I May Have Dodged a Bullet by Selling my Site
April 18, 2011 Posted by Tyler CruzA couple of days ago, the online poker websites PokerStars.com, FullTiltPoker.com, and AbsolutePoker.com, which are the 3 behemoths of the online poker world by far, were seized by the United States Department of Justice and FBI.
The founders of the sites, 11 of them in total, were indicted for several counts of bank fraud and money laundering. This is HUGE news. The prosecutors are seeking at least $3 billion in penalties. This is like Bernie Madoff, only these sites – allegedly – didn’t screw investors, but rather the government and their competitors.
To show just how serious this is, click on any one of the following 3 links: PokerStars.com, FullTiltPoker.com, and AbsolutePoker.com. I’ll wait.
If you did, then you’ll have seen the image below:
Can you imagine if these accusations were false (which, by the way, I doubt is to be the case. It’s the government after all, not a competitor with a lawsuit)? In addition to losing millions per day from having their sites shut down, think of all the PR damage already caused.
In addition, and perhaps more importantly, everybody’s account on these sites (at least in the US) is frozen. They cannot cash out their funds! Who knows how long these trials could take and what could happen afterwards. Some people may not be able to withdraw for a year or more, or maybe even never? Is that possible?
While the average real-money player probably only has around $200-300 in their account, you’d be surprised how many people have $10,000+, and there are certainly some who have millions in their account. But it’s all frozen now. Ouch.
However, the websites’ language/country specific websites appear to be functioning as normal (Ex. http://www.pokerstars.fr).
Here are some more details from CNN Money:
The sweeping 52-page indictment alleges that the companies, based offshore, used "fraudulent methods" to get around U.S. anti-gambling laws "and to receive billions of dollars from U.S. residents who gambled through the Poker Companies."
The authorities also issued restraining orders against more than 75 bank accounts, and seized five Internet domain names used by the companies to host their illegal poker games.
The companies allegedly arranged for the money from U.S. gamblers to be disguised as payments to hundreds of non-existent online merchants for the purchase of items such as jewelry and golf balls, according to the indictment.
The defendants include Isai Scheinberg and Paul Tate of Poker Stars; Raymond Bitar and Nelson Burtnick of Full Tilt Poker; and Scott Tom and Brent Beckley of Absolute Poker.
"As charged, these defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits," U.S. Attorney Preet Bharara said in a statement.
Prosecutors also filed civil charges against the poker companies and several individual "payment processors," seeking at least $3 billion in penalties.
Prosecutors also alleged that John Campos, a part owner of SunFirst Bank in Utah, agreed to process Internet gambling transactions in exchange for a $10 million investment in his bank by one of the other defendants.
Prosecutors said they are working with Interpol and foreign agencies to secure the arrest of the remaining defendants, who are not presently in the United States.
Did I Dodge a Bullet?
It was only 6 weeks ago when I sold my poker site, this this fiasco happened. Did I dodge a bullet?
Also, about a week ago, I decided to check all my poker affiliate accounts one by one to see if I had any money there, and was pleasantly surprised to find a couple thousand in my UltimateBet (same company owns AbsolutePoker, one of the companies listed in the indictment) affiliate account that I didn’t know about. I withdrew it that same day.
Did I dodge 2 bullets?
Well, maybe… maybe not.
First, regarding the withdrawal: in this case I think I did because even though I’m Canadian, UltimateBet’s site is down, plain and simple, and I don’t believe they have country/language specific ones like PokerStars does, so my funds would have been locked in there for who knows how long.
Regarding the selling of PokerForums – it’s too early too tell. On one hand, this is very bad for the poker world. It scares a LOT of would-be depositors away, all your recurring income from revenue share referrals is locked up, and fear always means less advertisers.
On the other hand, this could be a good thing as well. You see, part of the problem is that EVERY online poker player already has accounts at PokerStars, FullTiltPoker, and UltimateBet. This makes referring new players to them very difficult because they have all been used up.
Since they cannot play there anymore, for the time being at least, it means that you can use this opportunity to refer them to a new poker room, meaning a new $150-$300 CPA for you or revshare for life. Then again, this whole fiasco could annoy and/or scare a lot of poker players away.
So really, in my opinion, it’s too early to tell if I dodged a bullet by selling my site when I did.
What do you think about all this? People can be so greedy it’s sick. These guys were already billionaires, but it was never enough for them. They wanted more. Come on guys… 2 billion is not much different than 10 billion. It’s hard to spend that much if you wanted to.
wow, that was close.!
