Full Tilt Poker's Former American Customers Still At Mercy Of DOJ, But Probably Shouldn't WorryMoney Is Also There To Cover Bonuses, Points and Promotions |
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On Thursday, the United States government received a $225 million payment from Isle of Man-based PokerStars – the first installment of its $731 million settlement that also gave the company ownership of Full Tilt Poker, its former rival that was shut down completely last year.
Full Tilt had once been a popular online room that drew player deposits in the hundreds of millions of dollars. When the site closed its doors amidst accusations of financial crimes, $334 million worth of player funds were frozen. It was a devastating event to players around the world.
PokerStars managed to settle its Black Friday case with the Department of Justice without admitting to wrong doing, but it’s on the hook for helping clean up Full Tilt’s mess. The company will divvy out about $184 million to non-Americans, while the government will disburse compensation to its citizens who played on Full Tilt, thanks to the money forfeited by PokerStars. However, that process has raised questions, some of which are still unanswered.
Could Americans get anything less than their account balances?
As reported by Forbes, there’s speculation that the DOJ could compensate players by some other means than what is in their defunct Full Tilt accounts. Some in the poker community are worrying, but Jeff Ifrah, an attorney for Full Tilt who helped broker the deal, isn’t too concerned.
“Given the fact that the government allowed PokerStars to pay back its customers 100 cents on the dollar after Black Friday, I’m kind of surprised to see the poker community jumping to that conclusion so quickly,” Ifrah said. “I understand that the community is very vulnerable. They were victimized by what happened to them with Full Tilt. We worked very hard over the past 15 months to make sure there’s enough deposited into the [DOJ’s] remission fund to cover reimbursements at 100 percent. That’s what I expect to happen.”
According to the Forbes article, authorities could pay Americans what they deposited on the site over the years, instead of account balances. Ifrah said that he has never heard of such a possibility during his time working on the Full Tilt sale.
However, Ifrah admitted that the government has never guaranteed that it will repay Americans 100 percent. “It’s really their call in Washington,” he said.
With the money being in the government’s hands and precedence for U.S. player repayment, Ifrah said “it’s difficult to see a scenario where those things don’t rule at the end of the day.”
PokerStars wanted to repay Americans, but DOJ said ‘no’
After the sweeping indictments in April 2011, PokerStars swiftly cashed out its U.S. players. The DOJ allowed the company to do so, and the process was successful. According to Ifrah, PokerStars wanted to pay Americans again — this time what they are owed by Full Tilt.
Having PokerStars handle it would “have been much faster,” Ifrah said. “If the DOJ told PokerStars to [repay Americans] tomorrow, then I think they would. I don’t know that officially, but it would be my guess.”
Ifrah added that he was never given a specific reason why the DOJ chose to handle U.S. funds.
While the civil case was under the jurisdiction of the Attorney’s Office of the Southern District of New York, the DOJ’s Washington Asset Forfeiture and Money Laundering Section will process player reimbursement.
U.S. player bonuses on Full Tilt
The $150 million owed to Americans is a sum that not only includes account balances, but also bonuses (Frequent Player Points, for example) converted into real money.
“The way the calculations were computed included a value for those types of things,” Ifrah said. “So when you hear the number $184 million on the foreign side and the $150 million on the American side, those numbers take into account a value for bonuses, points and promotions.”
For Americans, the government would have to decide how much extra on top of winnings would, if any, be awarded to each person. The money is there to pay Americans their bankrolls plus whatever they accumulated in Full Tilt extras.
According to Ifrah, the DOJ knows that these types of bonuses were earned by customers.
Possible tax implications
The Internal Revenue Service was not at the table in the negotiations for the Full Tilt sale and PokerStars settlement. However, the agency could very well come into the mix soon.
“Who’s to say that they aren’t going to know about [player reimbursement]?” Ifrah asked.
Ifrah said that it isn’t the obligation of Full Tilt or PokerStars to repay players, American or otherwise, in a way that allows them to avoid tax obligations. “It never occurred to anyone that we needed to structure the reimbursement process in a way that would allow players with larger balances to avoid recording their compensation to the U.S. government.”
It’s unclear whether or not the IRS will get notices from the repayment process, according to Ifrah. When asked if the money could be taxed prior to entering the hands of the player, Ifrah said he hasn’t been told that this could happen.
However, there’s a lot of discretion in the repayment process, Ifrah admitted, and it makes it impossible to know for sure how it will all unfold. There’s no review or appeal on what the government decides to do with player repayment. To put it simply: Its word is final.
“Theoretically, the administrator of the funds could decide that anyone with a last name that begins with ‘S’ will get zero, and there would be nothing anyone could do about it,” Ifrah said. “So, does that mean we should all start worrying about that? No.”
Just like right before Black Friday, U.S. players will have to react to what the government does.
Not remembering your Full Tilt balance: Is this a problem?
The short answer, for now, is no.
The deal closed on Thursday, Aug. 9, and immediately after PokerStars was given the keys to start digging through player information on the Full Tilt servers, Ifrah said. Members of PokerStars are currently in Dublin, Ireland looking through Full Tilt data.
“Their top priority, as it has been expressed to me, is to get these player records and ensure that no one hears that, during the remission process, a claim was denied or reduced because of poor record keeping,” he said.
As for Americans, the DOJ already has had access to what is owed to each player. There has been no indication that players must remember how much they had when filing for remission.
Small account balances on Full Tilt: If uncollected, where does the money go?
A player will need to fill out paperwork to recover his or her Full Tilt money. For those with tiny sums stuck on the site, the hassle might not be worth it.
Ifrah said that if the Full Tilt remission fund is not all used up by former American customers, the leftovers would go to victims of other federal cases or go straight to the U.S. Treasury. In other words, the government could pocket the unclaimed Full Tilt money.
He added that leftover Full Tilt money could go to compensate former Absolute Poker players, or those of other sites the government has cracked down on.
The DOJ will release more information online in the coming weeks. Check back at CardPlayer.com for more coverage.
Follow Brian Pempus on Twitter — @brianpempus
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