In a statement issued on Tuesday, Full Tilt Poker (FTP) described a series of events leading up to the actions of the US government on Black Friday which resulted in a loss of more than $100m.
FTP cited “prior government enforcement activities and significant theft” before Black Friday as contributing factors that have left the company unable to meet its financial obligations to it players. Government seizures accounted for losses of approximately $115M in players’ funds, according to the statement.
Payment processors difficulties were also a major factor in FTP’s lack of financial well being. Daniel Tzvetkoff, arrested in Las Vegas and charged with money laundering, bank fraud and wire fraud in 2010, was alleged to have stolen more than $100m from FTP and PokerStars combined. FTP estimated their portion of the loss to be approximately $42m.
Their payment processor issues did not end there. For several months leading up to Black Friday, FTP “experienced unprecedented issues” with third-party processors that “greatly contributed to its financial problems.”
“While the company was on its way to addressing the problems caused by these processors, Full Tilt Poker never anticipated that the DOJ would proceed as it did by seizing our global domain name and shutting down the site worldwide.”
The company’s efforts to procure financial backing that would allow the repayment of hundreds of millions of dollars in players’ deposits have yet to bear fruit.
“Full Tilt Poker has been actively exploring opportunities with outside investors in order to stabilize the company and pay back our players,” it states. “At least six of those groups, including hedge funds, operators of other internet businesses and individual investors, have visited Dublin to inspect the operation.”
Continued efforts to find investors will be supplemented by “an additional financial advisor through an investment banking group.” In addition, another search will also commence in effort to find, “a new management team to restore the site and repay players.”
The entire statement follows.
As is obvious from the events that have transpired since April 15th, Full Tilt Poker was not prepared for the far-reaching, US government enforcement effort of Black Friday.
The events of Black Friday came on the heels of prior government enforcement activities and significant theft. Over the two years preceding Black Friday, the US government seized approximately $115M of player funds located in U.S. banks. While we believed that offering peer-to-peer online poker did not violate any federal laws—a belief supported by many solid and well-reasoned legal opinions — the DOJ took a different view. In addition, as was widely reported, a key payment processor stole approximately $42M from Full Tilt Poker. Until April 15th, Full Tilt Poker had always covered these losses so that no player was ever affected. Finally, during late 2010 and early 2011, Full Tilt Poker experienced unprecedented issues with some of its third-party processors that greatly contributed to its financial problems. While the company was on its way to addressing the problems caused by these processors, Full Tilt Poker never anticipated that the DOJ would proceed as it did by seizing our global domain name and shutting down the site worldwide.
Over the last four months, Full Tilt Poker has been actively exploring opportunities with outside investors in order to stabilize the company and pay back our players. At least six of those groups, including hedge funds, operators of other internet businesses and individual investors, have visited Dublin to inspect the operation. We have recently engaged an additional financial advisor through an investment banking group to assist us in our search for an infusion of cash as well as a new management team to restore the site and repay players. While any deal of this nature is necessarily complex given the current regulatory environment, our players should know that Full Tilt Poker is fully committed to paying them back in full and restoring confidence in our operations.
