Can Tilt ever make a Full recovery?

In April, in response to the Black Friday indictments, the Alderney Gambling Control Commission (AGCC) announced it would “undertake its own investigation” into allegations against Full Tilt Poker.

The regulatory body, which had signed a co-operation agreement with the Nevada Gaming Control Board just three months prior, then remained silent, as the operator continued to provide real-money poker to players outside the United States.

On 29 June, however, and with no warning, the AGCC suspended Full Tilt’s operating licences, effectively shutting down the site pending a hearing in London on 26 July. Less than a week later, the French regulator ARJEL followed suit.

In the days since, there has been plenty of noise, but little beyond speculation, with even some of those closest to the second-largest global poker site admitting that they have little idea of the full extent of the various discussions, negotiations and developments taking place.

Indeed, despite having nothing to do with the AGCC ruling, Pokerstars was first among the operators to issue a statement in response to the decision. The Isle of Man-licensed operator reassured players that its site would not suffer the same fate as Tilt, an assertion borne out by the Isle of Man Gambling Supervision Commission that has always insisted company assets must be kept separate from player funds.

The 14 poker players who make up ‘Team Full Tilt’ ““ the upper echelon of the site’s stable of pros ““ have largely remained silent on company issues since Black Friday, with a class action lawsuit brought against Full Tilt on 30 June going some way towards explaining this policy. In the case document ““ brought on behalf of “a nationwide class of Full Tilt account holders residing in the United States” ““ 13 of these 14 are said to have been “at all or some relevant time(s)… a shareholder and director of, and/or a participant in, Full Tilt and/or one or more Full Tilt companies”.

Tweet news

The one Team Full Tilt member not named in the class action suit ““ Tom Dwan ““ has been expressing his concern via Twitter, his sentiments themselves acting as a microcosm of the uncertainty common to most, if not all, individuals concerned for the future of the company.

Within hours of the 29 June judgement, Dwan tweeted: “Some pretty objective people whose opinions I respect are worried now that FT can’t pay out or find a buyer. Me too more I think about it.” However, less than 48 hours later ““ once news broke of potential European investment in the company, he changed tack, describing Los Angeles Times reports of a possible sale as “good news”, albeit with the rider: “Obviously it’s not 100% [that players will be paid] but closer than this a.m.”

Since then, eGaming Review has learned from Full Tilt’s lawyer Jeff Ifrah that a deal with European investors could be on the table within days, paving the way for the repayment of players and even a potential settlement with the Department of Justice (DoJ). “My hope is that as the company formalises a deal with the European investors the terms include paying back the players, and we’d like to think this will help take care of the class action suit and any copycat suits on the table,” he said.

“Part of the deal with [the investors] will hopefully be a settlement of the Department of Justice case ““ [they have] met with Alderney and France already and will be meeting with the DoJ.”

While one should not pin all hope on a speedy resolution, Ifrah’s latest comments at least offer players waiting for the return of funds reasons to be positive, as does Phil Ivey’s withdrawal of his lawsuit against the company. The team pro’s initial suit ““ filed electronically in early June ““ was dropped nearly a month later due to the player’s confidence in the repayment of US players. His lawyer, David Chesnoff, issued a statement on 30 June that said: “Mr Ivey intends to dismiss his lawsuit as he believes Full Tilt is taking steps to see that the players are paid.”

However, this news has been met with speculation on various poker forums about the Team Full Tilt member’s alleged part-ownership of the company having some part to play in his decision.

As was the case in the immediate aftermath of Black Friday, a number of rival sites have been eager to lap up a customer-base left looking for somewhere to play. Perhaps the most striking promotion has been the decision by PartyPoker to remove rake on its multi-table tournaments, while Titan Poker, the most recognisable member of Playtech’s iPoker Network, has also announced it is reducing or completely removing the rake from many cash game tables, calling its latest promotion “Rake Break”.

