by Wendeen H. Eolis
When CNN ran the headline “French investment firm to buy Full Tilt Poker,” last Thursday afternoon, it was music to the ears of Full Tilt Poker customers—until the story revealed itself as an un-orchestrated curtain raiser, shut down minutes later—for good cause. The CNN headline signaled a crucial turning point that had not been reached.
FTP’s customers seek to retrieve the monies in their FTP account balances. The journey to answers as to when, and if they can bank on the eventual return of their monies has been a long one, with rising expectations and dashed hopes. The CNN story and a feed of it to Yahoo.com produced a surge of increasing confidence, catching immediate attention of surfers and media reporters alike.
CNN, Yahoo and PPN Collide in Space
Poker Player Newspaper, however, questioned the story before reporting it—understanding that players are depending on a done deal as key to their seeing a return of their funds. PPN became the first media outlet to set the record straight as to the current status of negotiations. The PPN headline of the same afternoon read:
"DOJ & GBT Reach Signed Agreement For Acquistion Of Full Tilt; Tapie Agrees To Pay U.S. Government $80 Million For FPT’s Assets"
The sub-head, also above the article read:
"Stunning Move By Government Paves Way For Tapie Deal To Go Forward"
GBT-DOJ Signed Agreement is Here Again
The confirmed details of the DOJ-GBT agreement and interview comments of GBT’s counsel appeared in PPN last Thursday afternoon. Key points are recapped later in this article.
Since publication of the PPN article, CNN has updated its story, revised its headline, deleted the byline of one of the two original reporters, and added an Editor’s Note explaining that a deal for GBT’s acquisition of FTP has not been finalized. CNN made a prodigious and successful effort to put things right as to the impact of the signed GBT-DOJ agreement. For FTP players, however, it was just one more instance of confused and frenzied media coverage.
For now, as we go to press, there is nothing more to report on the progress of the deal at this time, according to GBT Counsel Dayanim—except to say, “It will take more time.”
How Will FTP Customers Fare?
While the DOJ has signed an agreement with GBT and the negotiations roll on, Dayanim, the chief architect of the GBT acquisition plan, shies away from commenting on how the DOJ might actually process FTP customer claims. He is focused on the rest of the world (“ROW” players) for whom his client would have responsibility to repay or make whole.
Other lawyers familiar with the talks (but not part of them), who were queried for this story take a hard look at the statements that have been made by the DOJ and by both FTP and GBT and their counsels .
The first notable statement came from the DOJ on April 20th following execution of their “Domain Names” agreements with Full Tilt and PokerStars in which the Government said, “As part of Agreements, use of domain names Pokerstars.com and Full Tilt Poker.com will be restored to facilitate return of U. S. player funds.” The same press release also quotes United States Attorney for the Southern District of New York, Preet Bharara: “This office expects the companies to return the money that U.S. players entrusted to them, and we will work with the poker companies to facilitate the return of funds to players…”
Thereafter PokerStars processed full refunds to players, upon receiving cash out requests. Full Tilt says it has not been in a position to do likewise, but is involved in negotiations designed to end the separation between players and their monies entrusted to FTP.
Shortly after amending its civil forfeiture claim of April 15 (the related papers dated September 19th ), the DOJ, acknowledged rising inquiries from FTP customers concerning funds locked up in FTP accounts. The DOJ’s response was measured with more caveats than promises concerning the return of funds. Media swooped in on the glimmer of light, with little attention to the parsed words and warnings.
Several lawyers consulted for this article argue that a done deal will do significantly more for the DOJ, FTP, and GBT than for some of the site’s most faithful players—especially successful American-based poker pros.
Chuck Humphrey, a former partner at Kirkland & Ellis and a recognized gaming lawyer, suggests that American-based FTP customers may be in for a rude awakening. Mr. Humphrey explains that the Government has made no promises and is likely to resist player demands for compensation related to winnings:
“I believe it is unlikely the DOJ will return the total account balances to Full Tilt players. Even in the face of a few contrary court precedents, the DOJ continues to maintain that all online gaming is illegal. Returning the portion of a player’s balance that represents winnings would undermine that position as well as its underlying positions in the pending criminal charges.”
