Poker scandal

[mike777]

"On Tuesday, the U.S. Justice Department in a civil suit accused Messrs. Lederer, Ferguson and Furst, and another director of the company behind the Full Tilt Poker website, of defrauding thousands of online poker players out of more than $300 million that is still owed to them. The government said that, in total, the 23 owners of the site had taken out $444 million in distributions over..."

 

 

http://online.wsj.com/article/SB10001424053111904106704576582741398633386.html

[hrothgar]

"On Tuesday, the U.S. Justice Department in a civil suit accused Messrs. Lederer, Ferguson and Furst, and another director of the company behind the Full Tilt Poker website, of defrauding thousands of online poker players out of more than $300 million that is still owed to them. The government said that, in total, the 23 owners of the site had taken out $444 million in distributions over..."

 

 

http://online.wsj.com/article/SB10001424053111904106704576582741398633386.html

 

Felix Salmon had a good piece on this

 

http://blogs.reuters.com/felix-salmon/2011/09/20/full-tilt-ponzi/

 

Money quote:

In a weird way, strict anti-gambling regulations in the US are responsible for this fiasco. If poker sites were legal and regulated, we could trust the regulator — an arm of the US government — to protect gamblers’ funds. Casinos are strictly regulated; online poker sites should be as well. Instead, they became international fugitives, going to great lengths to make it possible for US gamblers to skirt regulations and use their sites. Up to and including buying banks:

[Hanoi5]

Money quote:

 

So if 'daddy government' doesn't take care of us we're screwed? More power to the government?

 

Although I agree that if they had taken care it wouldn't have happened, it is also true that if you are doing something illegal you are risking some consequences...

[wyman]

I understand what he's saying (and I am *hugely* pro online poker) but saying something like "oh, it's the government's fault. If blow was legal and therefore regulated, this guy wouldn't have gotten a bad 8 ball and OD'd," is a little bit loaded.

 

And if anyone here has money locked up on Tilt, I'm pulling for you. glglgl

[hrothgar]

So if 'daddy government' doesn't take care of us we're screwed? More power to the government?

 

Yes... More power to the government. (Or, if you prefer to phrase things differently, less rat feces in our dinners)

[hrothgar]

I understand what he's saying (and I am *hugely* pro online poker) but saying something like "oh, it's the government's fault. If blow was legal and therefore regulated, this guy wouldn't have gotten a bad 8 ball and OD'd," is a little bit loaded.

 

I don't see why... There are any number of examples where legalization and subsequent regulation have significantly improve quality.

 

Liquor quality in the US during / after Prohibition is a prototypical example; as are sanitary conditions for abortion providers before and after Roe versus Wade.

[aguahombre]

Thanks, Mike777. I hope this thread will continue with updates as they occur.

[wyman]

Anyone with a lot of time on his/her hands who wants to read more about this might try the 2+2 forums. The News, Views, and Gossip subforum has several threads on this. The signal-to-noise ratio is a bit lower, but the volume is massive, so there's a lot of signal in there.

[bd71]

I don't see why... There are any number of examples where legalization and subsequent regulation have significantly improve quality.

 

Liquor quality in the US during / after Prohibition is a prototypical example; as are sanitary conditions for abortion providers before and after Roe versus Wade.

 

I think this is not the most helpful comparison.

 

Less helpful comparison: Prohibited black market (A) vs. legalized/regulated market (B)

 

More helpful comparison: Legalized/regulated market (B) vs. legalized/unregulated market (C )

 

Arguing that B>A does not mean that B>C. I'm not taking a position, but since I suspect that most here will agree that A is the worst scenario, the debate should be between B and C.

[wyman]

I don't see why... There are any number of examples where legalization and subsequent regulation have significantly improve quality.

 

Liquor quality in the US during / after Prohibition is a prototypical example; as are sanitary conditions for abortion providers before and after Roe versus Wade.

 

It follows from his point that government should legalize and regulate everything that's both illegal and dangerous, but which would be less dangerous if regulated. Otherwise, he assigns blame to the government for any injury sustained as a result of the dangerous activity/substance/whatever. I assume he also blames the government for any immigrants killed by coyotes or otherwise as a result of human trafficking and any who die escaping from places like Cuba, since if we just had an open immigration policy, they would be better off. I also assume he blames the government if a guy gets an STD from a hooker, since if we legalized prostitution, then the hookers would have to register with the health department and maintain a clean bill of health.

 

And maybe you think we should have totally open borders and legal prostitution. And that's fine. My point is simply that some things -- not necessarily those, and certainly not poker -- should be illegal, and people who do things that they know are illegal do them at their own risk.

 

Government taxation and regulation of online poker would certainly be positive effects of "legalization" (note this is in quotes because its current legal status is unclear). But to say that the government is to blame for people being robbed by the owners of an online poker site is just silly in my opinion.

[PassedOut]

It follows from his point that government should legalize and regulate everything that's both illegal and dangerous, but which would be less dangerous if regulated. Otherwise, he assigns blame to the government for any injury sustained as a result of the dangerous activity/substance/whatever.

Saying that something bad could have been prevented by government regulation is not the same as saying that the government is "to blame" for it happening.

[wyman]

Saying that something bad could have been prevented by government regulation is not the same as saying that the government is "to blame" for it happening.

 

In a weird way, strict anti-gambling regulations in the US are responsible for this fiasco.

 

Am I missing something? [my emphasis added]

[luke warm]

Saying that something bad could have been prevented by government regulation is not the same as saying that the government is "to blame" for it happening.

no, but saying gov't is responsible seems to assign at least some blame

[aguahombre]

When people want to do something, people will emerge to provide that service.

 

When government forbids an activity (drinking, poker, drugs, whatever), the people who emerge to enable that activity either were already criminals or become criminals.

