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According to the affidavit supporting a seizure warrant, an ex-employee stated that Bodog has “hundreds of employees located in Canada and Costa Rica who handle the daily operations of taking bets, tracking sports events, customer service, website development, advertising and financial transactions.”
 
After the full seizure and shutdown of FullTilt and Absolute Poker combined with the shutdown of PokerStars for US players, Bodog was the largest site on which people in the US could play poker. Bodog had already announced that it was closing its site to new US players in the beginning of this year but remained open to users already registered. They may have known that a case was being put together but it seems this was not good enough since they were also conducting large amounts of sports betting and this is what most of the case by the government is built on.
 
In fact, besides the information collected by the informant, the government had also undertaken two seperate undercover investigations. In 2006, a IRS agent was able to establish an account on Bodog, place bets on a number of sporting events and receive his payouts to a Maryland address via check. In 2009, an Immigration and Customs Enforcement’s Homeland Security Investigations agent opened an ewalletxpress account and went through the same process. Bets were made as recently as January 2012.
 

 
Calvin Ayre, founder of Bodog, is the target of the indictment as well. Ayre has been the public face of Bodog since the brand gained in popularity starting in the mid 2000s. Ayre set up the headquarters in Costa Rica from where Bodog managed billions in gambling transactions.
 
Federal prosecutors claim that Ayre worked alongside James Philip, David Ferguson and Derrick Maloney to supervise and conduct illegal gambling business from June 2005 to January 2012 which was in violation of Maryland law. A media broker was allegedly directed by the defendants to run an advertising campaign to attract U.S. gamblers to Bodog.com.
 
It seems Carbon Poker is now clearly the largest poker room still open to U.S. players. There has been increased traction by companies, states as well as special interest groups to legalize poker in the U.S. in the near future. To keep up to date with these events, feel free to subscribe to our feed!

 
This debate went on in March 2012 as the National Conference of State Legislatures spoke out against the federal legalization of Internet poker pushing instead for regulation at the state level. They believe that the government should respect the Justice Department’s ruling on the Federal Wire Act and would oppose any efforts by Congress to preempt state authority over online gaming. The letter goes on to say that States have long been able to make similar decisions on other forms of gambling and were successful in their efforts. Therefore it is their belief that internet gaming should be treated the same way.
 
If federal legislation does pass, states and Indian territories will share the burden of regulation as a proposal by Rep. Joe Barton suggests. Once federal law is in place, Nevada will already have approved companies to which it has issues licenses and will be ready to go. States like California and New Jersey may want to handle their own regulation but other states may chose to let Nevada oversee and regulate poker on the internet in their state.
 
“Nevada is essentially moving ahead without a federal law,” said John Pappas, executive director of the PPA (Poker Players Alliance). “Should it become federal law, I think Nevada will be in the position to be one of the first states certified to issue licenses. I think a lot of states would rather not take the regulatory burden upon themselves and would say what’s good enough for Nevada is good enough for us.”
 
If this should happen, the approved regulation by the NV Gaming Commission could be quite important since they might be used by the largest regulatory body post-legislation. These regulations are of course not final as of yet and subject to change.
 
Here are some interesting points in the proposed regulations.
- Affiliates are allowed.
- Player fund transfers are not allowed.
- Site operators must make sure that players have only one account.
- Operators may pay a fixed sum to celebrity players for marketing purposes as long as the operator does not profit beyond the rake.
- Promotional/bonus credits can be offered by the operator.
- An operator must maintain at all times a reserve of cash, cash equivalents, an irrevocable letter of credit, bond, or combination thereof, equal to the sum of all the players’ funds.
- The ceiling for maximum rake is 10%.
 

 
Other States
 
Although The District of Columbia was the first jurisdiction in the U.S. to legalize online gaming last april, officials are still divided whether or not the government should move forward. Last year a councilman inserted language in a budget bill that allows poker and other games to be played online. There was no obstruction from Congress within the 30-day objection period so the bill turned into law.
 
D.C. remains the only jurisdiction besides Nevada to have approved internet gambling within its borders but a repeal bill also introduced last year by council member Tommy Wells could ultimately amend the law and reverse the legalization.
 
Although New Jersey has fallen from grace in the gambling industry, New Jersey Gov. Chris Christie supports online gaming as long as its headquarters is Atlantic City. He now backs Sen. Raymond Lesniak hoping that NJ won’t be left behind. Ohio and Iowa are also interested in the online gaming space after DOJ’s clarification on the Wire Act. Iowa even conducted a study showing that it could bring in $3 million of yearly tax revenue for the state.
 

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Not all states share the idea that online gaming should be legalized and regulated. California and especially Utah still show strong anti-gaming sentiment. Utah even has legislation in the pipeline that would ban online gaming before it is even legalized just in case federal regulation ever gains traction.
 
