My personal/industry thoughts on Black Friday

Do you think US players will be able to play online poker again and if so how long would you say it will be until we can?

On April 17 2011 11:41 tooker wrote: Do you think US players will be able to play online poker again and if so how long would you say it will be until we can?

Yes,
best case scenarios:
state level 1-1.5 years
federal 1.5-2 years
(I've adjusted this, simply because states may cooperate to get something federal in place more than just going forward alone on a state level)- but as a conservative guy- I'd say minimum of 2 years.

Just because even if it is approved next month, there is simply the process of organizing and setting things up.

But for the 3 sites that were indicted,
this case will last at least 2 years,
if the party poker founder Anurag Dikshit case is any indication and
if they should win the case, then they may enter in thereafter, but likely not at the start if the legalization happens within 2 years. Keeping in mind that this indictment is as serious as can be.

I would think because of the level of activity towards legalization, that this recent event occurred and it is no coincidence they targeted the top 3 sites.

If you consider, 2006 is when the UIGEA came into effect, in has been 5 years now, regardless of the recent activities and during this time, Party, 888 and ipoker have been out of the market.

Do you believe any of the big 3 will survive the lawsuits without going bankrupt? The fines that they are facing look quite menacing.

On April 17 2011 12:14 Surprise wrote: Do you believe any of the big 3 will survive the lawsuits without going bankrupt? The fines that they are facing look quite menacing.

Very insightful question,
and I can't answer it without it shocking people, but I'll give you the criteria of what you need to look at:

1. How much of their market is US based?

2. What was their long term potential had they not gotten indicted in the US, if the US had eventually legalized?

3. Do they participate in any other regulated markets?

Questions that can't be answered are:
(a)Will the DOJ be able to freeze all the international accounts they have identified as related to the big 3 via interpol?
(b)How much has the brands been damaged from this and its ability to get new customers and keep a cash flow going?
(c) Will the sites be able to continue to use the .co.uk & .eu urls?

Ultimately, site themselves will do a cost analysis of the potential cost to address the full consequences of the indictment,
so its not just a matter of going bankrupt, its a matter of 'is it worth it?' and the top 3 questions will illuminate that.

The last point is the sites must try their best to honour the non-US cashouts, even if it is a huge blow to their business foundation,
if they don't, then its not a matter of everyone cashing out, it's a matter than no will want to 'cash in/deposit' and their cash flow will dry up.
If they have any hope of getting through this to get back into the market, they must maintain their international credibility with their existing
customers to have the cash flow to go through the entire process with the DOJ. If they don't honour international cash outs, then something is up. But I wouldn't jump the gun on this, even a weeks wait after something like this would be considered reasonable.
In cash of US cash outs, it's really to early to say anything without it being full speculation.

It wouldn't be right for me to put a % beside who I think would make it and not, but I think it's obvious from the main 3 questions above.
But if something from questions a, b, c, should turn out in the negative result, I really think all bets are off.

When PS and FT set up ways to allow players to withdraw, what time frame do you believe this will happen in and how will they go about doing so?

thanks for this david. i dont have any questions at the moment but just wanted to show appreciation for your time and the professionalism youve shown on lp so far.

I'm aware of the shit storm we are in but a small part of me hopes that I may one day at least see a fraction of my bankroll again.

What would be at this point from the information you've gathered be the best case scenario on US players getting their money back or is that simply not an option at all? It's very obvious the Feds want their piece, and they'll use their vast resources/reach to get it.

On April 17 2011 12:57 joLin wrote: thanks for this david. i dont have any questions at the moment but just wanted to show appreciation for your time and the professionalism youve shown on lp so far.

Also +1 to this post.

I liked your posts the instant you started posting on LP. Props yo~

Awesome post sir.

I have 500k on PS should i try to cash it out? How many risk is there of NON US players (australian) of losing their bankrolls..

Thanks! If stars goes down, will u offer me some kind of special deal to play on heropoker??

Do u think non americans are safe playing at FT/PS?

do u expect a boom on smaller sites that accept US players? will/can such sites be targeted by US govt?

do sites that accept US players at the moment work legally (how does cashout occur etc?), if not legal are they in serious threat of being shut down in near future?

