Zimba Blog: Full Tilt Poker Misplayed Their Hand

Zimba Blog:

As Rep. Anthony Weiner's resignation last week demonstrated for the umpteenth time, public individuals are not typically brought down by their misdeeds, but rather their attempts to deny and cover up for their misdeeds. Pretty much everyone accepts that we are fallible beings prone to poor judgment and moments of weakness in our lives. But the public is very unforgiving of those who instead of accepting culpability with humility and honesty, chooses to deny, lie and obfuscate. In those moments, public ire is agitated to such a point where we lose the ability to forgive the hypocrisy.

Much like Rep. Weiner's fall from grace, Full Tilt Poker (FTP) is falling in a similar pattern in the poker world. FTP has exhibited a woeful public relations campaign since the Black Friday indictments of April 15th. A once proud company that had a pretty stellar reputation amongst the public and its customers is being humbled by regular news of prior misdeeds while being unable to responsibly return U.S. player funds reputed to be between $100-$150 million. Instead of regularly delivering honest assessments of its status, it is playing the defensive, misleading and irregular communications game meant to buy time and placate the public until it can sort out some solution to its mess. If not for the massive attention that the World Series of Poker garners each year, FTP would be continuing to receive a pounding in the poker media. PokerStars, on the other hand, faced their obligations to U.S. players in two weeks. Two months later Full Tilt Poker appears as confused as ever in how to manage their public relations or how to emerge from their quagmire. It's a truly sad story for a once proud company.

As an amateur poker player, when I made my move to Full Tilt Poker several years ago, the online poker room had everything I was looking for. FTP had a good volume of players and options of games to play. They innovated new games and features; my favorite being Rush. They showcased the biggest cash games online that I enjoyed railing. Their large stable of sponsored pros was very likable. As a casual player who simply wanted to grow my online bankroll, I had little reason to test their reputed lethargic customer service, one of their few negative public reputations. I couldn't have been much happier or satisfied. They seemed like a reliable, reputable, and ambitious company that took a calculated risk to keep serving U.S. players post UIGEA.

To most of us, it appeared that Full Tilt Poker had a plan. Full Tilt Poker was a site purported to be owned and run by poker players for poker players, right? Isn't that what all good poker players have? A plan for their hand, thought out in advance and ready to handle any deviations as they came. FTP understood that they were taking calculated risk in continuing to serve the U.S. market and they had made business decisions accordingly, right?

Sadly, this was not the case.

As a proper detailed recap of all Full Tilt Poker's moves and their rumored misdeeds since April 15th would make a massive blog, I'll try to briefly restate some of the biggest issues that have come to light:

• Full Tilt Poker's initial public statement set the tone for all that was to follow. It was a concerning sign that they expressed sadness and surprise at the indictment when they had to have seen it coming at some point. They also claimed to have been "always abiding by the law."
  
• Ray Bitar and Nelson Burtnick were the only owners indicted, although much speculation has gone into who the other owners and responsible parties must be; specifically high profile poker players like Howard Lederer, Phil Ivey, Chris Ferguson, Eric Seidel, John Juanda and Andy Bloch.
  
• The April 15th DOJ indictment indicated FTP engaged in massive bank fraud; by miscoding transactions, bribing bank officials, purchasing a bank and generally attempting to avoiding UIGEA sanctions.
  
• FTP press releases since April 15th have been few and far between to the media or directly to their customers. Their main and irregular source of information has been the FTPDoug updates on 2p2. Even the FTPDoug account's identity has been called into question, further highlighting the opaque methods that FTP is using to communicate to part of the public. Instead of a Doug, it is now assumed that communications are coming from FTP spokesperson Michelle Clayborne.
  
• FTP has made infrequent updates on the FTP that while sounding on the surface like progress was being made, simply were administrative steps of calculating and converting bonuses, T$, FPP's and rakeback into as yet untouchable player accounts. No communicated on the larger issue of return of player funds has been communicated.
  
• FTP took full advantage of Irish-based Alderney Gaming commission's regulations allowing commingling of player and operational funds. This commingling has created a massive unresolved issue of what were player funds or FTP operational funds amongst the many DOJ seized bank accounts.
  
• Within Bradley Franzen's guilty plea and cooperation with the DOJ was acknowledgment that roughly $60 million had been forwarded to player's accounts by FTP which they were unable to collect from player's bank accounts/deposits.
  
