GPWA Times Magazine - Issue 22 - October 2012

The other online poker rooms charged in the Black Friday indictments – Absolute Poker and Ultimate Bet (UB) – reached a settlement agreement that requires them to forfeit their assets so the DOJ can sell them. Neither Absolute Poker nor UB admitted to any guilt as part of the agreement. The assets will be sold “with the net proceeds of that sale to be held pending the resolution of claims filed by other parties who have asserted an ownership interest in the Absolute Assets,” the DOJ said. The doj and online poker The market will fundamentally determine the impact of PokerStars’ acquisition of Full Tilt and settlement with the DOJ. What’s more interesting is what this settlement says about the DOJ and online poker. Let’s start by taking a look at the “dealings” the DOJ has had with PartyPoker (PartyGaming), PokerStars, Full Tilt Poker and Absolute/UB. Here’s what happened in each case: • PartyGaming reached a “non-prosecu- tion” agreement with the DOJ and paid a $105 million fine. • PartyGaming co-founder Anurag Dikshit paid a $300 million fine to the DOJ. • PokerStars paid $547 million to the DOJ, set aside $184 million for players outside the U.S. It also acquired Full Tilt as part of the settlement. • Isai Scheinberg, PokerStars founder, has yet to settle. • Bitar (former Full Tilt CEO) surren- dered to authorities and is out on bail. So is Burtnick. Lederer, Ferguson and Furst still have legal issues. • Full Tilt belongs to PokerStars now. • Absolute Poker’s Brent Beckley reached a plea deal and was sentenced to 14 months in prison. • The DOJ is looking for someone to buy Absolute/UB. What can we learn from this series of events? If you have enough money to settle with the DOJ, you’ll be OK. If you don’t, you’re in trouble. And don’t mess with the DOJ. What’s more difficult to discern is the value of Full Tilt Poker. According to the DOJ, Full Tilt owed around $350 million to players all over the world. $184 million has been set aside for players outside the U.S. That means American players are owed about $166 million. The money owed American players is coming out of the $547 million PokerStars is giving to the DOJ, so that means the “real fine” for PokerStars so far is $381 million – just $81 million more than Dikshit paid for his fine. In order to determine the final “fine” PokerStars paid in its settlement, you have to subtract the amount of money Full Tilt is worth. This is a tough valuation, because the assets are certainly worth something. But the business has been dormant for more than a year. For the sake of round numbers, let’s value Full Tilt at $31 million. That leaves the DOJ fine at $350 million, which isn’t bad considering Dikshit paid $300 million as an individual in 2008. It could have been a whole lot worse. “The market will fundamentally determine the impact of PokerStars’ acquisition of Full Tilt and settlement with the DOJ. What’s more interesting is what this settlement says about the DOJ and online poker.” Different strokes