On April 17 2011 12:46 Carthac wrote: When PS and FT set up ways to allow players to withdraw, what time frame do you believe this will happen in and how will they go about doing so?

On April 17 2011 13:01 YoMeR wrote: I'm aware of the shit storm we are in but a small part of me hopes that I may one day at least see a fraction of my bankroll again. What would be at this point from the information you've gathered be the best case scenario on US players getting their money back or is that simply not an option at all? It's very obvious the Feds want their piece, and they'll use their vast resources/reach to get it.

International: All they need to do is just make a good estimate of where they stand financially as a company. The issue is, while player funds are separate and may be protected, the ones in transit, likely not as much. If the DOJ had accounts which were for fund transfer to players, then the sites need to account for the fact that they these funds are gone, but they still need to pay these out to the players. And while most of these accounts should have been for US players only, no one knows what the percentages are in these frozen accounts are between US/International. That being said, I do not think the sites would be trying to make an exact count, just enough to know what is the general situation is so the accounting doesn't become even more convoluted later on.

So obviously for high valued players they want to get them their cash asap to maintain their trust, so they will likely start with those cash outs first.


US: This is a pretty sick question mainly because, even if they had the funds available to give to you, by what processing agent would they use to get you the funds? I can only say, unless it is in cooperation with the DOJ to let you get your funds, any attempt to send them through would give further exposure to those sites and even make them potentially even more guilty, as, they would either have to use the current system they have which hasn't been exposed yet, or actually state it is really from 'x company' and still have the transferred funds rejected by the back from being related to online gaming. I think anyone who says they have a time line or answer for this is speculating hardcore and even if the DOJ were to get directly involved with this, they would need to get access to the funds and the player balances to get this process started and that would only happen once the legal proceedings got far enough for the DOJ to get control of those assets.

That being said, I was not on the payment side of any site, so I don't know if there is some other mechanism to do so, but even the player balances may be considered evidence now. Other than flying to the bank and picking up your funds in cash, I can't see any other process off the top of my head.

BUT, the DOJ's intention wouldn't be to screw the little guy (I know it doesn't feel like that), but if they claim the revenue in damages, they will sort things out as well with player balances. I would said though ANYTHING right now, even my comments are mere speculation, you will will have to simply wait for further developments. So I'm trying to say, on many levels, it doesn't look good, but we simply don't have enough information to really say one way or another, yet.

On April 17 2011 13:02 YoMeR wrote: Show nested quote + On April 17 2011 12:57 joLin wrote: thanks for this david. i dont have any questions at the moment but just wanted to show appreciation for your time and the professionalism youve shown on lp so far. Also +1 to this post. I liked your posts the instant you started posting on LP. Props yo~

Thanks to both of you & sorry this couldn't be under better circumstances.

Thanks for your posts.
Out of curiosity since I play on Playersonly: how much jurisdiction do the skins on Merge have on cashing out policies?

On April 17 2011 13:10 wobbly_au wrote: Awesome post sir. I have 500k on PS should i try to cash it out? How many risk is there of NON US players (australian) of losing their bankrolls.. Thanks! If stars goes down, will u offer me some kind of special deal to play on heropoker??

Again, if a company wishes to really continue business, and I think PS does, then they will honour cash outs and keep the international business running;
but I would minimize your exposure, not because I think that PS will tank immediately or in the short term, but it would not be prudent not to keep that much online considering the overall situation. After all the sites are under indictment, its not like they left completely voluntarily.

But to share this is one point that players wouldn't normally think about:

The players numbers right now haven't dropped, but unlike you educated regs, fish are always coming and going,
this is called the 'churn rate'. meaning every month a set average percentage of players drop out of the poker site because they went busto, or
haven't decided to reload for this month.

If a site is unable to get new members sign ups at a certain rate to compensate for this churn rate, the numbers will decrease each month and
the games will also get tougher and thus also increase the churn rate among, not just fish, but regs as well.

So now PS, FT and UB need to now publicize their new url to get players, and if they players just assume its dot com, well that is worst possible thing you want to see
as a new player signing up.

I mention the above because I want to put your question into context,
if the site, minus the US players, does not drop further, month on month and even grows,
your online balance is that much more secured.

If the site, minus the US players, drops month on month,
you may one day wake up and feel very much akin with your US poker playing brothers.
But out of the 3, I do feel that PS has the most chance to take it as far as it can go.

