“To win at poker you have to be patient. This almost feels like a game of poker within the actual game,” says Daniel “Jungleman12” Cates. The problem? “In this game, I have no idea what to do.”
Cates is 23 years old and has won approximately $7 million in his career as a poker pro. For the last 18 months, though, 80% of Cates’s bankroll — and around $145 million belonging to more than 100,000 other players — has been held in limbo by the United States Department of Justice. (Cates is currently being staked by a fellow pro.) On April 15, 2011, a day that has been dubbed "Black Friday" in the poker community, the DOJ shut down the American operations of three major sites: PokerStars, Full Tilt Poker, and Ultimate Bet.
PokerStars had enough money in reserve to quickly pay off its American players, allowing them to withdraw whatever amounts they had in their accounts. But Ultimate Bet and Full Tilt both lacked the funds to make players whole. Ultimate Bet was a ghost ship of a site, mired in corruption, cheating scandals, and other problems. It basically vaporized — along with its customers’ cash. Full Tilt had also been badly mismanaged but was beloved by players and ran on superior software.
Anticipating that Full Tilt’s money problems could be resolved, players quickly began buying account balances from other players. Those whose stakes (and net worths) were mostly tied up in Full Tilt needed cash; their better-capitalized peers gave it to them in exchange for the rights to whatever money was returned by Full Tilt and the DOJ down the road. Transactions were conducted via Twitter, e-mail, and a popular poker-oriented chat board called twoplustwo.com. Says Dan Fleyshman, former CEO of the site victorypoker.com: “The price on the dollar scaled down as things went on [with no resolution in sight]. It started at 85%. Then it went down to 30 or 40%.” Says Rich Ryan, a senior staff writer and producer for PokerNews: “By September of 2011, people were selling their Full Tilt account balances, via Twoplustwo, for as little as one cent on the dollar.” In typical poker-player fashion, most of these deals, regardless of the sums, were completed without contracts.
In January of this year, Full Tilt and the DOJ worked out an arrangement in which the DOJ took ownership of Full Tilt with the intention of selling it to raise funds to pay back American players. Seven months later, on July 31, PokerStars purchased Full Tilt from the DOJ. Businessweek estimated that the transaction would make $547 million for the U.S. government. At the time, the DOJ vowed to reimburse Full Tilt’s U.S. players; Stars said that it would take responsibility for returning $184 million to non-American customers.
PokerStars followed through on its end of the deal and recently relaunched the Full Tilt site outside of the U.S. In an announcement to Americans, though, this was their ominously bureaucratic-sounding and detail-free advice for recouping funds: “file petition with the DOJ through a remission process which will be administered through the DOJ.” Says Cates: “Initially, I thought this was good news. But unfortunately, the DOJ hasn’t told me or anyone anything. They don’t even answer e-mail.”
According to Steven L. Kessler, an attorney based in New York City who specializes in forfeiture law and is representing high-stakes pro Adam Webb's attempt to recover nearly $59,000 in this case, it's business as usual to make seized funds difficult to recover. “Any forfeiture case is about fund-raising,” he says. “In one of its publications [the 'National Asset Forfeiture Strategic Plan 2008–2012'], the government talks about bringing in $2 billion in forfeitures and returning only $700 million.” Recouping Full Tilt funds will be “a long, drawn-out process to the point that you will need to be out five or six or seven figures for it to be worth pursuing. The system is set up so that you are discouraged from going after your money. There is the cost in terms of emotion, time, effort, and cash. You can do the claim yourself, but the discovery process will require you to show tax returns and bank statements. ... It's virtually impossible to do without an attorney. Plus, look at what you’re exposing to get back what belongs to you. You have to wonder if it will turn into a tax case.” He adds that PokerStars administering its own payment, in a simple and straightforward manner, was an anomaly. “I am surprised that they let PokerStars do it that way,” he says.
In a statement issued on Nov. 14, John Pappas, executive director of Poker Players Alliance, an online-poker lobbying and support group, said that he believed “completion of a claims process is a long way away.” Attorney Kessler believes that none of the money will be paid out before the DOJ receives all $547 million Poker Stars is paying it, and that won’t happen until 2015.
Nonetheless, the seeming inevitability that there will, eventually, be a repayment process has lifted the market for Full Tilt accounts. There's no question that the U.S. government has the money to make the reimbursements, and the DOJ recently announced a search for a claims administrator to consider petitions for refunds. Former VictoryPoker CEO Fleyshman says 70 or 80 cents on the dollar is a reasonable price.
In light of all the uncertainty, it’s a good bet that Alec “Traheho” Torelli has the best possible attitude about the Full Tilt contretemps. “Because it’s something I can’t control, I haven’t spent a lot of time worrying or tracking the progress,” says Torelli, who won his first million before turning 21 and has about $30,000 stuck on Tilt. “You get happy and sad and it creates so much emotional volatility. Right now, as far as that money is concerned, I am in the exact same situation as somebody who’s been obsessing over it, and I probably have an extra 200 hours that I devoted to more productive things in my life.”