Full Tilt/PokerStars settlement

First, I am not a poker player but seen this discussed here before and just wondering what other board members thought of this settlement?

http://money.cnn.com/2012/07/31/technology/online-poker-settlement/index.htm?hpt=hp_c2

The details seem a bit convoluted, Quote from article:
As part of Tuesday's settlement, Full Tilt will forfeit to the government virtually all of its assets, which will then be acquired by PokerStars.

PokerStars will repay the approximately $184 million owed by Full Tilt to foreign players. Full Tilt's U.S. victims can seek compensation from the $547 million forfeited by PokerStars to the government.

But again, not the expert here, what do you guys think?

 

I think there are a few things going on here, coming from different angles...

Like on one hand it looks like Poker Stars is being a bunch of great guys and they are not only buying their way out of the situation they are in, but they are actually taking care of the customer's of their former biggest rival and bailing them out!

But the reality is: the Full Tilt software is actually pretty good, after Poker Stars its pretty much the best thats out there. What Poker Stars is doing is just making sure that THEY get the software so that it doesn't fall in to the hands of another company that has the finances to pump in to a new company and give them serious competition. IE: Caesars Entertainment, MGM or Zynga

Obviously those companies can still compete with Poker Stars but they have to put in time and money to develop the software, find all the bugs and pitfalls, etc instead of just being 100% ready to launch tomorrow, which they would be if they had the Full Tilt Software.


As far as the money goes it sounds like international players get their money back from Poker Stars, but US players are going to have to ask the government for their money back.

For US players that will bring up questions like "Am I going to have to pay taxes on that money?" and "Will I have to pay taxes on money I won in the past but didn't declare?" and similar questions, mostly about taxes.

To that end probably a lot of US players will be too afraid to ask for their money back, IE: if you were a semi decent poker player and were able to make $50-60K a year off Full Tilt playing in the cash games and tournaments and maybe 2 years ago you had a nice $80,000 tournament win... and you didn't report any of it ever, you might be facing a tax bill of $70,000-100,000 and even possibly more in penalties and fines for tax evasion. If you only have $50,000 on Full Tilt you might be thinking its better off to just leave the money there than file to get it back and risk losing a lot more.


In the end I would say the big thing from this deal is that Poker Stars probably worked it so that they have some way to enter the US market once poker is legalized in the US - if they didn't get that out of the deal then they really had almost zero incentive to make any kind of deal with the US DoJ.

 

Why does CNN's photo for a virtual poker story contain an image of physical table blackjack?

 

As far as requesting money; I'm going to wait and see what others are experiencing, what the process is. I have about $1,000 that was stolen from me.

I know a few people that have $10k+.

Anything I get back goes straight to Vegas, maybe a single buy-in at a craps table.

 

I am being very hopeful about this all. I think that US players will get their money back. I have very little tied up so it doesn't matter personally, but for the pro's this is huge. For me the biggest thing is that I think we will have legal online poker sooner rather than later and I want Poker Stars to be the big player. Granted, we have online poker now but it is tough to always find open tables at the limits I play.

Maybe I'm fooling myself but I am hopeful. Also, I'll happily take my wopping $63 back, lol.

 

i don't really see how that would be an issue since they can't prove where the money came from. that 50k you have sitting there could have been 100k that you deposited and you actually lost 50k.

 

You'd think that as part of the settlement the government would get data on deposit and disbursement history for each account, no?

 

then they could come after you for back taxes regardless of whether or not you claim the money you have sitting there. so you're better off claiming it either way.

 

Maybe.

Reading the article it says that Full Tilt is surrendering everything to the government first and then Poker Stars is buying it off them... so that should mean that for at least some time the US government would have access to all the information and history of each player on Full Tilt, including information on deposits, withdraws, transfers, wins, losses, etc.

It just really depends on what they choose to do with that information - they could give a tax amnesty to people up to a certain point or they could decide to do nothing unless people file for their money back... some of it probably really depends on just how accurate the overall information is and if they can use it to track somebody down or not. IE: I know on Poker Stars my first account with them was just bogus information I entered to sign up for an account and it wasn't until I decided to play on there for real money that I made a real account with accurate information.

 

Online Poker - taxation

I deal with the US government daily in my job. Trust me. They will NOT be giving up any taxation opportunity that was missed if they get their hands on those records. Just fair warning to those that think the government will give them tax amnesty or a break. Legitimately and legally, you owe it.

 

From what I've read briefly about this:

I haven't seen a figure reported anywhere that says what percentage the fund represents of all US accounts.

