Comments on: Full Tilt Ponzi http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/ A slice of lime in the soda Wed, 22 May 2013 01:01:25 +0000 hourly 1 http://wordpress.org/?v=3.4.2 By: Nathan_514 http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-33124 Nathan_514 Tue, 15 Nov 2011 22:17:23 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-33124 Wow, shocking. When you criminalize something, it's run by criminal enterprises with little regard for the well-being of its customers. If only there was some sort of precedent in history we could have used to foresee this, like the criminalization of alcohol or marijuana<a href="http://www.newbalancevancouver.ca">.</a> Wow, shocking. When you criminalize something, it’s run by criminal enterprises with little regard for the well-being of its customers. If only there was some sort of precedent in history we could have used to foresee this, like the criminalization of alcohol or marijuana.

]]> By: blamm http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31246 blamm Sat, 24 Sep 2011 05:18:04 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31246 Maybe they'll, all the player's who are investors and part of the Full Tilt will be banned from live poker events as punishment for their crimes. Of course crime never kept sporting stars off the field for very long. Maybe they’ll, all the player’s who are investors and part of the Full Tilt will be banned from live poker events as punishment for their crimes. Of course crime never kept sporting stars off the field for very long.

]]> By: blamm http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31244 blamm Sat, 24 Sep 2011 05:14:17 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31244 The Ponzi term it used to allow for 1 count for every person swindled, of 10 million years imprisonment. If they had used simple theft, or grand theft, they could only ask for 5, maybe 10 years total. I'm kind of upset that now I have to play live poker against the same people who set up the Full Tilt and stole my money. William The Ponzi term it used to allow for 1 count for every person swindled, of 10 million years imprisonment. If they had used simple theft, or grand theft, they could only ask for 5, maybe 10 years total.

I’m kind of upset that now I have to play live poker against the same people who set up the Full Tilt and stole my money.

William

]]> By: rcwhalen http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31232 rcwhalen Fri, 23 Sep 2011 17:53:27 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31232 For Social Security, it’s print as you go http://blogs.reuters.com/christopher-whalen/2011/09/23/for-social-security-its-print-as-you-go/ Bubbles, Ponzi this and that? Great stuff. Chris For Social Security, it’s print as you go
http://blogs.reuters.com/christopher-wha len/2011/09/23/for-social-security-its-p rint-as-you-go/

Bubbles, Ponzi this and that? Great stuff.

Chris

]]> By: NICKATNITE http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31226 NICKATNITE Fri, 23 Sep 2011 16:06:16 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31226 ArtySmokes has it right, except for his opinion that Full Tilt didn't need to "have all that cash lying around." Yes they did! Pokerstars was regulated to have funds segregated. Full Tilt was not. ABSOLUTE POWER BREEDS ABSOLUTE CORRUPTION. That is all that needs to be said. The directors at Full Tilt just plain stole from the players BECAUSE THEY COULD. That is what happened by any way you want to slice it. I hope that the DOJ will force these CROOKS to pay back EVERYTHING THEY STOLE from the players. ArtySmokes has it right, except for his opinion that Full Tilt didn’t need to “have all that cash lying around.” Yes they did! Pokerstars was regulated to have funds segregated. Full Tilt was not. ABSOLUTE POWER BREEDS ABSOLUTE CORRUPTION. That is all that needs to be said. The directors at Full Tilt just plain stole from the players BECAUSE THEY COULD. That is what happened by any way you want to slice it. I hope that the DOJ will force these CROOKS to pay back EVERYTHING THEY STOLE from the players.

]]> By: ArtySmokes http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31207 ArtySmokes Fri, 23 Sep 2011 03:57:45 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31207 Pokerstars segregrated funds, so that it always had enough liquid assets to pay to customers if they wanted to cash out. (Which they did when the DoJ closed the American market). Full Tilt had instead moved $400 milion into the private bank accounts of the shareholders, meaning a massive shortfall, so it couldn't pay its players after Black Friday. Pokerstars is still on the hook for a $1.5 billion dollar fine for "money laundering and wire fraud", although it remains to be seen how the legal action will play out. Although PS has always treated its customers very well, the DoJ seems determined to punish it for doing business with American customers, while taking its profits overseas. As others have touched on, if the DoJ had never launched the initial civil case, we wouldn't even know that Full Tilt was mis-managed. It was making huge profits, and - in normal circumstances - players wouldn't suddenly be requesting withdrawals. Lederer and Ferguson presumably took their "dividends" (prior to Black Friday) because the company didn't need all that cash lying around (and indeed wasn't required to keep a certain %, like a bank is). But when the DoJ froze the company's assets, there was a "run on the bank" and no liquid assets available. If anything good comes out of this, it will be that online poker companies are regulated more strongly in future, much like banks are. Pokerstars segregrated funds, so that it always had enough liquid assets to pay to customers if they wanted to cash out. (Which they did when the DoJ closed the American market). Full Tilt had instead moved $400 milion into the private bank accounts of the shareholders, meaning a massive shortfall, so it couldn’t pay its players after Black Friday.
Pokerstars is still on the hook for a $1.5 billion dollar fine for “money laundering and wire fraud”, although it remains to be seen how the legal action will play out. Although PS has always treated its customers very well, the DoJ seems determined to punish it for doing business with American customers, while taking its profits overseas.

