Posts Tagged ‘PokerStars’

I’m Glad I Didn’t Say Which Christmas

Wednesday, November 14th, 2012

Back at the end of July came news that the US Department of Justice had settled with PokerStars and Full Tilt Poker on civil claims, and that players would be paid back. I wrote,

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.

I was wrong.

I was expecting the DOJ to treat this differently from a ‘standard’ remission case, given that all the money was on hand and there was a complete list of who needed to be repaid. I was wrong: The bureaucratic procedure will be followed.

Yesterday, John Pappas, Executive Director of the Poker Players Alliance met with officials from the DOJ. A full statement from Mr. Pappas regarding the meeting is available. The gist of it is that is:

Our third objective was to get a sense of timing. Unfortunately, completion of a refund claims process is a long way away.

I now expect this to take many more months, perhaps more than one year for players to be repaid. Unfortunately, a realistic time-frame is 12 to 18 months from now. It could take less time if all the stars align, but it could take longer if something goes wrong. Poker players will be dealing with “bureaucracy at work.”

While what’s below isn’t the process, from a poker player’s perspective it might as well be. It’s definitely an example of how bureaucracy functions most of the time.

“The 2011 Purdue University Rube Goldberg machine shattered the world record for most steps ever successfully completed by such a machine. In 244 steps the ‘Time Machine’ traces the history of the world from Big Bang to the Apocalypse before accomplishing the assigned everyday task of watering a flower. The record has been sanctioned by the Guinness Book of World Records and the World Records Academy.”

DOJ Settles Civil Claims Against PokerStars & Full Tilt Poker; Full Tilt Balances to be Refunded to US Players; Settlement with Absolute/UB Also Referenced

Tuesday, July 31st, 2012

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.

Hurry Up and Wait: FullTilt/PokerStars/Group Bernard Tapie Update

Tuesday, April 24th, 2012

This post has nothing to do with taxes, but everything to do with online poker. You’ve been forewarned.

Today came news that Group Bernard Tapie has backed out of the deal to acquire the assets of FullTilt Poker. That is a fact, and that would normally be bad news for individuals who are waiting to be reimbursed by FullTilt. However, fresh on the heals of that news (and, in some cases, preceding that) came the rumor that PokerStars was acquiring FullTilt, and settling with the US Department of Justice for $750 million.

First, let’s deal with the facts. GBT says that they could not come to an agreement (with the DOJ) on repaying non-Americans and that there were issues regarding forfeiture laws outside of the US. I’ll take what GBT said at face value (though the reasons cited ring somewhat hollow with me). No matter, an acquiring company can always decide to walk away from a deal.

The next fact is that PokerStars is in negotiations with the DOJ to settle the criminal and civil charges filed against it. That’s not a surprise, as PokerStars would like to not have anything hanging over its head. This was confirmed by Eric Hollreiser, Head of Corporate Communications for PokerStars, in a corporate blog post today.

The rumored settlement amount, $750 million, feels right. Party Poker settled with the DOJ for around $300 million. If we consider that PokerStars operated in the US for five additional years after the UIGEA went into effect in 2006, the additional amount is reasonable.

It also feels right that the DOJ doesn’t want to deal with repaying Americans (or individuals outside of the US). Americans likely could file claims of rendition with the DOJ, and I suspect that the DOJ isn’t set up to deal with thousands of claims, so why not hand it off to PokerStars. That said, this part of the rumor could be wrong.

Let’s look at this from the DOJ’s point of view. “PokerStars operated for five years following implementation of the UIGEA. They committed bank fraud. They should pay at least double what Party paid,” might be how the DOJ looks at it. So the DOJ keeping $600 million and setting up a $150 million fund to repay Americans (the estimated amount owed US players by FullTilt is $150 million) also feels right. This is just speculation by me, and we’ll all have to wait for the press release by the DOJ.

And that’s the definite reality: Until the deal is signed off–and any deal with $500 million or more coming into the US will have to go up to the Attorney General (Eric Holder)–no one with concrete knowledge of the terms is going to say anything. This could be a matter of hours, days, or weeks. As my niece would say, “Hurry up and wait.”

There’s another certainty: No one in the US is going to be playing on PokerStars (or FullTilt Poker) if this deal goes through. This deal will not change current US law as interpreted by the DOJ. The DOJ believes that online poker is not legal under a variety of laws. Until legislation passes in Congress (or state legislation passes), there will be no legal online poker in the US. Nevada is in the licensing stage for intrastate online poker; the best hope for federal legislation will be in the lame duck session following the November election.

Finally, a brief comment about Ultimate Bet/Absolute Poker (remember them?): If the rumors are true about PokerStars purchasing FullTilt Poker, do not expect a repeat of them purchasing UB/AP.