws and couldn't collect coma large percentage of it's clientele"

It started to be one after they credited accounts with funds they couldn't collect.

9/20/2011 2:07:13 PM

So, I read the linked article... board members took excessive payouts...

Sounds more like an embezzeling scheme than a ponzi scheme. Sensationalism at its finest.

[Edited on September 20, 2011 at 2:09 PM. Reason : also, lol at autocrrect changing from a to coma]

9/20/2011 2:08:41 PM

hustlers gonna hustle

9/20/2011 2:16:04 PM

It just goes to show you what happens in an unregulated bush economy.


I'm glad all these ponzi schemes are being outed now, not particularly to Obama's credit, but more to the depression that outed the ponzi schemes.

9/20/2011 2:19:51 PM

how you going to regulate a business that was illegal in the first place, blaming "unregulated bush economy"

worked out well for the drug game

just sayin

[Edited on September 20, 2011 at 2:21 PM. Reason : e]

9/20/2011 2:21:31 PM

Social Security's next, brother

9/20/2011 2:22:25 PM

if bush sr hadn't passed legislation none of this would have happened

9/20/2011 2:26:14 PM

Quote :

"how you going to regulate a business that was illegal in the first place, blaming "unregulated bush economy" worked out well for the drug game just sayin"

I could name a few scheme that pre-date bush but the majority of money problems in this country escalated under Bush due to lack of oversight.

Greed can only be combated with transparency and oversight.

9/20/2011 2:27:17 PM

the gamblin' hustle's been on for centuries.

this one just happened to have a big ole popularity boom associated to it, with slick marketing and unlimited supply of tax free income in paultry off shore accounts. put shady sharps into this situation, shit like this is going to happen.

blaming it on bush era oversights is the most FUCK DUBYA pawn move ever.

9/20/2011 2:30:28 PM

^^ yes because people who are really greedy are all about oversight.

9/20/2011 2:31:06 PM

^^You mad?


Yes, the housing industry was exploited by the banks.
Yes, the war and domestic taxpayer funds were exploited by the contractors.
Yes, the public was by exploited by ponzi scheme.


When I say exploited, I mean, you could visually see its impact on the economy.





From 2006-2007.

9/20/2011 2:43:12 PM

Quote :

"I mean how can you expect them to have operating costs and not use the money you gave them?"

I'd assume like a normal casino poker room they take a percentage of each pot or each buy-in which covers their operating costs, everyone would be aware of that going in.

So instead of just making it legal several years ago, regulating it, and taxing the shit out of it for everyones benefit, we end up at this point instead. Lots of people getting screwed, people in jail, tons of money wasted on lawyers, courts, feds, etc.

Good stuff.

9/20/2011 2:45:34 PM

Forgive me for not knowing the economics of websites....but wouldn't they also make a lot of money from companies advertising on their website?? Or would that pale in comparison to their operation costs? Just trying to figure out how these poker sites are SUPPOSE to earn large profits.

9/20/2011 2:54:33 PM

gamblers

9/20/2011 2:55:35 PM

Quote :

"Forgive me for not knowing the economics of websites....but wouldn't they also make a lot of money from companies advertising on their website?? Or would that pale in comparison to their operation costs? Just trying to figure out how these poker sites are SUPPOSE to earn large profits."

There are 100,000s of games. If they took just 1% of every dollar that is WON/paid out. They'd make a shitload of money.

That combined with advertisement equals more BOKU bucks.

That combined with tournaments...advertisment and sponsers, buy-ins, etc.. equals more boku bucks

That combined with merchandise... like t-shirt, keychains, etc... equals more boku bucks

[Edited on September 20, 2011 at 3:01 PM. Reason : .]

9/20/2011 2:59:33 PM

Nevin Shapiro says these guys are rookies.

9/20/2011 3:04:06 PM

Quote :

"boku"

9/20/2011 3:04:55 PM

Quote :

"Just trying to figure out how these poker sites are SUPPOSE to earn large profits."

I just explained it in my the post above, and similar to what GxB said... They take a percentage of each pot(called a rake) or each buy-in if it is a tournament or a sit-and-go type deal(you might pay $50 dollars to enter the tournament, $40 will go into the "pot" and they'll keep $10).

In a real casino you are somewhat limited by floor space, and you can only afford so many dealers. But if you think about playing online, you pay no dealer, people can be playing in multiple games(you hear stories of guys having 10+ games open on their computers at a time) and at that point all that matters is that you keep people playing and exchanging money as fast as possible. There is also little downtime for shuffling, or things of that nature so you can churn through tons of hands a day.

I'm guessing it is typically around 3-5% that they rake. So pretty easy to see how you can start to make some money with millions of dollars exchanging hands a day.

9/20/2011 3:21:41 PM

Quote :

"^^ yes because people who are really greedy are all about oversight."

Hell yeah they are...as long as they have a hand in crafting the "oversight" legislation. And, based on how Washington DC works, they usually do. The biggest federal Agricultural-related bill in recent memory ("Food Safety Modernization Act") was literally written by Monsanto lobbyists.