Luck you and unlucky the buyer! Don’t know how much he is angry with you.
I was right. I told you who ever bought your site was a sucker.
You dodged a money bullet, poker affiliates are cleaning up right now. There are hundreds of thousands of players looking for a new place to play, and the poker affiliates are getting $200 cpa’s on all of them.
I agree. It could be a new opportunity to exploit.
Well lets hope you don’t get into any trouble. You know what you did and didn’t do, I guess the issue is whether or not you did anything illegal.
What?
If you’re allergic to money (which seems to be the case), sure, you dodged a big bullet.
Thank Jebus you unloaded an aged, authority site at a rock-bottom price just weeks before it’d have gotten you 2x-3x what you sold it for due to recent events.
Who know’s man. Yes there might be a lot of quick money to be made right now, but you don’t know where the risk ends, who knows, maybe the FBI come after the affiliates pushing sign-ups next.
You can always play the “could have, should have” game, but you made your choice!
When you letting us know what the new site is?
Poker business is unsure at the moment. But it won’t die, that is impossible I think..
They will recover
That’s crazy. I know a few guys that were good players and have a lot of money invested into playing poker online and now I’m sure they’re out some big money (for awhile anyway).
It’ll definitely be interesting to see where people go now. What are the other big poker sites?
I really don’t know if you dodged a bullet or not, Tyler. As someone else has mentioned, if the new owners are properly monetizing, this could be a great time to own PokerForums. There are off-shore sites that are still going strong and poker players will always play, and for sure always talk, brag, whine and dream out loud … which is what forums are really all about.
Wow, this is some serious news. Well, you are now on the safe side, so nothing to worry about.
This is exactly what I thought about the other day. I remember you selling a poker site and I was like ….look what happened, someone must be laughing right now.
you said ulitmatebet is down. No, it’s not. I’ve been playing steadily..am playing at this very moment…..on ULTIMATEBET
Looks like you made the right decision in the nick of time, Tyler. It must really suck for those who have huge sums in their accounts, for sure. And the Tyler on Neo photoshop me laugh!
I think you did doge a bullet indeed.
I wonder if this is the beginning to force online poker sites pay taxes and regulate online poker or just flat out close online poker to all US players.
I know people with few $1000 in their online poker account that they dont know what’s gonna happen to it too.
Yes, cos all poker players are US based! Jesus H. As well as the real growth areas in online gambling (including poker) having nothing to do with the US there is also the fact that US players will be looking for somewhere new to play.
Dodged a bullet or missed out on massive revenue opportunity? I know what my stats are saying.
Ouch, you are very lucky there! I suppose you always need an element of luck as an entrepreneur, and you sure got it there. That would really suck having an account full of cash on one of those sites. I guess the US govt doesnt really care about that, they see them as illegally made funds if you are a US citizen, and aren’t bothered in the slightest about non-US citizen funds affected.
Thanks for sharing will for sure tell my dad about this.He is a user of PokerStar.net.
Thanks,
Bradley Nordstrom
Online poker is on the verge of being legalized in the United States, which would immediately create the worlds largest market for online poker.
NJ, CA, NV & FL have all been clamoring to become the first jurisdiction within the US to legalize online poker. NJ’s legislature passed a law legalizing online poker a few months ago, with enough votes to beat a veto, but the governor did veto and stated that he felt the issue should be on the ballot for voters to decide. It’s still uncertain whether NJ legislators will overpower the governor or wait for it to be on the ballot.
Despite those States all working to become the first, in steps Washington D.C. to beat them all to the punch. Not only did D.C., the stomping ground hometown of our political elite in the US, beat them all in becoming the first jurisdiction within the US to legalize, they legalized not even a week prior to the raid on the poker sites.
That last point is quite interesting, IMO. Not even a week had passed after Washington D.C. legalized online poker and the federal government virtually took down their major competitors.
This, after all, had nothing to do with poker online but simply paving the way for Washington D.C. companies to enter the market without such deeply rooted competition.
Anyhow, all that aside and back to PokerForums.org, wouldn’t the site have been worth a lot more after poker is legalized throughout most of the U.S.?
So we should say that you’re lucky to sell of your poker forum a couple weeks ago? But a poker forum would be safe from legal issue, and I believe that the new owner should have some other strategies to make money from the forum. ;D
Between, both 3 sites seem to be working now?
In the past I was thinking to become an affiliate to some of these sites but I had concerns if this would be legal and as it seems I was right!
In my opinion you couldn’t be in danger of likewise accusations if you didn’t do anything similar to them!
But still, it’s nice to be out of danger in time…