Poker forums have been buzzing all day with joy… “Full Tilt Poker has been sold”.

This would be great news, if only it were true. At this time sources close to Best Poker Rooms have revealed, a deal is in the works that could see Full Tilt Poker sold in the coming days, but there are many logistics that need to be worked out before it can be finalized. In simple terms, the LA Times report that Full Tilt Poker sold to European Investors was premature. Let me go ahead and run through the back story so readers can fully understand the situation.

Full Tilt Poker Payment Processor Issues

In June 2009 Full Tilt Poker complained one of their largest payment processors Intabill owed them tens of millions of dollars. Intabill was a company founded in 2001 by then 17-year wiz-kid entrepreneur Daniel Tzvetkoff of Queensland Australia. The company was a massive success growing 10-20% per month, and their founder was all over the media including reports of a $25million+ Gold Coast property purchase, several nightclub acquisitions, and had made it into the BRW Young Rich list.

There was no reason in the world not to trust them; this was the global leader in high risk payment processing. However it was later revealed by partners that Daniel Tzvetkoff had falsified company accounts and embezzled approximately $100 million from the company. In July 2009 Intabill, who had just achieved PCI status three-months previous, failed. Full Tilt Poker was left on the hook for tens of millions of dollars in player deposits they credited, players won, lost, cashed out etc. that Full Tilt Poker never received.

This started a string where for the next two years Full Tilt Poker would be ripped off by other processors as well, and during certain periods had no way of knowing what they had and what they hadn’t collected in player deposits. This compounded, and soon their reserves were $60 million shorter than combined digital balances showed.

Daniel Tzvetkoff Turns Informant

Arrested in April 2010 by the FBI in Las Vegas, Daniel Tzvetkoff was facing up to 75 years in prison for UIGEA violations and money laundering. After a few months in custody he became a government informant and entered the FBI’s witness protection program. The information he’d soon later give to the FBI was key in their plan to take down the world’s largest online gambling sites.

Black Friday Hits

15 April 2011, Full Tilt Poker’s domain name and several bank accounts were frozen as the FBI and New York Department of justice unsealed a four poker site, eleven person federal indictment that named founder and CEO of Full Tilt Poker Raymond Bitar. There were five charges brought against him which were:

1. Conspiracy to Violate Unlawful Internet Gambling Enforcement Act (UIGIEA)
2. Violation of Unlawful Internet Gambling Enforcement Act (UIGIEA)
3. Operation of Illegal Gambling Business
4. Conspiracy to Commit Bank Fraud and Wire Fraud
5. Money Laundering Conspiracy

In order to get their domain back, Full Tilt Poker began cooperating with the US DOJ immediately and blocked all US players from accessing their website for the purpose of real money play.

The Real Drama Begins

Full Tilt Poker did their best to stall and buy time, but the company didn’t have enough cash to pay back the estimated $150 million they owed to US players. Rumour has it that flagship Team Full Tilt member Phil Ivey had a deal worked out that would allow them to pay players, but Howard Lederer and Raymond Bitar rejected the deal, as it would see them lose controlling interest in Full Tilt Poker. The company was willing to sell up to 70% in preferred shares of the company, so long as they remained in full control. Ivey irate immediately asked for release from his contract, which was declined.

In a move most in the poker community misunderstood, Phil Ivey legitimately concerned with players well being, filed a lawsuit for $300 million against the parent company that owned Full Tilt Poker. His leading accusation was that Full Tilt Poker’s failure to keep adequate reserves enough to payout player’s deposits had caused irreversible damage to his reputation. Well as time passed there were more and more complications and Raymond Bitar who was once confident he would find a buyout lost hope. More time passed and now well over two months from their exit US players were still unpaid.

Online Poker Sites Sounds the Alarm

Online Poker Sites, a rather new poker information site ran by Jim Griffin, better known in the industry as pokerprop, was one of the first to report the seriousness of the situation. On 2 June 2011 their website warned:

At this time we are recommending poker players deposit and keep stored in their player account no more than they are comfortable losing should Full Tilt Poker prove or become insolvent.

The information that Jim Griffin himself held back from his Poker Site Warning page, a source in the gambling industry revealed to him… If Full Tilt Poker could continue to perform the same level they did in 2010 it would take them nearly 8-years to become debt free. Considering Full Tilt Poker had recently experienced a 48% decline in player volume, much of that due to US players no longer allowed on their website, maintaining those same earnings was highly unlikely. Also, what this doesn’t take into account is the US Department of Justice (DOJ) seeking $3 billion in restitution from four gambling sites; Full Tilt Poker’s share in that is approximately $900 million. The numbers didn’t come anywhere close to working out. It would take a major restructuring and no further DOJ payments beyond what they had already seized.

Full Tilt Poker Closes

On 29-June 2011, with no warning Full Tilt Poker went offline. This wasn’t however a situation where they were headed for the hills. It turned out the Alderney Gambling Control Commission which licensed them pulled the plug; suspending Full Tilt Poker’s license. Now offline it seems all cards have been placed on the table and deals are now being worked out.

1. CalvinAyre.com reported the Bwin.Party which operates PartyPoker.com offered $185 million to purchase Full Tilt Poker outright but withdrew their offer after Full Tilt Poker was taken offline.
2. The Kahnawake Gambling Commission issued a statement that they are reviewing the facts and will issue a follow up statement in the coming days on whether Full Tilt Poker will be allowed to use their secondary provider license to operate in Kahnawake whilst their Alderney license is suspended.
3. LA Times reported today that Full Tilt Poker had reached a deal to sell to a European investor.
4. LA times also reported that Phil Ivey is set to drop his lawsuits against Full Tilt Poker.

Putting the News all Together

Investing to buy a piece of Full Tilt Poker hasn’t made sense to anyone who’s come close to seeing the figures. For this reason it is entirely logical if there is a buyer as LA Times reports there is, it would near certainly be from a company that also benefits from the added standpoint of billing it as a good will gesture. For example: PokerStars or PartyPoker saving the day, making sure US players are not stiffed the $150 million they are owed would go a long way for many years to come with the poker community.

However, even having only received the numbers from a source, of a source, it still seems apparent “the figures do not make sense. So, in order for a sale to finalize the following things likely need to occur.

1. The US DOJ Approves the Sale
2. Phil Ivey Drops his Law Suit
3. Full Tilt Gets a Gambling License
4. Full Tilt Poker is Brought Back Online

#1 and #3 are the difficult parts. There seems little chance anyone is forking over $200 million or whatever the figure might be to purchase until at minimum those four criteria are met. While LA Times has reported a sale, at this time we at Best Poker Rooms are only comfortable reporting “a sale is in the works”. This one still has a high probability of falling through; the longer Full Tilt Poker remains offline the more risk poker players have.