In any case, Nevada seems to be spearheading the race for regulation and legalization of online poker. It is the hopes of the PPA that these steps taken by the most prominent gaming state in the US shows lawmakers and congressmen that are on the fence that a well regulated and accredited body is ready to support and manage online poker. Whatever the future may look like for internet poker in the US, Nevada clearly wants to be at the center of it.
 
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The Poker Players Alliance has hailed the ruling as a victory for the online poker industry as the clarification of the law suggests that Internet poker is not in violation of the Wire Act.
 
John Pappas, PPA executive director, had this to day: “This will provide policy makers at both the state and federal level with the legal confidence to move forward with licensing and regulation of online poker and other non-sporting activity within their respective jurisdictions. However, it is our hope that our federal policy makers see this as an incentive to move quickly to enact federal licensing and regulation before various states produce a mix of individual state schemes that may not be the best model to serve consumers.”
 
The Nevada Gaming Commission has already drafted regulations and is said to be willing to issue licenses so that operators can run online poker sites as early as 2012. Read the full article here.
 
Moreover, the DOJ made public a letter sent to Senate Majority Leader Harry Reid and Senator Jon Kyl regarding their letter sent to the Attorney General in July questioning the enforcement of federal online gambling statutes. In it, Assistant Attorney General Ronald Weich says that this new clarification “will not undermine our ability to use other powerful tools, such as the federal statutes prohibiting organized crime, racketeering, and money laundering, to prosecute that type of criminal conduct. Furthermore, in states that ban various forms of gambling — including Internet poker — the Department will be able to investigate and prosecute those gambling businesses under the Unlawful Internet Gambling Enforcement Act and other sections of the criminal code.”
 
Furthermore, The DOJ was careful not to comment on the Unlawful Internet Gaming Enforcement Act (UIGEA), except to say that “in light of that conclusion, we need not consider how to reconcile the Wire Act with UIGEA, because the Wire Act does not apply in this situation. Accordingly, we express no view about the proper interpretation or scope of UIGEA.”
 
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AGCC Commissioners, sitting as a tribunal, have today revoked the licenses of Vantage Limited, Filco Limited and Oxalic Limited, trading as Full Tilt Poker (FTP), with immediate effect. This follows the earlier suspension of the licenses on 29th June 2011.
 
At a hearing held in London over six days, it emerged that FTP had fundamentally misled AGCC about their operational integrity by continuously reporting as liquid funds balances that had been covertly seized or restrained by US authorities, or that were otherwise not actually available to the operator. Serious breaches of AGCC regulations include false reporting, unauthorized provision of credit, and failure to report material events.
 

 
At the commencement of these proceedings on 26th July AGCC made clear its preference to hold the hearing in public, to the benefit of players and media alike. However, the tribunal was persuaded that the hearing should be held in camera on the basis of claims by FTP that this would maximize the chance of a commercial rescue of the business for the benefit of players. For this reason an adjournment of 54 days was allowed.
 
It is important to note that the revocation of FTP’s licenses does not, as has been suggested, prevent a reactivation of the business under new ownership and management. Unresolved claims by players against FTP become a matter for the police and civil authorities. Now that FTP’s licenses have been revoked, AGCC no longer has jurisdiction over these companies.
 
The license of Orinic Limited, a recently added geographic sub-division of the FTP poker room, remains suspended.
 
The determination notice containing the decision of the Commissioners and reasons for it is available at GamblingControl.org.
 
A few days later, The AGCC released a statement to Full Tilt players who have been turning to them to resolve issues regarding their account with the online poker site. After reminding players that the AGCC does not guarantee player funds when it gives out a license, it now says that after revoking FT’s license, the Commission no longer has the authority to “intermediate or arbitrate on player issues or disputes with Full Tilt.”
 

 
Here is their statement:
 
Following the revocation of the licenses, AGCC no longer has authority to intermediate or arbitrate on player issues or disputes with Full Tilt (excepting for players registered under a Swiss address). Players may have the following alternative options:
 
1.Full Tilt has been requested to provide a specific player contact: this is awaited and will be incorporated here upon receipt.
2.Any player who believes they are a victim of crime, as a result of their dealings with Full Tilt, should in the first instance contact their own local police in their country of residence and report the matter to them. These reports will then be coordinated centrally.
3.It is understood that a number of civil actions have been initiated by players against Full Tilt, some as class actions representing multiple players by UK, U.S. and Canadian lawyers. Details of the firms concerned can be found through Internet search.
 
This is a convenient way to wash their hands of all problems relating to Full Tilt and players’ issues so it seems that revoking the license could have also been a way stop getting involved in the whole case in the future.
 
The exception made for Swiss licenses is because the license issued in Orinic was seperate and intended solely for the purpose of having Full Tilt operate out of that region.
 
