News came out this morning that the long-rumored deal that would have PokerStars acquire Full Tilt Poker, agree to pay the DOJ $731 million (the rumored amount was $750 million), and pay back players while settling the civil charges it faced came to fruition this morning. Press releases were issued by Full Tilt and PokerStars announcing the deal; a press release will be issued later today by the DOJ. The obvious questions are:
- Who will be repaying the Full Tilt players?
- When will players be repaid?
- What does this mean for US players’ taxes?
- Will PokerStars (or Full Tilt Poker) be returning to the US anytime soon?
Who will be repaying the Full Tilt players? If you are outside of the US, PokerStars will repay you. A fund of $184 million will be set up, and withdrawals will begin within 90 days of the completion of the transaction — likely by the end of October.
If you are within the United States, you will be repaid by the Department of Justice (the US Attorney’s Office for the Southern District of New York). You will have to apply through remission with the DOJ to be repaid. I assume (but am not certain) that the FTP site or client will be reopened so that US players can look to see what their balances were. A fund of $150 million will be set up for the repayment. The exact process will likely be revealed in the press release to come from the DOJ, but here is a sample remission petition (Hat Tip: Taxdood).
When will players be repaid? If you are outside of the US (and this is determined by your residence on June 29, 2011), you likely will be repaid no later than November. If you are in the US, this remains unclear, but I’d expect you to be repaid before Christmas.
What does this mean for US players’ taxes? That income that wasn’t constructively received in 2011 will likely be constructively received in 2012. That means you will need to report your Full Tilt income on your 2012 tax returns. You may need to adjust your fourth quarter 2012 estimated payment.
Will PokerStars (or Full Tilt Poker) be returning to the US anytime soon? No. While the agreement specifically allows for PokerStars to apply for licenses if and when online poker is legalized in the US, the criminal charges against PokerStars were not settled. As long as PokerStars (or any of its owners, executives, or managers) faces a criminal indictment, they will not be licensed in the US.
Most gaming licensing boards are extremely reticent about licensing anyone with any sort of criminal past. If PokerStars were found innocent of the criminal charges against it, then they would have a chance of obtaining a US (or state) license. Until then, it is extremely doubtful that US players will see PokerStars (or Full Tilt Poker) back in the United States.
Buried in the DOJ Press release is the following:
In a related matter, the U.S. Attorney’s office also filed a motion requesting that the Court enter a settlement agreement reached with Absolute Poker/Ultimate Bet that requires the company to forfeit all of its assets (the “Absolute Assets”) in order to fully resolve this action. The motion also requests that the Government be permitted to liquidate the Absolute Assets, with the net proceeds of that sale to be held pending the resolution of claims filed by other parties who have asserted an ownership interest in the Absolute Assets.
It appears that US players can also apply for remission on their AP/UB balances. However, it is likely they’ll receive pennies on the dollar (or perhaps a penny on the dollar) as it is unlikely the assets of AP/UB have much value.
Once the DOJ announces the remission process, I’ll post about that. I now return to my scheduled vacation.
UPDATES: It’s remission, not rendition; the date being used to determine US (or rest of the world) residency is June 29, 2011, not April 14, 2011.