Regardless of PS going down, which I honest to God hope it doesn't (as I still have many colleagues and juniors working there who have jobs there as well as all the international players),
I will always try to my best treat you well at Hero Poker on all levels whenever you'd like to come over. But again, I wouldn't want PS to fold for any reason.

Cheers.

On April 17 2011 13:35 HeroPoker-CEO wrote: Show nested quote + On April 17 2011 13:10 wobbly_au wrote: Awesome post sir. I have 500k on PS should i try to cash it out? How many risk is there of NON US players (australian) of losing their bankrolls.. Thanks! If stars goes down, will u offer me some kind of special deal to play on heropoker?? Again, if a company wishes to really continue business, and I think PS does, then they will honour cash outs and keep the international business running; but I would minimize your exposure, not because I think that PS will tank immediately or in the short term, but it would not be prudent not to keep that much online considering the overall situation. After all the sites are under indictment, its not like they left completely voluntarily. But to share this is one point that players wouldn't normally think about: The players numbers right now haven't dropped, but unlike you educated regs, fish are always coming and going, this is called the 'churn rate'. meaning every month a set average percentage of players drop out of the poker site because they went busto, or haven't decided to reload for this month. If a site is unable to get new members sign ups at a certain rate to compensate for this churn rate, the numbers will decrease each month and the games will also get tougher and thus also increase the churn rate among, not just fish, but regs as well. So now PS, FT and UB need to now publicize their new url to get players, and if they players just assume its dot com, well that is worst possible thing you want to see as a new player signing up. I mention the above because I want to put your question into context, if the site, minus the US players, does not drop further, month on month and even grows, your online balance is that much more secured. If the site, minus the US players, drops month on month, you may one day wake up and feel very much akin with your US poker playing brothers. But out of the 3, I do feel that PS has the most chance to take it as far as it can go. Regardless of PS going down, which I honest to God hope it doesn't (as I still have many colleagues and juniors working there who have jobs there as well as all the international players), I will always try to my best treat you well at Hero Poker on all levels whenever you'd like to come over. But again, I wouldn't want PS to fold for any reason. Cheers.

Thanks for the awesome post, I think i may just cancel my 500k wire and cash out a lil less.

expected this blogpost to be about Rebecca

On April 17 2011 13:16 CamilaPunt wrote: Do u think non americans are safe playing at FT/PS? do u expect a boom on smaller sites that accept US players? will/can such sites be targeted by US govt? do sites that accept US players at the moment work legally (how does cashout occur etc?), if not legal are they in serious threat of being shut down in near future?

Just keep checking 3 things:
1. no more url confiscations of the current url they are using
2. no constant decrease in player numbers month on month
3. international cash outs are still going through with no issues

But, I'll be clear about one statement.
In regards to AB/UB, the fact that they are willing to allow current US players to keep playing while in the US,
speaks volumes to me (even if payments are disabled). Whereas PS/FT have disallowed US players from playing in the US.
While you didn't mention UB/AP in your question, you definitely shouldn't.

There will be minor boom with the smaller sites,
but 100% the DOJ targeted the top 3 sites for a purpose
and while I'm sure the DOJ likely does have a lot of information on the smaller sites as well,
politically this is a much bigger win on many levels.

But likely legalization will occur before the smaller sites can really have an impact,
but should US legalization not occur and the smaller sites do replace PS/FT (highly unlikely because no one will engage in the same level of
marketing spend/investment, if there is a chance of this happening again) then I'm sure the DOJ would come after them.

How other sites do their cash out process, would possible be different due to the fact the volumes are significantly lower and the nature of the relationships may be more direct, as bank may actually accept the gaming code, but since the volume is so low, the bank is never warned etc, so it is 'legal' insofar as the bank hasn't received a warning yet, when when the warning does come, to do so further would be risky,
(no I'm not counting this as ignorance of the law or innocent till caught, but that the bank may have assessed it to be 'lawful gaming' internally)but it is difficult to comment further on that.

Again PS may have thought what they were doing was actually legal because they consider poker a skill game and don't offer table games,
but there are some sites don't promote to US players but the network is open to US players.