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Full Tilt Poker and Groupe Bernard Tapie Sign Acquisition Agreement

Groupe Bernard Tapie has over 30 years of experience in the salvation of financially distressed businesses, with over 40 companies acquired and managed to profitability, the most well-known being the sport equipment giant, Adidas.
 

 
Laurent Tapie also granted an exclusive interview to iGaming France to discuss the acquisition. He said “We have shown that we have the funds necessary to repay player debts. We want to find ways where we don’t have to put in all the money and will be talking to the US Department of Justice next week.” He did not disclose how much the company paid for the acquisition but did state the obvious fact that they wouldn’t have undertaken the project if they didn’t believe there was good potential.
 
If all goes well with the dealings with various parties such as the DOJ as well as other potential investors, Tapie plans to reopen Full Tilt Poker by January 2012. According to him, “The brand is not in question, it’s a well-known brand and the technology is widely recognized as being possibly the best in the industry. The management of the company is being questioned and it will be changed (should the takeover be concluded). I believe we have the tools necessary to once again make the site one of the leaders in the online poker sector.”
 
So it would seem that conditional to a favorable agreement with the DOJ which would help the Bernard Tapie Group repay the money owed to players, that FTP players finally have some good news. It would also seem like the site might regain some credibility and might one day attempt to reclaim its spot amongst the top online poker rooms.
 
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Last week, the Manhattan United States Attorney’s Office amended its April 15 complaint against internet poker companies to include charges against Full Tilt Poker’s board members including Howard Lederer, Chris Ferguson, Bay Bitar (CEO) and Rafe Furst. At the same time, the DOJ issued a warrant in rem in order to seize five bank accounts related to those charges. “In rem” is a legal term meaning action directed towards personal property which would put the holdings of these men at risk. This is in no way an arrest warrant since the complaint is a civil one, not a criminal one. By making this a civil case, it makes it easier for the government to seek forfeiture of the funds and go after the personal cash holdings of the men mentioned above.
 

 
Approximately 23 individuals owned shares in Full Tilt Poker. The percentages of ownership were around 19.2% for Ferguson, 8.6% for Lederer, 7.8% for Bitar and 2.6% for Furst. These FTP “insider defendants” were also at all relevant times members of the Board of Directors of Tiltware LLC with Ferguson as Chairman of the Board.
 
The arrest warrant in rem, signed by the Honorable Leonard B. Sand, was issued on Sept 19. It was issued to “any designated officer of the Federal Bureau of Investigation and/or any law enforcement officer authorized by law,” commanding them to seize the property that appears in the warrant.
 
The amended complaint includes a new assertion that as at March 21st 2011, Full Tilt Poker owned about $390 million to players all across the world with only $60 million on deposit in its bank accounts. $150 million of the $390 million was owed to players in the US. Furthermore, FTP’s payment channels became so disrupted that the company faced increasing difficulty when attempting to collect funds from US players. Rather than disclosing this fact and finding ways to work around it, Full Tilt actually credited the players’ online accounts without even collecting these amounts from the players’ bank accounts. This “phantom” money that FTP allowed players to gamble with were funds that Full Tilt never collected nor possessed. As if this were not bad enough, the complaint also alleges that between April 2007 and April 2011, the four men lined their pockets with approximately $443 million of players’ money.
 
The DOJ went on to referencing specific examples of how and when FTP misled players in thinking their funds were safe such as the following post on TwoPlusTwo poker forum by “FTPDoug” on July 19 2008.
“Trusts are legal vehicles whereby funds are deposited into a trust account under the control of a trustee who manages the funds in accordance with the instructions of the trust settlor (you). Given the thousands of deposit and withdrawal transactions Full Tilt has to process each day, the variety of methods used to deposit funds, and the delays in actually receiving funds which are deposited by credit card or check, a trust is simply not practical for our purposes.”

“Players’ funds at Full Tilt Poker are kept in several deposit accounts throughout the world, all of which are separate and distinct from our operating accounts. Funds are transferred from the players’ deposit accounts to Full Tilt Poker’s operating accounts only after we have earned them. This is not done each time we earn rake or even daily, but as our earnings accumulate, we make periodic transfers of those earnings from the deposit accounts to our operating accounts.”
 

 
So will this legal action by the DOJ help get Full Tilt Poker players’ money back? There is no definitive answer as of yet but this is one more step in the right direction.
 
U.S. Attorney Preet Bharara said in the announcement that Full Tilt “cheated and abused its own players to the tune of hundreds of millions of dollars. … Full Tilt insiders lined their pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company.”
 
As mentioned, Full Tilt owed $150 million to US players on Black Friday ($390 million worldwide) and only had $60 million in its accounts. The DOJ recognizes that U.S. citizens are owned money. On Black Friday, the DOJ seized bank accounts related to FTP which may explain where they got the $60 million figure even though the true total amount of these accounts is unknown. By filing the civil suit and going after personal bank accounts of Lederer, Ferguson, Bitar and Furst, the DOJ may be looking for a way to cover the shortfall.
 
