PlayerVsPlayer Poker Graph Software

PokerStars Saves The Day

Comments: 0

PokerStars' Head of Corporate Communications just published a post on pokerstarsblog.com that says they can't say anything but rumors are running wild that PokerStars will be purchasing FTP and settle their outstanding legal issues with the DOJ as a result of Black Friday.

Sometime soon we can expect to hear good news. So far the rumors are:
  • GBT deal with FTP/DOJ is off the table.
  • PokerStars will pay $750 million to acquire FTP. This includes covering the $330 million owed to FTP players as well as fines to settle charges with the DOJ.
  • FTP will continue to run as a separate poker room.
  • FTP will re-enter the US market.
  • Isai Scheinberg will be stepping down from his position at PokerStars.
If these rumors are true PokerStars is bailing out everyone in this mess including, US and ROW (rest of world) players, GBT, themselves and even the DOJ

GBT Out Of FTP Deal

This part seems to be confirmed based on this Washington Post article. The biggest issue that killed the deal appears to be a last minute requirement from the DOJ that GBT has a plan to repay ROW players within 90 days.

A second issue is that laws in other countries may allow FTP's creditors to go after FTP assets to recover liabilities owed to them as the DOJ agreement would not be binding in their country.

I've never been too confident in the GBT deal. There were rumors that GBT was having a hard time coming up with the money on their own that it would take to complete the purchase. Benham Dayanim statements regarding collections of loans from FTP pros prior to the deal seemed to lend credence to this in my mind.

The rumored GBT/FTP/DOJ agreement was that FTP would forfeit their assets to the DOJ and GBT would purchase those assets for $80 million which would include a $25 million dollar bank account as well as agreeing to handle repayment of roughly $150 million in ROW payer accounts.

PokerStars coming in to take over the deal helps GBT save face as it seems they didn't have the ability to finalize the deal and now they get to blame it on PokerStars sabotaging it.

FTP Players To Be Paid Within 90 Days

Making players whole within 90 days was a sticking point in the GBT deal and one can assume that the DOJ/PokerStars deal will include such a provision.

PokerStars has a lot on the line. They are currently the biggest online poker room. They're ability to pay out US players post Black Friday enhanced their already strong reputation. Doing anything to diminish their reputation would be a bad decision.

PokerStars has purchased other failed poker rooms in the past. The way it was handled was that their old account balances were treated sort of like bonuses and they needed to play enough to clear the balance before they could withdraw. It wouldn't surprise me if there were similar provisions in this case though no information has been released.

There were a lot of things concerning the GBT deal that didn't make sense.

In my opinion players would be more willing to play to clear their accounts having PokerStars behind FTP rather than GBT which doesn't have as great a reputation in the online gaming industry as PokerStars.

PokerStars Bails Out The DOJ

The US Attorney for the Southern District of New York has the reputation of going after deep pockets and getting big settlements. Although they are enforcing the laws they do seem to grab a good chunk of change when they do.

After it was discovered that FTP and AP/UB were insolvent their hope of recovering $3 billion in fines as a result of Black Friday had to have been diminished.

That might not seem so bad. Just take what you can from FTP and AP/UB and be done with it. But settling with FTP and AP/UB for the small amount they could would leave the DOJ in a poor position in their ongoing settlement negotiations with PokerStars. The only player with deep pockets.

Some have even questioned the strength of the DOJ's case considering they came out to say that the Wire Act doesn't apply to online poker and they allowed Chad Ellie and John Campos to plea to misdemeanors. The Forbes article suspects that had the case gone to trial it had the possibility of compromising the case against the poker sites.

PokerStars gives the DOJ some of the money they were after and the DOJ avoids going to trial risking losing the case and creating dangerous precedents.

Why would PokerStars Want To Own FTP

At first glance this doesn't make sense. With Full Tilt Poker offline any players outside the US that want to continue to play online poker would have already started playing on another poker site, primarily PokerStars.

PokerStars does not need to buy the player base of FTP as they already had them. Some may argue that the FTP software is better but that's mostly a subjective issue. I've always preferred the PokerStars software over FTP.

They're obviously not buying the brain trust that ran FTP into the ground so why would they be interested in buying FTP?

While PokerStars has FTP's players there is the risk that they could lose some of those players if another entity buys FTP. 

Considering the mess FTP has become the value of FTP seems less than the $750 million that PokerStars is shelling out. Especially since GBT was going to spend $80 mil, -$25 mil, +$180 mil in ROW deposits. So why would PokerStars be willing to pay so much?

PokerStars Settles With The DOJ

That $750 million figure isn't just for FTP. The rumored breakdown is $380 million to cover player accounts and $370 million as fines to the DOJ.

PokerStars has been in constant negotiations with the DOJ after Black Friday to settle their outstanding criminal and civil charges. The DOJ was seeking $3 billion in fines. Given the financial position of FTP and AP/UB, that figure was out of reach. There seems to be enough evidence that laws were broken and someone has to pay.

PokerStars still has the threat of criminal and civil charges against their companies and some individuals. They were going to have to settle with the DOJ one way or another. Allowing PokerStars to buy FTP gives PokerStars something back for their fines in addition to having the charges settled.

Even if PokerStars felt they could win at trial it is easier and cheaper to settle. If poker sites are allowed to come back to the US then PokerStars will need a clean record to re-enter the market. That can be accomplished via the settlement.

FTP Returning To The US

Two of the rumors posted by Shawn Deeb was that FTP would be returning to the US market and that Isai Scheinberg would be stepping down.

I would assume if FTP is allowed to return, so would PokerStars. This is the best rumor to come out today. I can see this being true but won't hold my breath.

Scheinberg stepping down reinforces the rumor (though that's a rumor in itself.) Scheinberg is facing criminal charges as a result of the Black Friday indictments. If he is being asked to step down the settlement likely includes resolving his criminal charges. It seems as if he will plead guilty to some charges and have the matter settled with the above mentioned fines and maybe no or limited jail time.

The most telling thing about these rumors is that the DOJ has no jurisdiction to tell a foreign company who can be in charge and who can't. If this is being included in the deal then one can assume that it is in preparation for PokerStars to re-enter the US market.

PokerStars and Scheinberg are taking a big hit here. They've been a great part of the online poker community and did a lot to promote and enhance the game. It makes sense that they would come in and save the day which is why so much weight is being given to these rumors.

Let's hope they're true.

No Response to "PokerStars Saves The Day"

Leave A Reply

Recent Posts