So this may be more of a politically motivated indictment where by these sites were very mainstream and open in the US market, even if it was through the dot net. The main issue is that they allegedly in worked cooperation with payment processors to circumvent the US wire/funding issue, thus the money laundering charges.

As an extreme example: a poker site in Denmark may be open to US residents and their credit card works on the site, but its not marketed to US players and has no English on the site.
It's not likely this would be targeted, but if the payment processor is doing something shady and there can be a concrete link between the two, well a case could be made, but they likely wouldn't be targeted.

But there is a reason why Party left the market, and those reasons never changed, so in the same way, just because a site isn't targeted is no guarantee that it won't be.

But to answer your question, I don't think these smaller sites in the short term are at risk to be shut down, but these sites that market to the US will likely be excluded from any legal market entry, and as you've seen with PS/FT, you never know what will happen.

But I would think that this is a high enough profile case, which took out the three market leaders, as sufficient enough to satisfy the intentions of the whatever parties that have an interest or gain in this indictment have and scare the crap out of the existing operators.

On April 17 2011 13:33 ManofFire wrote: Thanks for your posts. Out of curiosity since I play on Playersonly: how much jurisdiction do the skins on Merge have on cashing out policies?

Much, we can handle it on our own, or through the network or give specific instructions on it,
like restrictions or exceptions.

What do you think is gonna happen with Cereus?

sir, isn't it "dangerous" to play in sites that currently accept US players? do you think the US govt. will go after those sites after the PS/FTP/UB thing?

On April 17 2011 14:18 goose58 wrote: What do you think is gonna happen with Cereus?

Again,
it is hard for me to give a hard statement,
but again:
is there liquidity mostly US based?
are they financially stable?
are they operating in other regulated jurisdictions?
do they have good management?

I'd say the writing is on the wall here.

On April 17 2011 14:28 DvoBoardRider wrote: sir, isn't it "dangerous" to play in sites that currently accept US players? do you think the US govt. will go after those sites after the PS/FTP/UB thing?

Just for the context, I'd like to reframe the word 'dangerous' to 'risk'.

If you are not a US player; the risk is if you join a site that is mostly US based and it folds, then you may folding along with it.

Also, while the indictment might have been politically motivated and no more are forth coming (as they already have the top 3)... who really knows. I definitely do not have the answer for that.

But as a player, you need to weight the risks of having access to US players or not having, and its kind of the same reasoning why some Swedish players will play on FT verse their domestic or an EU licensed site.

Since the UIGEA passed, the risk has been the same, it's just the enforcement is now coming into play.

For US players, it has always been a choice of absolutes: to either play poker or not to play poker online after the UIGEA. But I don't think there was ever denying the risk factor unless you really accept what a company states at face value. I'm not going write that there is no risk and it is something I need to also sort out in the very very near future as to how we continue to operate as a site and part of a network.

If legalization is right around the corner, then it would be foolish for anyone to try to cater to the US market, to risk getting banned from it.

I know that the answer may have not been exactly what you were expecting, but I'd say everything is just to early to say where things are headed both for the level of risk/reward (as it may not be worth it for an international player to hit up the US market if really most people do finally decide to quit until it becomes fully regulated) or what will be the US gov't next move.

On April 17 2011 14:08 HeroPoker-CEO wrote: Show nested quote + On April 17 2011 13:33 ManofFire wrote: Thanks for your posts. Out of curiosity since I play on Playersonly: how much jurisdiction do the skins on Merge have on cashing out policies? Much, we can handle it on our own, or through the network or give specific instructions on it, like restrictions or exceptions.

Thanks a lot for the quick response.

As the CEO of a new up and coming pokersite - are you happy to see the top 2 big sites fall / lose what was a near perfect reputation? I immagine there will be a lot of refugee playes looking for a new place to play

^he already answered that


new question (and thanks for all your replies, this blog post has been extremely interesting) :

international withdrawals are working... friend of mine, american, wanted to transfer me money for me to cashout for him and give to him somehow but US players cant transfer as well

i was pondering later on -- i understand the blocking of american based players via IP and whatnot, but what interest does FTP/PS have in not allowing them to try and transfer their money out? I figure FTP/PS would want to help out their players as much as possible but this just makes it seem like "they have our bank monies which = players money and we have to wait to see what sort of settlement will occur meaning if we have to pay big bucks than the players will have to cough up their rolls" or something of that nature.