As others have touched on, if the DoJ had never launched the initial civil case, we wouldn’t even know that Full Tilt was mis-managed. It was making huge profits, and – in normal circumstances – players wouldn’t suddenly be requesting withdrawals. Lederer and Ferguson presumably took their “dividends” (prior to Black Friday) because the company didn’t need all that cash lying around (and indeed wasn’t required to keep a certain %, like a bank is). But when the DoJ froze the company’s assets, there was a “run on the bank” and no liquid assets available. If anything good comes out of this, it will be that online poker companies are regulated more strongly in future, much like banks are.

]]> By: dsnews53 http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31161 dsnews53 Thu, 22 Sep 2011 12:22:25 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31161 Pokerstars ran an honest site. Pokerstars ran an honest site.

]]> By: fireshoe http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31154 fireshoe Thu, 22 Sep 2011 03:49:55 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31154 So what did Pokerstars do right that FullTilt didn`t? So what did Pokerstars do right that FullTilt didn`t?

]]> By: gazuga http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31149 gazuga Wed, 21 Sep 2011 21:10:42 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31149 DrFuManchu, don't lose sight of what banks are: credit intermediaries. Money changing is where their assets, liabilities, and the surmised difference between them all come from. Solvency for a bank means steering a dollar toward higher returns than the rate at which it borrowed that very dollar. Unless Full Tilt is taking their excess reserves and throwing them in a hot tub rather than seeking profits with them, they're credit intermediaries of the same dull stripe. Imagine a bank whose asset side favours investment over managed lending. And whose service fee intake is vastly more lucrative, because its customers are used to paying for every single downstream transaction. One more difference: a higher(!) reserve ratio than is typical for deposits. That's one liquid, profitable bank, and its name happens to be Full Tilt Poker. DrFuManchu, don’t lose sight of what banks are: credit intermediaries. Money changing is where their assets, liabilities, and the surmised difference between them all come from. Solvency for a bank means steering a dollar toward higher returns than the rate at which it borrowed that very dollar.

Unless Full Tilt is taking their excess reserves and throwing them in a hot tub rather than seeking profits with them, they’re credit intermediaries of the same dull stripe. Imagine a bank whose asset side favours investment over managed lending. And whose service fee intake is vastly more lucrative, because its customers are used to paying for every single downstream transaction. One more difference: a higher(!) reserve ratio than is typical for deposits. That’s one liquid, profitable bank, and its name happens to be Full Tilt Poker.

]]> By: theambler101 http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31145 theambler101 Wed, 21 Sep 2011 18:24:27 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31145 Full Tilt ran a number of TV adverts on late night TV in the UK and have sponsored sports. This was a big poker site. They were regulated by the Alderney Gambling Control Commission which (formerly?) had a good reputation. I think regulators are really just a bunch of shysters who cream off some money from gambling websites and then proceed to do nothing to make sure these websites operate correctly - I know this from personal experience of trying to get help from the Maltese regulator a few years ago. Regulators should not be paid by gambling websites and must have strong powers to investigate and punish. I think that the US poker ban was a mistake, but the truth is Full Tilt could have left the US market when the ban came into force and focussed on other markets, just like all reputable sites. Nobody made them become a Ponzi scheme. I suspect they were already a Ponzi scheme before the US ban and so needed US players cash to keep going. Full Tilt ran a number of TV adverts on late night TV in the UK and have sponsored sports. This was a big poker site.

They were regulated by the Alderney Gambling Control Commission which (formerly?) had a good reputation. I think regulators are really just a bunch of shysters who cream off some money from gambling websites and then proceed to do nothing to make sure these websites operate
correctly – I know this from personal experience of trying to get help from the Maltese regulator a few years ago. Regulators should not be paid by gambling websites and must have strong powers to investigate
and punish.

I think that the US poker ban was a mistake, but the truth is Full Tilt could have left the US market when the ban came into force and focussed on other markets, just like all reputable sites. Nobody made them become a Ponzi scheme. I suspect they were already a Ponzi
scheme before the US ban and so needed US players cash to keep going.