The other open question, as I understand it, is whether players will be able to recoup any part of their account that represents winnings, since that's presumably considered ill-gotten gains.

Then again, there is a line on the 1040 for illegal income. So it may be that all player will get all of their money back, and the fund will issue some variation on a W2-G and winnings will be taxable.

Or they may just confiscate winnings.

 

I've listened to a bit of the twoplutwo podcast on this and there seems to be no concern about getting your winnings. When I got my poker stars money back there was no isse with that but I had a small bankroll.

 

Yeah the simple definition of winnings would be amount on account, minus deposits.

But the IRS definition of winnings is winnings per session, and then you can deduct your per session losses against it. Much different to account for. I've never played online poker, but if they displayed your session P/L onscreen while you were playing, there's a good chance per session info was stored in their database.

 

Playing on-line poker hasn't been considered illegal, it's the financial transactions and the bank fraud that took place that was at issue. This aspect won't be an issue for the players once they get paid. The tax issues and payment process are what is really at question for the players.

 

I want my $11.20 back from Poker Stars!
I also want my $9.45 back from Full Tilt!!!

 

not necessarily. that would have been a ton of data to store long term for every player. more likely the session data was only stored for the current session and afterwards it was deleted.

 

If you have some time and are interested in more details on the FTP saga, people are starting to talk. Start with the Lederer Files and the 2P2 interview and then move onto some of what other people are saying in response to what Lederer has said.

Lots of opinions and one sided version of events. Lederer is trying to get accepted back into the poker community is some form.

There are 7 parts:
http://tinyurl.com/99welrl

2nd interview on 2P2:
http://tinyurl.com/d72y68x

The 4th in a series has just been posted:
http://tinyurl.com/9bzseqr

Perspective from 9 different poker personalities:
http://tinyurl.com/9pmvwo6

Wendeen Eolis from Poker Player News:
http://tinyurl.com/9j8lj8y

 

interesting but way too long to ever see all of. need somebody to writeup a recap of the important stuff.

 

Here's the best I could find in terms of cliff notes.

http://tinyurl.com/9mtlhnc

Listen to http://tinyurl.com/9pmvwo6 if you have time.

A post from the cliff thread at 2P2:

The company started with a bunch of motivated owners. As it matured, and as the distributions started coming in, owners cared less and less about the actual company and just wanted the distributions to keep coming in. All or most stopped working for the company and the company became Ray's to run. Owners even stopped whining about him once the $$$ started to come in. A couple fist-pumping board meetings happened each year and everyone nodded and raised distributions and voted Bitar in.

Once Ray moved to Ireland, absolutely no one cared what was going on. Even when things started to get dicey, no one really cared enough to fly to Ireland to see for themselves. People were suspicious but too lazy to fly to Ireland and too busy buying real estate.

Then everything went to hell. Owners all hop on airplanes to Dublin, try to find investors, try to save the day when it's already too late.

Pokerstars saves the day. Flip to damage control time.

First thing, make sure you look out for your friends. Make sure in your big pokernews interview you highlight how your friend Jesus reluctantly received his $70M in distributions. Nevermind that he was Ray Bitar fan number one. Seems pretty clear that if Jesus wanted Ray out, he could've made that happen.

Deflect blame on Ivey (I'll take even money on this being a large part of the later parts of this interview with HL... AB already spent a lot of time on this). Highlight how unhelpful he was early on (wouldnt even answer their phone calls, show up for meetings) and how unhelpful he was after the fact (his ridiculous law suit). Blame the guy that had nothing to do with FTP on a day to day basis.

I really hope that this FTP spill my guts damage control episode does not end with everyone giving Ivey more blame then he deserves. The blame goes like this:

1) Ray Bitar
2) Jesus, Bitar fan #1. Guy who brought him on and was his biggest supporter.
3) Everyone else on the board who was fine with Ray Bitar running the company and didn't really want to fight with Jesus
....... A very distant 4) The other owners who didn't care about anything but distributions

If you're on the board, your main job is to protect shareholders and to be responsible for the people running your company. Laziness and ignorance are not excuses.

 

The $$$ issues are centered around the DOJ affecting the financial processors, FTP and Stars having to find new processors. $$$ started to get seized/frozen by the DOJ and outright stolen by processors.

FTP started taking deposits and crediting playing accounts from players without being able to collect from the credit card or bank accounts. This becomes known as a back-log which ends up being more than 9 figures.

The DOJ seizes FTP's web domain leaving them with their pants down and exposed.