• Phil Ivey, FTP's most visible pro, pulled out of the entire World Series of Poker while initiating a $150 million lawsuit against FTP for breaching their contract by not indicating that FTP had been informed previously by the DOJ that it was engaging in illegal activity. Ivey wants release from his non compete contract provision and relief for damages to his reputation and future opportunities.
  
• Despite taking weeks and months to respond to customers and the public, FTP fired off a quick acerbic response to Phil Ivey's $150 million lawsuit that was posted in the middle of the night and began "Contrary to his sanctimonious public statements, Phil Ivey's meritless lawsuit is about helping just one player - himself."
  
• Rumors from inside FTP indicated that high level ownership rejected the notion of playing players at the expense of owners.
  
• At the WSOP, tension, debate and vitriol has followed the issue of red pros wearing Full Tilt patches. Many Red pros have opted not to wear patches rather than face the wrath or attention. Some Team Full Tilt and select other pros have worn them. All have been urged not to discuss Full Tilt publicly by FTP. One example, Brandon Adams, indicated he would keep wearing his patch out of loyalty and fear of what might happen if Full Tilt dissolves. He indicated that we should give time for FTP to overcome the amateurish management mistakes and government seizures
  
• Rumors surfaced; multi-accounting amongst the top pros like David Benyamine, Patrik Antonius, and Guy Laliberte was more prevalent that originally feared, Full Tilt pocketed instead of redistributing $300k in funds seized from a player accused of having his account ghosted, some prominent players borrowed (i.e. had accounts "topped off") significant sums in the millions and losing thus requiring a messy result, 100% rakeback accounts being sold for up to $50k.
  
• Individuals within FTP indicated that they had one large Bank of Ireland company account released that held more than $30 million. It was not one of the DOJ seized accounts, but had been frozen out of concern that it might be related.
  
• More recently individual poker pros have spotted Ray Bitar, Chris Ferguson, and Howard Lederer in Las Vegas, eating around town late at night but not having any public appearances, playing the WSOP, or making any statements.
  
• Old FTP lawsuits have resurfaced; Jason "JDN" Newitt's wrongful termination and seized ownership lawsuit and Clonie Gowen's lawsuit was reinstated where she accused FTP of reneging on 1% ownership she was orally given (rumors of that offer being given while she was dating Chris Ferguson).

The Full Tilt Poker saga continues with no end in sight. The last public statement from FTP indicated "We still do not have a specific time frame for this. There has been, and remains, no bigger priority than getting US players paid as soon as possible, and we have been working around the clock to get this done." They are attempting to raise capital, but rumor has it have rejected offers that would have given up control of the company to outside investors.

Full Tilt Poker's sole acknowledgement of their failings stated "we understand -- and have always understood -- the effect that our brief statements have had not only on our customers, but also on our reputation. It has not been easy to stay silent and watch the damage being done to our company brand and personal reputations, but we need to be mindful of the complicated and serious legal issues raised in the pending cases."

Full Tilt Poker could have chosen a different path. A path of clarity and transparency. They could have communicated regularly and honestly with their customers and the public. They could have owned up to their mistakes, mismanagement, and misdeeds. But just as Rep. Weiner and countless public figures and companies have done before them, they have dug a bigger hole for themselves. They have misled and delayed. They have hidden behind the legalese.

Although the charges by the U.S. DOJ were very serious and substantive in nature, it could be argued that the response by Full Tilt Poker over the last couple months has devalued the company even more so. In the face of crisis, Full Tilt Poker has been exposed as a poorly run company that didn't plan well for what many have could have predicted was in their future. The damage to their reputation amongst players around the world is even greater than the loss of 39% of their player traffic. Full Tilt's lack of a reasonable plan for their hand has cost U.S. players significantly. Whether Full Tilt Poker can survive their mismanagement has yet to be seen.

Despite the negative circumstances surrounding Full Tilt Poker and the return of U.S. player funds, there is one new ray of hope that may occur as early as this week. Rep. Joe Barton (R-Texas) could introduce legislation through the more favorable House Energy and Commerce Committee, that would legalize online poker and create a federal regulatory body to oversee future U.S. poker sites. He has the support of the AGA, PPA and some powerful politicians who previously were against poker legislation. Momentum is building that could finally put the wheels in motion to create a regulated environment where U.S. poker players will be able to play online poker without the fear of a company like Full Tilt Poker misplaying their hand so badly.