 

Yes, in that way government is to blame: for most of the deaths perpetrated by the Mob during prohibition, and for the shady and/or shoddy money deals of FTP.

 

Absent prohibitions, people emerge who ---acting in their own best interests --- improve the service provided and keep the unsavory types in line; OR people (customers or providers) emerge who demand of government that it regulate the activity.

 

Prohibition is just not a good idea.

[PassedOut]

no, but saying gov't is responsible seems to assign at least some blame

I guess that's right, since the government imposes the anti-gambling measures. But most of the blame falls on the people who do not exercise personal responsiblity for what they do.

[Phil]

Saying that something bad could have been prevented by government regulation is not the same as saying that the government is "to blame" for it happening.

 

OTOH, saying that something good happened when something was regulated is not the same as saying the government gets credit for it happening.

[Hanoi5]

When people want to do something, people will emerge to provide that service.

 

(...)

 

Prohibition is just not a good idea.

 

I think killing people is prohibited. And I think that's a good idea in general. Unfortunately humans cannot agree on what's good or bad, there will always be opinions in favor and against anything.

[aguahombre]

I think killing people is prohibited. And I think that's a good idea in general. Unfortunately humans cannot agree on what's good or bad, there will always be opinions in favor and against anything.

Not particularly relevant to my post, or to yours. But is killing people a good idea, or the prohibition of it, in your opinion?

[Hanoi5]

The prohibiton is, of course, a good idea. Prohibiting alcohol may be bad, but then many deaths have come from drunk people. Prohibiting drugs may seem good but then Amsterdam is a nice city.

 

Killing is prohibited and yet many countries send soldiers to other countries to kill people.

 

In the end opinions are like asses and everyone should treat their religion like their penises, but we'll continue to discuss all this all over again.

[aguahombre]

Well, maybe we should stick to discussing prohibition of things not so far on one end of the scale, like poker...and not try to compare it with murder.

 

My post stated the Probibition (U.S. Volstead Act) led to deaths; was not a value judgement about people's pleasures, but rather an opinion about government deciding what those pleasures should be.

[Hanoi5]

Well, maybe we should stick to discussing prohibition of things not so far on one end of the scale, like poker...and not try to compare it with murder.

 

My post stated the Probibition (U.S. Volstead Act) led to deaths; was not a value judgement about people's pleasures, but rather an opinion about government deciding what those pleasures should be.

 

And I was trying to convey the idea that no matter what we think there will always be people against or in favor of it. And there'll be good and bad things coming out of it, too.

 

And I first wanted to say that we shouldn't rely so much on the government and just try to live with the few liberties they left us. If people in the US just accepted the fact that they can't play poker legally on the internet in their country and that if they do they can lose their money then people wouldn't have lost their money. If you complain that the government should just legalize poker then they'll create a organism that will take care of it, people to manage it, secretaries, etc and then those people will get involved in some sort of corruption and suck more money from you in taxes, etc.

[blackshoe]

Perhaps you all should read Ain't Nobody's Business If You Do, by Peter McWilliams. The book is sub-titled "The Absurdity of Prohibition in a Free Society".

[Elianna]

I don't understand something:

 

In London, Sebastian Fox, an aspiring music producer, said he could earn around $1,200 a month playing poker online. He racked up $8,000 in an account on Full Tilt. On June 29, he said that he tried to withdraw around $2,400 to pay for rent and other living expenses and discovered Full Tilt's website had been closed down, following the U.S. suit and a subsequent raid by authorities in the U.K.'s Channel Islands where Full Tilt is licensed to operate its website

 

The way I read this, is that the U.S. shut the company down, and is now prosecuting them for not being able to operate while being shut down. What am I missing?

[barmar]

Absent prohibitions, people emerge who ---acting in their own best interests --- improve the service provided and keep the unsavory types in line; OR people (customers or providers) emerge who demand of government that it regulate the activity.

 

Prohibition is just not a good idea.

Another example is abortions. Before they were legal, women got "back alley" abortions, and complications (including death) were common due to poor conditions. Legalization meant that they could be done in legitimate hospitals and clinics, and the government and medical community could set and enforce safety standards.

 

It simply never works to criminalize an activity that a large segment of the population really wants to do.

[Stephen Tu]

The way I read this, is that the U.S. shut the company down, and is now prosecuting them for not being able to operate while being shut down. What am I missing?

 

Quite a lot. The U.S. didn't shut the entire company down. What it did in April was it seized its U.S. facing domain name (blocking access to the U.S. website), and froze payments working from Full Tilt -> payment processing companies -> banks. It did this along with a couple other major poker sites, the biggest other one being Pokerstars. Both companies continued to operate their sites legally overseas, but froze real money action for all players with U.S. addresses. About a month after the U.S. shutdown, the Feds made an agreement to let the sites pay out the U.S. players' remaining balances, while litigation continues. Pokerstars promptly paid everyone back.

 

Full Tilt however did not. Full Tilt ran into additional trouble, it got its gaming license (issued in some other country) suspended (I forgot exactly why). Also, it came to light that Full Tilt was either grossly mismanaged, or was run by outright crooks, because they didn't keep the money in player accounts segregated from their operations, and used it to pay owners & to run things. A legitimately run site should have been be able to run operations and pay out its profit dividends solely from its enormous incoming revenue stream (the rake), while keeping player funds sacrosanct & separate. But now you have a situation where they owe players hundreds of millions, but only have a few tens of millions to pay them. This is a fraud/theft charge, and a separate legal issue from the original one filed in April, which alleged money laundering (since the payment processing companies weren't properly disclosing the destination of the funds to the banks), among other things. For the April charges, arguably no one got defrauded, since everyone got the money they were supposed to, but for these new ones, people are are being stolen from.