9/20/2011 3:28:59 PM

Quote :

"MORE BOKU BUCKS"

9/20/2011 3:46:19 PM

Quote :

"I just explained it in my the post above, and similar to what GxB said... They take a percentage of each pot(called a rake) or each buy-in if it is a tournament or a sit-and-go type deal(you might pay $50 dollars to enter the tournament, $40 will go into the "pot" and they'll keep $10). In a real casino you are somewhat limited by floor space, and you can only afford so many dealers. But if you think about playing online, you pay no dealer, people can be playing in multiple games(you hear stories of guys having 10+ games open on their computers at a time) and at that point all that matters is that you keep people playing and exchanging money as fast as possible. There is also little downtime for shuffling, or things of that nature so you can churn through tons of hands a day. I'm guessing it is typically around 3-5% that they rake. So pretty easy to see how you can start to make some money with millions of dollars exchanging hands a day."

Then why were they running out of money? Did their investors take that much out??

9/20/2011 3:56:51 PM

Quote :

"But if you think about playing online, you pay no dealer, people can be playing in multiple games(you hear stories of guys having 10+ games open on their computers at a time) and at that point all that matters is that you keep people playing and exchanging money as fast as possible. There is also little downtime for shuffling, or things of that nature so you can churn through tons of hands a day."

this goes both ways though; people play at much lower stakes online than they would in a live casino.

the point still stands that full tilt was very public about how they were expected to be making money, people didn't think they were playing poker for free.

^ dude, did you read anything that was posted?

[Edited on September 20, 2011 at 4:02 PM. Reason : .]

9/20/2011 3:58:35 PM

^^ They weren't able to collect money because of laws, and it seems they were also paying out ridiculous benefits and bonuses and such to board members. Sounds like the business became unsustainable not because of the base idea behind the business model which in theory would work, but because of shady business practices, and changing laws.

^I don't think people play for much lower stakes online than in a casino. I guess they could... but the most popular tables at casinos are like $1/2 blinds. Not exactly big money. I'd think those would be the most popular online poker games as well. It is enough money to make it worth winning but not so much you can't just put $100 in an account and play.

9/20/2011 4:13:07 PM

Quote :

"boku"

Yeah, it's Japanese for beaucoup.

9/20/2011 4:44:24 PM

I roomed with a girl who dated a guy and he paid his school tuition via online poker

9/20/2011 4:49:30 PM

I read most if the 110 page report today.

It was a ponzi from the get go they weren't keeping deposits separate from revenues.

The ponzi came unravelled when the payment processors froze up because of the laws bush passed in 2005.

It could have run for quite awhile longer and become a multi billion dollar scheme if not for the feds freezing their access to new player funds.

9/20/2011 5:21:02 PM

9/20/2011 6:31:43 PM

not a ponzi scheme. jesus, some of you people need to understand what a ponzi scheme is. It's a scheme where older investors are paid with the money "invested" by newer investors. THAT is a ponzi scheme. There was literally zero element of implied "investment" by FullTilt here. It was a fucking service that people paid for that involved literal gambling. At no time was anyone promised any actual return on investment, and at no time was anyone being paid dividends or anything of the like. This is more a matter of the gov't squeezing the company's ability to take in money and disburse it legally. While it appears that a large amount of money also went to higher-ups that maybe shouldn't have gotten it, that's not necessarily a defining feature of a ponzi scheme, nor does such behaviour make something a ponzi scheme. It more than likely makes it embezzling, but embezzling is NOT a ponzi scheme.


moreover, blaming this on Bush and deregulation? how the fuck do you figure that making something illegal is a form of fucking deregulation? what the fuck are you god damned smoking?

[Edited on September 20, 2011 at 6:51 PM. Reason : ]

9/20/2011 6:49:47 PM

^ you are completely wrong burro. They falsely claimed people's deposited money was safe when they actually were just keeping it for themselves.

This was definitely a ponzi scheme. If you knew anyone on full tilt that had lots of $$$ ask them about it. Full tilt has always been sketchy about payouts.

9/20/2011 6:53:09 PM

but that would still not be a ponzi scheme, dude. ponzi specifically implies paying out old benefits from new investments. it does not seem that they even took new payments after the fed cracked down on them. It is still most certainly criminal, as you say they told people their money was safe when it was not, but that doesn't make it a ponzi scheme

9/20/2011 6:56:04 PM

According to the filings they havent had the cash to back the accounts for at least two years if not more. So they definitely have been paying out payments based on newer deposits.

It seems to be the exact definition of a ponzi scheme if the released information is accurate.

9/20/2011 7:01:02 PM

Initially everyone thought they couldn't get their payouts because of frozen accounts but it's just because full tilts owners were just stealing the money.

9/20/2011 7:02:26 PM

only if they were paying out old accounts with new deposits, yet, unless I am missing something, I don't see any indication that they were ever able to take in new deposits. did I read it wrong?

9/20/2011 7:02:50 PM