The history of Full Tilt Poker is one of Everest-sized highs (becoming the second largest online poker room in the industry, highly respected) and Hades-depths lows (revocation of license, besmirching of reputation and loss of respect, not paying players, etc.). As exposed by none other than Howard Lederer in his seven hour escapade that has become known as “The Lederer Files” on PokerNews, it is more likely than not that the FTP operation was more of a “Three Stooges” farce than a true Shakespearian tragedy.
From the start of the “Files,” Lederer comes off as someone who, quite honestly, is looking to cover his ass. “I am one person in what was a very complicated situation, so I don’t have all the answers and I don’t have all the facts,” Lederer stated within minutes of the opening segment of the interviews. Over the remainder of the seven hours, his responses of “I don’t know” on a multitude of subjects rivaled that of someone called in front of Congress regarding less-than legitimate decisions that affected a segment of society.
The story of Full Tilt Poker dates back to the infancy of online poker. The creators of the Frankenstein monster that would become FTP, Lederer says, were former Chief Executive Officer Ray Bitar and former World Champion Chris Ferguson, “very close friends” as Lederer recounts. Others involved included poker professionals Phil Ivey, Rafe Furst, Phil Gordon, Andy Bloch and Perry Friedman (who was actually building the program that would eventually become Full Tilt). These men (and others) would be the ones that brought the idea to life of an online poker website “by the players, for the players” under the auspices of TiltWare, LLC.
The first warning signs regarding Full Tilt Poker should have come almost immediately. A Board of Directors was named (Bitar, Ferguson, Friedman, Ivey and Lederer), but none of them held even a passing knowledge of what such responsibility being a member entailed. “We saw our role in the company as an advisory board,” Lederer says in the “Files.” “We are not professional board members, we are not professionals or CEOs like the board of Apple, our job was to get on the phone with management, discuss the company…there was no expectation the board would be operating day-to-day.”
Furthermore, Lederer asserts that the decision to put Bitar in the role of CEO might not have been the best move for the newfound company. When asked if Bitar was qualified to be the leader of the company, Lederer responded, “Not in any traditional sense. He had a passion for the company, (but) he didn’t have an MBA…no experience, no education. He was an owner, very invested in the company (and) was brought in to run the company by Chris (Ferguson) and, in a lot of areas, he was doing a good job.”
The birth of Full Tilt Poker would come in the summer of 2004. A particularly memorable press release was sent out regarding getting poker admitted as a medal sport for the Athens Olympics that year, which offered players a tee-shirt that said “US Poker Team” by visiting a website (the method of building a database of potential players – in fact, this writer may still have his shirt somewhere). After building that database, Full Tilt Poker went live in June 2004.
Over the next two years, Full Tilt Poker slowly made an impact on the online poker community. The ability to “Learn, Chat and Play With the Pros” (the catch tag for drawing in potential customers), their A-list members of “Team Full Tilt” and an assortment of successful promotions, seemed to draw players in along with a cartoonishly quirky, bright and catchy software. Battling against the behemoths of the industry at that time – PartyPoker and PokerStars (with Party outdistancing PokerStars by a wide margin) – as well as other well-established companies such as 888Poker, Ultimate Bet and Absolute Poker, Full Tilt languished in the middle to lower Top Ten before circumstances rocked the industry.
The passage of the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2006 – a bill tacked onto a must-pass security bill regarding the shipping industry by Presidential hopeful Bill Frist of Tennessee (now retired) – brought about a seismic shift in the online poker world. Almost overnight, such companies as PartyPoker, 888 and many others shut down their operations to American players (as publicly traded companies on foreign stock exchanges, they could not knowingly violate laws of another country). The private companies – PokerStars, Full Tilt, Absolute and Ultimate Bet – saw their opportunity to make their claim to the top rungs of the ladder by remaining open to American action.
It was also around this time that the first idea of “disbursement” of funds to the original investors came into mind, according to Lederer. “Excess cash,” in Lederer’s words, was paid out to the investors to the tune of approximately $443 million (according to the U. S. Department of Justice) over the next five years. These disbursements, although perfectly legitimate for investors in a company, were a bone of contention for Ferguson but not for the others who had put money into the creation of the business.
Over the next three years, Full Tilt Poker became what it had aspired to – one of the biggest players in the online poker industry. Ranking second only to PokerStars (following the fall of Absolute Poker and Ultimate Bet due to cheating scandals), Full Tilt Poker seemed to be cruising along, seemingly printing money hand over fist. Dark clouds hovered on the horizon, however, that would eventually lead to the fall of the company.
In 2010 (due to seizures by the U. S. government and limited usages of the UIGEA), payments weren’t coming through to the Full Tilt Poker coffers. To counter this, many of the private online poker companies allegedly utilized payment processors that would mask the true intent of the transaction – funding a gaming account – by passing them off as different internet purchases such as sporting equipment. Full Tilt Poker began to have troubles at this time as their processor ran afoul of the U. S. government and had his finances seized (along with his arrest), further preventing money from coming into the company.
Although this money wasn’t coming into their pockets, Full Tilt Poker continued to credit player accounts and continued with the disbursements to investors. The ultimate downfall would come in April 2011 in what has become known as the “Black Friday” indictments of the three major U. S. online poker operations (PokerStars, Full Tilt Poker and the CEREUS Network team of Absolute Poker and the newly-renamed UB.com) that saw two of FTP’s major players, Bitar and Nelson Burtnick, named as defendants.
Without the “Black Friday” indictments, it is unknown whether the issues plaguing Full Tilt Poker ever would have come to light. Almost immediately following the April 2011 action, it became known to those on the Board of Directors at Full Tilt (including Lederer) from CEO Bitar that there was literally no money in the bank. Facing millions in potential fines from the U. S. government, Full Tilt Poker continued to tell international players that “all was well” (possibly in theory to potentially build a large enough bank to be able to pay those fines) and continued to take deposits from these players (and hand out disbursements to investors) until the Alderney Gambling Control Commission (Full Tilt Poker’s license holder) suspended the room in June 2011 and eventually would revoke its license in September.
Also in September, the news would get worse for some board members of Full Tilt. The U. S. Department of Justice amended their complaint and announced civil action against Lederer, Ferguson and Furst for their roles in the company. The action, which is currently ongoing, would look to strip the men of millions of dollars and property that is said to have been falsely accumulated through the operation of Full Tilt Poker as a “Ponzi scheme.”
As the calendar creeps closer to 2013, it has been a mixed bag in the news for Full Tilt Poker. On the good side, the settlement of issues between the feds and PokerStars, which led to them acquiring Full Tilt Poker’s assets, will be leading the former Number Two in the online gaming industry to return to action, supposedly in November. This will allow international players to make a difficult decision – stay and play on the site or immediately yank their funds from the besmirched company (at PokerStars’ expense) and play on the “legitimate” sites that have survived the carnage.
For U. S. players, the story is less than rosy. As per the PokerStars/DoJ deal, the federal government will be responsible for the reimbursement of players affected by the Full Tilt closure. As of today, the feds have yet to announce a plan for that repayment and there are no indications that an announcement is forthcoming.
Although they introduced some excellent concepts to the online poker world (Rush Poker, the “multi-entry” tournament), the story of Full Tilt Poker can be considered a Shakespearean tragedy that belies the world of online poker or a “Three Stooges” farce that demonstrates the ineptitude of poker professionals as business operators. It is up to the individual to make that determination and – once it reopens next month under the auspices of PokerStars – whether Full Tilt Poker can return to the poker community as a respected entity.