The Big Question For Full Tilt's U.S. Players: Will They Get Their Poker Winnings Back?

The Big Question For Full Tilt's U.S. Players: Will They Get Their Poker Winnings Back?
Nathan Vardi, Forbes Staff
Following the money trail
BUSINESS | 8/01/2012 


http://winsgame.com/poker


Full Tilt Poker
Within the next five days, PokerStars, the world’s biggest online poker company, will pay the U.S. government $225 million as part of a $557 million forfeiture. The U.S. government will use some of the proceeds of the forfeiture to compensate U.S. online poker players who had about $150 million on deposit at Full Tilt Poker, the online poker company that the government has described as a Ponzi scheme.


Preet Bharara, the U.S. Attorney in Manhattan, put together this highly unorthodox deal to, in his words, “allow us to quickly get significant compensation into victim players’ hands.” Bharara’s efforts will for certain achieve that for Full Tilt’s U.S. customers, but some of them might still end up being disappointed with the result.


The big question for Full Tilt’s U.S. players: will they get their poker winnings back? Several sources familiar with the situation say no decision on this vital issue has been made, but there are people at the Department of Justice who are uncomfortable with the idea of paying U.S. players money that was won in online poker games played on Full Tilt’s web site. “The section that is in charge of the remission fund hasn’t decided that question clearly and that is the next big issue,” said Jeff Ifrah, a lawyer who worked for Full Tilt Poker.


The ultimate decision on this issue will be made by the Department of Justice’s asset forfeiture and money laundering division, which operates out of the department’s headquarters in Washington. It will administer the remission fund that will be funded with money secured by Bharara’s Manhattan office, which will likely weigh in and give its recommendation on what it thinks should be done. Either way, a significant amount of money will wind up in the hands of Full Tilt’s U.S. customers, but there remains the potential some of the playes will be repaid much less than they had hoped.


The Department of Justice has consistently taken the position that online poker violates U.S. law. This position is what led to Bharara’s crackdown on the online poker industry in 2011, the shut down of the U.S. facing web sites of PokerStars and Full Tilt, the indictment of 11 individuals, and a $3 billion civil forfeiture lawsuit. Since online poker is a no-no, according to the federal government, lawyers working for the government are not so sure that the Department of Justice should be paying out money that was won in online poker games.


Numerous sources close to the matter told me the decision could go either way and was too difficult to call.


John Pappas, executive director of the Poker Players Alliance, the Washington D.C. lobbying group, said it would be “ludicrous” for the government to not pay U.S. players what they had on deposit at Full Tilt and said his group will “play a role in the process.”


Pappas claims it would be inconsistent for the government not to pay back all the money that was on deposit by U.S. players on Full Tilt given that the government allowed PokerStars to pay back all the money that its U.S. customers had on deposit after the federal crackdown on online poker last year—and that the U.S. government was ready to let Full Tilt pay back its U.S. clients in a similar fashion, which only did not happen because Full Tilt didn’t have the money. Now, Pappas reasons, not only does the U.S. government have the money, it’s also allowing PokerStars to fully refund the winnings of Full Tilt’s non-U.S. customers. “It would be unfair for players who were successful online to be shortchanged from what they have rightly won and quite honestly lawfully won,” Pappas said.


Still, the government might point to some subtle differences, like the fact that the U.S. government views online poker as being legal in some foreign jurisdictions, but takes the position that it’s not in the U.S.


Pappas also said it could be a logistical nightmare for the U.S. government to figure out how much players deposited on Full Tilt instead of just paying back what they had on deposit in April of 2011. There is still a lot riding on what finally gets decided in Washington.