A. Jeff Ifrah, counsel for FTP and Ray Bitar spoke in carefully guarded words shortly after the signed DOJ-GBT agreement asserting, “The letter of agreement helps pave the way toward restarting Full Tilt’s operations outside the U.S. and paying back players whose deposits were frozen along with Full Tilt’s assets.” He refrains from any reference to the agreement’s reported reference to DOJ consideration of “compensation for player losses.”
One lawyer, not related to any of the parties quips pointedly: “Before you count on any winnings as part of your net worth statement, consult your lawyer on his bet as to whether you will see a penny beyond lost capital.”
A Clean Slate of Relevant Facts
The events of poker’s “Black Friday” have triggered many debatable reports and sometimes misstatements of fact as if they were gospel. Parsed words by the parties and unclear media accounts go hand in hand to create misimpressions. Here are a few notable facts that have more than occasionally gotten lost in the shuffle of news coverage and parsed words of the protagonists associated with the FTP debacle.
1. None of the FTP directors except for Ray Bitar has been indicted.
2. No company was indicted in the April 15 criminal case U.S. v. Scheinberg et al.
3. None of the parties involved in the current discussions—DOJ, GBT, and FTP—have made any promises that American-based players will be made whole.
4. According to GBT counsel, the four directors of FTP as of April 15th would be prohibited from holding any shares in FTP going forward, but contrary to a report by CBS News (November 18), there is no such prohibition against any other shareholders from doing so.
5. Despite poker media speculation that the DOJ was expected to announce the GBT-DOJ signed agreement last Friday, no such announcement has been made by the Government.
6. Contrary to reports in myriad news stories of late, anyone who claims that the deal needs only to get the necessary approval of FTP has vastly simplified the remaining steps, so as to create a substantive misimpression. Well- placed optimism notwithstanding, Mr. Dayanim acknowledges there are still many details that need to be worked through.
Recap of DOJ-GBT Signed Agreement
For those who were occupied on Wall Street or elsewhere last week, here is a recap of a few key points of the DOJ-GBT signed agreement reported November 17, as re-confirmed with GBT’s attorney Behnam Dayamin: GBT would hold at least a majority interest in the company; none of the FTP directors as of April 15th would be permitted to hold shares in the company. (Note change from “current” directors in prior online article) All other shareholders could own shares in the company without limitation except to the extent that GBT would be required to hold the majority interest. With respect to FTP’s US customers, they would be able to submit petitions to the U.S. Government for compensation of their losses. With respect to players outside of the U.S., GBT would “repay or make whole”, all of those customers.
Jeff Ifrah Steps Up to the Plate
In a statement reported by InsideIreland.ie), just as PPN is going to print, Ifrah calls the anticipated deal “a very creative solution,” noting, “The agreement [is] behind us. The next step is how is it going to work?” For the first time, Ifrah takes the bull by the horns and acknowledges publicly critical unanswered questions— “Are the players going to get everything back, what’s the process for filing claims, and so on. These are things that the players are concerned about now.” For most players, repayment of their funds is the thing they have probably cared about most from the moment they were locked out of their accounts.
Dayanim and Ifrah are Well-Matched to Make a Deal
Although uncertainties abound, as to how well players will fare—especially those who must look to the U.S. Government for repayment of income they earned at the tables, all of the lawyers who have responded to questions for this article agree that players appear to be well-positioned to recoup their losses, to the extent monies in a player’s account reflect deposits made by him or her.
The team of Ifrah and Dayanim in the deal making process should be very good news for a substantial part of the poker community with deposits at FTP, including “Rest of the World” players who under the agreement are to be repaid or made whole. Dayanim and Ifrah are respected experts in their field and of good stock—formerly practitioners at the same nationally acclaimed law firm and known to each other since their college days.
Editor’s Note: Wendeen Eolis is CEO of Eolis International Group, a legal consultancy that reviews lawyers and law firms for clients of legal services, including companies, government agencies and high net worth individuals, with a 40-year specialty in the gaming space. Her public service activities and humanitarian initiatives have included advisory roles to city, state and federal governments. Wendeen was the first woman to cash in the main event of the World Series of Poker.