Is that totally non-sense? Or does the inability for player transfer make the situation be even worse than thought? Any thoughts on this would be appreciated.

Also there are claims that like 75 banks are seized including international banks (please correct me if im wrong) -- wouldnt that mean that there is a possibility that the amount of money seized is greater than the total american roll on sites? What kind of access do the sites have to their money in such banks?

thank you for doing this.

Ya I'm gonna download your poker site in the next week or two.

On April 17 2011 18:47 TalentedTom wrote: As the CEO of a new up and coming pokersite - are you happy to see the top 2 big sites fall / lose what was a near perfect reputation? I immagine there will be a lot of refugee playes looking for a new place to play

My investors are quite happy, but it isn't like Hero Poker was in competition with PS and FTP, simply we just launched and our objective was to do branding for 2 years and then assess at that point.

But I guess what is different from Hero from many of the other network sites out there was that it was created with the intention of going big and mainstream should the opportunity arise, so the framework was set up that way, which is great because now we can start to flex that more 'mainsteam structure' without getting swat down by PS or FT immediately and that our marketing dollars have a better chance of seeing light.

But on a personal side, it's not like I planned or anticipated for this situation and so many of the players I know are simply in such a bad situation. I was even thinking of setting up place in Korea or Aus for US players to come over and settle down for the next couple of years (basically just prepare everything for them to come over)- I guess I am still thinking about that.

Also, don't think the DOJ didn't get a wealth of information on every site out there in the world and isn't aware of what is going on( I bet they know more about online poker than most senior directors do now lol), so thinking to just step in there and own the market is a bit foolish, rather, I still need a few more days to really really think about things and how to best protect the brand, company and all my players for the future. But the collateral damage of what happened to PS/FTP will have scarred so many US players and perhaps the fall out isnt' over and people on 'the site that shouldn't be named cause it is already so scandelous' will be totally screwed first.

So one hand, as a business professional, there is an obvious opportunity here, and it's my job and responsbility to manage us into a stable and advantegous position. On the other hand, the level of destruction to player's confidence is something that really will take a lot of effort to over come and I need to balance the intake of possible new players and our ability to ensure that everything is well protected and stable.

So the short answer is, I'm still in shock a bit about it all, more concerned about my friends and player I know and the general state of this poker tsunami, but I am also in the middle of getting some emails of the survivors looking to get back on their feet, so I'm getting around to really focusing on their secure and protected 'relocation'. It does sound overly dramatic, but man, that is how I feel right now. But my investors are again quite giddy like school girls-but I'm not about to compromise our position and brand by going all gun-ho into this like some battlefield vultures.

On April 17 2011 20:41 CamilaPunt wrote: ^he already answered that new question (and thanks for all your replies, this blog post has been extremely interesting) : international withdrawals are working... friend of mine, american, wanted to transfer me money for me to cashout for him and give to him somehow but US players cant transfer as well i was pondering later on -- i understand the blocking of american based players via IP and whatnot, but what interest does FTP/PS have in not allowing them to try and transfer their money out? I figure FTP/PS would want to help out their players as much as possible but this just makes it seem like "they have our bank monies which = players money and we have to wait to see what sort of settlement will occur meaning if we have to pay big bucks than the players will have to cough up their rolls" or something of that nature. Is that totally non-sense? Or does the inability for player transfer make the situation be even worse than thought? Any thoughts on this would be appreciated. Also there are claims that like 75 banks are seized including international banks (please correct me if im wrong) -- wouldnt that mean that there is a possibility that the amount of money seized is greater than the total american roll on sites? What kind of access do the sites have to their money in such banks?

I really don't want answer this question, cause its going to hurt really badly.

This is purely MY OWN assessment, it is the same opinion I would give to a gov't analysist. But the final outcome is still very much up in the air, please take what I write in the context that this situation is still very very early.


The act of funding and cashing out, it under fraud and money laudering, so by rights, all these funds should be considered evidence and utlimately to be distributed by the DOJ should there be a resolution. Its not like FT/PS don't want to give you your money, but it may be out of their control as your actual funds are now frozen.

Even your online balances, by allowing for any time of fund transfer, cash out, player to player transfer, could be interpreted that these sites are still engage in MONEY LAUNDERING and are continuing to give the middle finger to the DOJ.

