Wednesday, August 08, 2012

Not-So-Easy Money (On U.S. Players Withdrawing from Full Tilt Poker)

Full Tilt Poker cashierYesterday I made a passing reference to my account balance on Full Tilt Poker. I’ve mentioned that balance here before, which even compared to the balances of other “recreational” or part-time players isn’t much (just under three hundy). Of course, even if I didn’t have a cent on FTP I’d still be highly interested in any developments concerning the possible return of players’ funds.

The agreement reached between the U.S. Department of Justice and PokerStars last week for the latter to acquire Full Tilt Poker was greeted with elation by most, primarily because of the fact that the news came with an accompanying indication that players’ FTP balances -- long-thought by many to be gone forever -- will be returned.

For players in countries where Stars will be reopening the FTP site, funds will be available for withdrawal as soon as the site comes back online (probably by early November). There are a few non-U.S. countries in which FTP will not be relaunched (France, Italy, Spain, Denmark, Belgium, and Estonia). It sounds like Stars is hoping to work out a method whereby players in those countries can have their FTP balances transferred to their PS accounts and from there be able to withdraw, if desired.

Of course, neither PS or FTP will be reopening in the United States, where the DOJ will be handling the business of cashing out. Stars understandably knows nothing about how that process will go, nor what sort of timetable the DOJ will follow when it comes to returning players’ FTP money.

Recall how the agreement included Stars forfeiting $547 million to the DOJ. As the DOJ explained in its press release last week, “Full Tilt’s U.S. fraud victims will be able to seek compensation for their losses from the Department of Justice from the $547 million forfeited by PokerStars.”

Shortly after last week’s news initially broke, Nathan Vardi of Forbes penned a follow-up suggesting the return of U.S. players’ FTP funds might not go so easily. Indeed, the title of Vardi’s article -- “The Big Question For Full Tilt's U.S. Players: Will They Get Their Poker Winnings Back?” -- even suggests the possibility that U.S. players might not see their funds returned at all.

ForbesIn pursuing the question posed in his article’s title, Vardi notes how “there are people at the Department of Justice who are uncomfortable with the idea of paying U.S. players money that was won in online poker games played on Full Tilt’s web site.” (This despite the DOJ's own characterization of us as “Full Tilt’s U.S. fraud victims.”) From there Vardi offers some speculation about what those who will be in charge of the remission process at the DOJ might be thinking.

“The Department of Justice has consistently taken the position that online poker violates U.S. law,” Vardi says in support of the notion that the DOJ might not want to repay FTP players their winnings.

Some took issue with that statement as kind of glossing over what exactly the DOJ has considered illegal in the past (i.e., offering real money online poker games to U.S. players? U.S. players playing online poker?). Also, describing the DOJ having “consistently” adopted a single position regarding online poker kind of overlooks all the hubbub surrounding that DOJ memo from Sept. 2011 -- first made public right before Christmas -- in which the DOJ appeared to revise its position regarding the Wire Act.

That letter, penned by Virginia A. Seitz, Assistant Attorney General for the Criminal Division of the DoJ’s Office of Legal Counsel, clarified how the Wire Act only applied to sports betting. Of course, the letter said nothing about online poker, and in fact explicitly “express[es] no view about the proper interpretation or scope of UIGEA.” Even so, some states (most notably Nevada) appear to have taken the revised opinion of the Wire Act as a cue to license and regulate online poker.

But Vardi isn’t just speculating on his own. He’s spoken to “lawyers working for the federal government” who have told him the DOJ isn’t crazy about the idea of “paying out money that was won in online poker games.” He also states that “numerous sources close to the matter” have told him “the decision could go either way and was too difficult to call.”

It’s certainly possible, then, that the DOJ might choose some method of handling FTP payouts for U.S. players that does not simply involve returning whatever balances we had in our accounts as of Black Friday.

Vardi also spoke to John Pappas, Executive Director of the Poker Players Alliance. Pappas voices incredulity at the notion that the DOJ wouldn’t allow U.S. players to recover their entire FTP balances.

Pappas is described referring both to the fact that PokerStars was permitted to allow U.S. players to withdraw their entire balances last year and to the fact that players in other countries will be able to withdraw their FTP balances, too. Pappas believes what we saw with Stars last spring is a kind of precedent here, which does make sense. He also thinks other countries’ players getting to cash out their FTP monies should have something to do with what happens for Americans (it’s only fair!), although in truth it does not.

PokerStrategyToday Matt Kaufman of PokerStrategy offers a measured response to the entire situation that includes some conjecture about various possibilities going forward, including addressing the idea that the DOJ could somehow have U.S. players only be refunded money they deposited -- i.e., not their entire balances.

You can see right away how such a method could theoretically result in a situation where the losers get refunded more money than the winners. Such a repayment plan would also cost the DOJ more (as Kaufman explains), since the total amount of money deposited onto the site would necessarily be more than the total amount of current balances.

Kaufman talks about how the DOJ could impose some sort of starting date when considering its options (e.g., only deposits made after a certain date would count). He also mentions how they could take withdrawals into account, too, when calculating what players are due.

Who knows, really? Obviously some methods would appear more fair than others, and some more logistically simple to follow than others. Whatever happens, it’s clear those in charge of the remission process at the DOJ can proceed in pretty much whatever fashion they choose in what is really an unprecedented situation.

In other words, as is true in poker generally speaking, there’s a chance element here for Americans when it comes to the prospect of being reunited with their FTP balances. And as is also true in poker, a lot of patience is probably going to prove needful here, too.

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Blogger Grange95 said...

Kaufman and Pappas missed the most obvious DOJ compromise: Refunding the lesser of the account balance or the deposits. This would ensure that illegal winnings were not distributed while also avoiding rebating losses voluntarily incurred by players. And, it should not be particularly hard to calculate, assuming FTP kept decent records.

Also, Pappas is an idiot if he truly thinks the voluntary Stars payout of full account balances is a precedent. Stars was making a business decision to refund full account balances; the fact the DOJ permitted the transfers to occur is not an endorsement of the manner in which Stars calculated refunds owed. For FTP, players are "victims" of a "Ponzi scheme" seeking remission of funds held by FTP that were forfeited to the government. If the DOJ decides that poker winnings are illegal gambling profits, there is no legal requirement that those profits be remitted.

8/08/2012 2:39 PM  

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