]]> By: guanix http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31144 guanix Wed, 21 Sep 2011 17:42:33 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31144 jfreeman420: Banks keep less cash than deposits, but they invest the rest by making loans and buying other assets. If everyone wanted to withdraw their deposits all at once, there wouldn’t be enough cash, but over time the bank could call in loans and sell its investments and pay everyone. Full Tilt is alleged to have paid out the money to owners and board members. Full Tilt promised to keep a 100% reserve ratio, and the government is alleging that they didn’t keep this promise. (Note that all the other poker sites named in the lawsuit are not alleged to have done anything similar, it’s a problem specific to Full Tilt.) jfreeman420: Banks keep less cash than deposits, but they invest the rest by making loans and buying other assets. If everyone wanted to withdraw their deposits all at once, there wouldn’t be enough cash, but over time the bank could call in loans and sell its investments and pay everyone.

Full Tilt is alleged to have paid out the money to owners and board members. Full Tilt promised to keep a 100% reserve ratio, and the government is alleging that they didn’t keep this promise.

(Note that all the other poker sites named in the lawsuit are not alleged to have done anything similar, it’s a problem specific to Full Tilt.)

]]> By: jfreeman420 http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31143 jfreeman420 Wed, 21 Sep 2011 17:32:41 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31143 How is this any different than how banks operate? Banks make the majority of their money by loaning out the money their customers deposit. They count on continued deposits to fund peoples withdrawals and debit card purchases. If every bank customer wanted to withdraw all of their money in one day do you think the bank could accommodate them? I played on Full Tilt for many years and have always been payed when I cashed out. I don't know anyone who didn't. it is true that most people lose every dime they deposit and many players kept large bankrolls only cashing out what they needed. Every dollar is raked over and over again so I am sure they had a formula in order to justify the profits they took and would cover themselves for cashouts. Just another government tool to scare the public away from what they feel isn't int he confines of their moral turpitude. How is this any different than how banks operate? Banks make the majority of their money by loaning out the money their customers deposit. They count on continued deposits to fund peoples withdrawals and debit card purchases. If every bank customer wanted to withdraw all of their money in one day do you think the bank could accommodate them?

I played on Full Tilt for many years and have always been payed when I cashed out. I don’t know anyone who didn’t. it is true that most people lose every dime they deposit and many players kept large bankrolls only cashing out what they needed. Every dollar is raked over and over again so I am sure they had a formula in order to justify the profits they took and would cover themselves for cashouts. Just another government tool to scare the public away from what they feel isn’t int he confines of their moral turpitude.

]]> By: DrFuManchu http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31136 DrFuManchu Wed, 21 Sep 2011 12:21:01 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31136 @Gazuga: Your analogy is flawed. The difference between a bank and Full Tilt is that banks can use fractional reserves because they have a variety of sources of funds, including assets which can be used as collateral. By contrast, the only source of funds for Full Tilt is customer deposits, which become assets only when a rake is deducted. @Gazuga: Your analogy is flawed. The difference between a bank and Full Tilt is that banks can use fractional reserves because they have a variety of sources of funds, including assets which can be used as collateral.

By contrast, the only source of funds for Full Tilt is customer deposits, which become assets only when a rake is deducted.

]]> By: DrFuManchu http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31135 DrFuManchu Wed, 21 Sep 2011 10:11:26 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31135 Actually, there is a way to be sure that your poker site isn't a fraud: use one that is adequately regulated. The US is not the only government in the world. Actually, there is a way to be sure that your poker site isn’t a fraud: use one that is adequately regulated. The US is not the only government in the world.

]]> By: gazuga http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/comment-page-1/#comment-31133 gazuga Wed, 21 Sep 2011 03:17:19 +0000 http://blogs.reuters.com/felix-salmon/?p=10060#comment-31133 A poker deposit is an uninsured bank deposit. That's not an analogy. It's clearest way to define the transaction. All reading this page understand how bank balances differ from the contents of casino cages. Deposits aren't bailments: they're demandable debts. World of difference there. If Full Tilt's operations are solvent (which, save for rogue programmers telling their tables to stop collecting rake tomorrow, is a given), and if its players wish to hold balances above zero on average (which they self-evidently do), the next step for any solvent business holding millions in deposits is to lower its reserve ratio in prudent proportion to daily cashout volume. That's what Full Tilt does, along with every gambling site a tenth its size or larger. Full Tilt's reserve ratio looks to be 15%. Cautious, if anything. A poker deposit is an uninsured bank deposit. That’s not an analogy. It’s clearest way to define the transaction.

All reading this page understand how bank balances differ from the contents of casino cages. Deposits aren’t bailments: they’re demandable debts. World of difference there.

If Full Tilt’s operations are solvent (which, save for rogue programmers telling their tables to stop collecting rake tomorrow, is a given), and if its players wish to hold balances above zero on average (which they self-evidently do), the next step for any solvent business holding millions in deposits is to lower its reserve ratio in prudent proportion to daily cashout volume. That’s what Full Tilt does, along with every gambling site a tenth its size or larger.

Full Tilt’s reserve ratio looks to be 15%. Cautious, if anything.

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