A House of Cards

Filed in Other by on August 11, 2011

The scandals keep coming in the online poker world. Just when you think it couldn’t get any worse, karma hits the industry with a fucking gut-shot on the river.

The major events of recent weeks are as follows – the second biggest poker site in the world (Full Tilt Poker) was shut down to players world-wide; Phil Ivey, the biggest (and best) poker star in the world attempted to sue Full Tilt for 100 million dollars for reputational damage; rumours swirled of unethical and illegal activities being undertaken by owners and partners of the Full tilt company; and finally, credible reports surfaced that Ivey is dropping the lawsuit so he can turn around and buy the company.

But first, let us cast our eye to the other side of the world. To a tiny speck off the coast of the UK called Alderney. Alderney is one of those dodgy, vaguely autonomous pretend-countries that attract all sorts of big corporations by offering next-to-zero in the way of taxes; you know, like Bermuda or Costa Rica. Alderney is just like these countries, expect for the sun, beaches or any other identifiable reason to travel there.

It’s about 2 km long and 5km wide with a population of 2400. It’s the Nauru of the English Channel. Due in part to the people of fair Alderney’s taste for wine, the island is commonly described as “two thousand alcoholics clinging to a rock”.

But that’s not all; this little island is also the home of the Alderney Gambling Control Commission. The AGCC has responsibility for regulating none other than Full Tilt Poker, whom decided in their wisdom to house their corporate headquarters on this delightful little tax-haven slash brewery. It is this Commission that recently shut down Full Tilt to the rest of the world.

Think about that. Whatever Full Tilt has done, it has been so bad that the Alderney Gaming Control Commission suspended Full Tilt’s license. I’m stunned – the members of the board of Full Tilt could have been pictured running through the streets of London, setting fire to police cars and stealing sneakers from the Foot Locker, and I doubt AGCC would have even blinked.

But somehow, somewhere, out of the public eye, Full Tilt has done something so dodgy the AGCC has been forced to act. Previously, it had only been shut down to US players (by the US Department of Justice); now the rest of the clientele has had its money locked up and the tables closed.

What on earth can be so bad that the red-nosed, hiccupping people of the alleged country of Alderney have decided to call time on the operation? Well, the rumours surrounding the rationale are not kind. The allegations against Full Tilt – this is in addition to charges of money laundering and bribery by the US Department of Justice – are that they mixed player funds with the operational and marketing funds for the site (that is, they spent player deposits on things like sponsorship deals with high-profile players and on media advertising); that professionals associated with the site were selling ‘rake free’ accounts to third parties; and that they had lost tens of millions of dollars by trying to transfer money through dodgy third party organisations (I stress, these are all just allegations).

Now, they may get their license back – they just paid 450,000 USD in overdue fees to Alderney for starters (could this be the mean reason for the shutdown? Surely not). But that isn’t the real issue. Even if the AGCC is kind enough to let the site operate again, there will be close to zero confidence in the current management. The current CEO, Ray Bitar, (the pork-bun pictured at the start of this article) is a figure of universal derision and hate in the poker industry and would probably find himself in a hole in the Nevada desert if he dared ever showed his face in Vegas again. For the rest of the partners, their reputations have sunk along with the net worth of the company.

And this is where Phil Ivey comes in to the picture. The uncannily talented, almost inhumanly perceptive poker player seems to have a pretty fine business sense as well. His old employers are down and nearly out for the count, looking down the barrel of lawsuits (including one from Ivey) and criminal charges, and Phil turns around and offers to buy the company. Well played sir, nice hand.

It’s not confirmed yet and nothing is certain. Full Tilt is such a toxic brand now that I doubt anything could revive the company except perhaps Phil Ivey. What is clear is that things have gone from bad to worse for the poker industry.

To be frank, the poker industry must take a lot of the responsibility for this. It has not covered itself in glory in recent months. Full Tilt, an organisation I once believed were credible, has be shown to be badly and unethically managed and some high-profile poker players associated with the site may have been privy to the underhanded dealings. Confidence in poker has hit an all-time low and all of poker’s opponents – that meddling herd of ignorant legislators and moralists – have never had a better opportunity to shut down the industry.

But I still believe that poker cannot be kept down. It is too popular and enjoyable, too much part of American Culture, too appealing to the average Australian punter. It is not and cannot be seen by any reasonable person to encourage problem gambling in the same way as poker machines or table games like roulette.

What is happening now could be seen as a purging of the industry: spitting out all the scumbags that have taken advantage of a pastime whose popularity has not been matched by good public policy. Quite frankly, every collapse of a poker company, every scandal and every lawsuit is a further argument for regulation. This bullshit – the Full Tilt bullshit – just cannot happen in properly regulated environment. When you try to prohibit anything that people love – booze, poker, streaking at the cricket – you criminalise honest citizens and attract the attention of society’s underbelly to provide that banned service. Don’t forget it was prohibition in the US that essentially created the Mob. Unfortunately this analogy doesn’t extend to streaking, but you know what I’m talking about.

Poker is down but not out. In the coming year you will see a resurgence in live poker, and in two years the online version will explode. Watch this space.

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