More recently Paddy Power Poker launched its ‘Green Card’ loyalty promotion, which has a fasttrack application process for players who previously possessed the comparable ‘Black Card’ on Tilt.

Problems for players

This approach has been met with a mixed reception from affiliates, with RaketheRake CEO Karim Wilkins admitting it is “definitely having a positive effect on sign-ups for Party” but at the same time suggesting: “What there has been a distinct lack of is an appreciation of the problems that players are having.”

He went on to say: “Every room is going for a massive land-grab of going with extra promotions. I understand everyone wants to be part of that, but no one is saying ‘we’re really sorry that your money is stuck on these sites’.”

In the light of the PartyPoker response, James Hollins, an analyst at Evolution Securities, reiterated his firm’s “neutral” stance on bwin.party shares ““ due largely to ongoing concerns over German regulatory proposals. However, he was keen to stress: “The clear read across is positive for [Full Tilt’s] competing operators that should be able to gain additional customer actives and share of wallet.”

Consistent with this opinion, Hollins reiterated a “buy” recommendation on Playtech stock, while suggesting Pokerstars would be the main beneficiary of any potential migration of Full Tilt players.

Similarly, Nick Batram, an analyst at Peel Hunt, issued a note that read: “We believe that [the suspension] is likely to have a more significant impact on bwin.party in the short to medium term than the events of ‘Black Friday’.” Batram attributed this to the fact that “unlike Black Friday, the actions by the AGCC had a direct impact on European players”.

The day after what has been described by English poker pro Keith Hawkins as “predictable Wednesday”, bwin.party shares rose by more than 10%. Playtech, meanwhile, experienced more of a gradual climb, taking a full week to rise by the same increment, albeit a greater increase than in the days following 15 April.

Most tellingly, Hollins said: “The clear indication is that [Full Tilt] is facing major cashflow issues and, with zero cash income following its complete licensing base suspension, the situation may become terminal.”

Bleak outlook

Such a bleak outlook has been echoed by Pokernews founder Tony G, who suggested on 4 July that “Irish lawyers [are] now involved demanding Pocket Kings pay up or declare bankruptcy.”

Other developments have since shed some light on the financial wellbeing of Full Tilt Poker, with sponsored television show The Poker Lounge cancelled due to non-payment of fees to production company Presentable Productions ““ the show had been cancelled and rescheduled after an earlier non-payment on Black Friday, with a spokeswoman for Presentable confirming that following the latest setback “it is unlikely to go back on air”.

At the same time, payment processor Skrill (formerly Moneybookers), which had handled transactions for non-US customers of Full Tilt, announced it would stop accepting deposits from the company. It explained: “[Customer repayment] hasn’t been possible and [the suspension of Full Tilt’s licence] by the Alderney Gambling Control Commission has validated our decision.” Following that announcement the logos of each of Full Tilt’s payment partners was removed from the site, but several logos, including that of Skrill, have since returned.

Cashflow no-go

It is fair to say that the comparatively efficient response from Pokerstars has knocked the public perception of Full Tilt. The number one site for player traffic (even after its US exclusion) has paid back more than $120m (£74m) to its American customers, while beating Full Tilt to the punch on issuing a statement on its rival’s plight demonstrates the urgency with which it has sought to communicate with those concerned for its future.

However, considering initial speculation that a resolution of the indictments could take years and the negative impact of the reported nonsegregation of funds, the rumblings of possible investment in Full Tilt and ensuing settlements ought to be regarded as a positive thing.

That said, the AGCC decision is a major setback ““ and raises questions about the future of the company ““ which has only been compounded by its and the AGCC’s sporadic communication.

If the company can rise from the ashes, restoring its fragile European reputation if nothing else, then it could point to a brighter future not just for Full Tilt but for an industry rocked by the US authorities to the point where observers are asking ‘who’s next to go?’

This article appears in the forthcoming issue of eGaming Review. For a free trial subscription, click here.