Additionally, all payment gateways under PS/FT are now monitored or shut down in the US, PS/FT would have to renegotiate new payment solutions to get the money to you-I think I addressed this before, but the act of doing so, would again, make them further guilty. But the main thing is, what most players aren't getting is that the charges leveled against PS/FT/UB/AB are so freaking serious, its not that they left the market voluntarily like Party, the DOJ see them as full on international criminals. So to answer your question: the inability to do player to player transfers is to limit the issue of money laundering issues of you transfering to your canadian friend and him cashing out for you.

Bank accounts.
Not all of the accounts listed may be 'in transit' accounts, as the fund path can be easily back tracked from a 'in transit account' to an actual holding of player accounts. So, these accounts may be more than the sum that were in the process of being transfers, but its highly unlikely that these accounts will represent the full amount of the players bank rolls or the company's holdings.

They aren't stupid and no matter how much payments are linked with company operations; the actual profits and marketin funds are on a completely a different set of accounting trails.
Providing there was no internal bank account cross over and the payment providers only did payment; then
yes, the total funds frozen can be more than what was in transit, but
no, I can't see it being all the player balances.

Also, these accounts have been identified, and likely are in process of being contested over, meaning, that just like your own cash out request, the site's own cash out requests from these accounts are now 'pending'; if interpol or the DOJ has enough pull then they will take then over, if they don't depending on the jurisidiction, then the sites will get access to them.

If these accounts were more than the sum of the player balances, then it would be an automatic gg as the operational and marekting funds would not be able to cover the initial rush to cash out. But that hasn't been the case for PS and FT to my knowledge,as some cash outs have gone through; no comment on the 'site that shouldn't be named because it was already too scandelous to begin with'.

Sorry for the late response,
just flew into Macau for meetings this morning.

I gotta say david I like the way you present yourself given how everything has gone down this week. it might make me wanna play poker again someday on your site :D

godspeed to you!

+1 to rainkhan. Heropoker here i come. Thanks for taking the time to answer all these questions.

Guys thanks, it's the least I could contribute, and much thanks for the comments,
cheers,
David

And thanks RainKhan for the music as well ^^

if heropoker is ever open to americans ill definitely give it a try.

thanks alot for doing this.

heres a final question if u have time:

i managed to cashout immediately after finding out of the incident and worked fine but now a few days later i tried to cashout from ftp and got a delay reply due to high volume cashouts .. not only me but majority of non us lpers trying to cashout later on have had problems

now i now that the cashout process is automatic if below a certain value which i assume 99% of the people cashing out are doing below this value so is this worrisome?

On April 18 2011 20:18 CamilaPunt wrote: heres a final question if u have time: i managed to cashout immediately after finding out of the incident and worked fine but now a few days later i tried to cashout from ftp and got a delay reply due to high volume cashouts .. not only me but majority of non us lpers trying to cashout later on have had problems now i now that the cashout process is automatic if below a certain value which i assume 99% of the people cashing out are doing below this value so is this worrisome?

No worries,
1. Even if the minimum amount is usually automatic, ftp can disable it so then it all just goes to pending first.
2. The business aspect to this is the same as shutting down a freefalling stock market and operational:

(a) Even if FTP does have the cash and resources to handle a simultaneousness amount of cash outs, they obviously don't want everyone cashing out their entire bankroll immediately, so by making the majority of the cash outs pending, but also still continuing to do the cash out in phases, this can allow time for some non-us players to change their mind and cancel the cash out and play instead.
(b) They may have reached a bottle neck in the actual financial transaction side, meaning that while the internal system is automatic, they still need to communicate with the bank and a large volume of cash outs would probably give the bank pause and they would also process things in batches.

But in both cases, for international players, I could see that within a week cash outs should be occurring again with the same level of service as before for non-US residents. If it doesn't get resolved in 2 weeks or it is still limited, then either they had a such cash out volumes or their 'internal accounting' is struggling.

Cheers, I'm in Macau, but am able to get to my email/internet a couple of times a day until Thursday.

On April 18 2011 13:54 joLin wrote: if heropoker is ever open to americans ill definitely give it a try.

Hero Poker part of the Merge network, and the network is open to US players.