The DOJ recognizes that players are victims and that it is the Department of Justice’s responsibility to protect US citizens from fraudulent companies. There is nothing specific in the complaint that suggests that the government would try to redistribute the funds to players but this does not mean that that there are not ways for players and the government to work together to find a solution. However there is no wording for, or talk of restitution of funds in the complaint as it stands now.
 
The Poker Players Alliance believes that this should be considered a federal crime and the players who had funds with Full Tilt Poker should be considered federal crime victims.
“If the allegations are true, it means Full Tilt committed fraud and deceit of players. Therefore, I think the DOJ should set up some sort of victims fund. I’m not sure if the DOJ would view that people playing poker were victims, but I think that is something that should be pressed” said PPA executive director John Pappas. Federal crime victims have the right to full and timely restitution as provided by the law which is what the PPA is most concerned about. Pappas also said that the PPA is trying to meet with the DOJ and work with lawmakers to include language in the complaint requiring that seized assets be used to replay FTP players.
 
DOJ updates players on intentions OCT 03 2011
 
The DOJ released an update regarding player funds this week. It attempted to reassure victims that agencies including the FBI were trying their best to seize and secure as many FTP accounts and records as possible with the possible intention of returning the funds to players. They however warn that the return of funds depend on many factors such as how much they are able to collect, ongoing litigation and other procedures. As for the timeframe, they stated “We cannot predict the duration of proceedings in this case, other than to state that they will last for many months at the least.”
 

 
Reprinted hereunder is the full DOJ’s statement:
 
After the amended complaint in United States v. Pokerstars et al., 11 Civ. 2564 (LBS), was filed on September 22, 2011, the United States Attorney’s Office for the Southern District of New York received a number of new inquiries from individuals regarding the recovery of their funds from Full Tilt Poker.

At this time, this Office, together with the FBI and other agencies, is attempting to trace, secure and forfeit as much as possible of the funds derived from operation of the fraud committed by Full Tilt Poker and its board members that is alleged in the amended complaint. The Office is also attempting to obtain and examine the books and records of Full Tilt Poker. Many of those books and records are kept overseas. The return of forfeited funds to victims of the alleged fraud may be possible, but will depend on several factors, including the successful conclusion of the litigation, the amount of funds seized and ordered forfeited by the court, and compliance with other procedures the Department of Justice may eventually establish regarding return of forfeited funds to victims who lost money as a result of the alleged fraudulent conduct. 
We cannot predict the duration of proceedings in this case, other than to state that they will last for many months at the least. We will apprise victims of the alleged fraud of future developments as appropriate. General information regarding what is known as “remission” (i.e., return to victims) of funds that have been seized and forfeited is set forth in Department of Justice regulations found at 28 C.F.R. Part 9.

 
U.S. Attorney Preet Bharara had this to say: “Full Tilt was not a legitimate poker company, but a global Ponzi scheme. Not only did the firm orchestrate a massive fraud against the U.S. banking system, as previously alleged, Full Tilt also cheated and abused its own players to the tune of hundreds of millions of dollars.”
 
Bitar, one of the company’s top executives got $41 million and Lederer got $42 million the lawsuit added. Ferguson was supposed to receive $87.5 million although it seems he may have received an amount closer to $25 million so far with very little chance of collecting the rest at this point.
 
For a history of all events related to Full Tilt dating back to Black Friday, please see our articles on Full Tilt Poker.

 
Full Tilt Issues New Statement
On Wednestday, Full Tilt issued a statement to PokerStrategy.com addressing the financial difficulties the company is facing and how it plans to deal with them. According to this press release, about 250 jobs at Poket Kings Ltd. could be affected by this new cost optimization program which aims to reduce costs by approximately 12 million euros.

Here is the entire statement:
“On April 15th 2011 the United States Department of Justice unsealed a federal indictment against a number of individuals employed by major online poker operators. After the issuance of that indictment and a related civil case brought by the United States government, Full Tilt Poker withdrew from the US market. Then in a related action, on June 29th, 2011, Full Tilt Poker had its operating licenses suspended by the Alderney Gambling Control Commission.”

“Notwithstanding the foregoing, Pocket Kings firmly believes it has a very strong future in Full Tilt Poker’s Non-US Markets, and is fully committed to ensuring Full Tilt Poker restores the site and repay players in full. To this end, Full Tilt Poker has retained Sea Port Group Securities, LLC as its financial advisor with regard to raising capital and/or assisting in securing a strategic partner in order to fund continued operations of Full Tilt Poker’s non-U.S. business. The Company is in active discussions with several parties and will provide a further statement in due course.”
 
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