The Rise and Dominance of Full Tilt Poker
Full Tilt Poker (FTP) was founded in 2004 and quickly became one of the most popular online poker rooms, rivalled only by PokerStars. The Full Tilt Poker brand has seen professional players such as Phil Ivey, Chris Ferguson and Howard Lederer compete in tournaments, and FTP has quickly grown into a billion-dollar empire. The company attracted players with innovative tournaments, big bonuses, and an image as "poker's elite." Many players understandably thought their finances were safe, but the reality was different.
The intervention of the US Justice Department and the charges
In 2006, the U.S. Illegal Online Gambling Enforcement Act (UIGEA) was passed in the U.S., prohibiting financial transactions between U.S. banks and illegal online casinos. Many gaming sites withdrew from the US market, but Full Tilt Poker, along with PokerStars and Absolute Poker, continued to operate. This did not escape the attention of the US government.
In April 2011, the FBI blocked the domains of Full Tilt Poker, PokerStars and Absolute Poker. Federal authorities did this as part of an investigation into the companies for money laundering, bank fraud and illegal gambling. There was confusion among the players who often had a lot of money in their accounts. FTP calmed the situation and reassured players that they had nothing to worry about and that their funds were safe.
The Ponzi scheme that shocked the gaming community
The biggest shock, however, came after the FBI intervention. It was revealed that Full Tilt Poker was not actually keeping player deposits in separate accounts as it had claimed, but was using them to pay managers and professional players. The scheme turned out to be a typical Ponzi scheme - new players' money was being used to pay off older players and employees.
According to the federal indictment, Full Tilt Poker owed players more than $390 million when it actually had only $60 million deposited in its accounts. Howard Lederer, Chris Ferguson and Ray Bitar, three of FTP's major shareholders, were charged with embezzlement and misleading players. In fact, the company's executives cashed out huge bonuses while the players had no access to their deposits.
Consequences and player rescue
Following the allegations, FTP went into liquidation and its brand was eventually taken over by rival company PokerStars, which pledged to refund players their money. The gradual payout of deposits took several years, but most of the affected players eventually received their money.
Ferguson, Lederer and Bitar eventually reached a settlement agreement with the US government, paying millions of dollars in fines. While Ferguson and Lederer pleaded not guilty, Bitar pleaded guilty in two federal lawsuits, but neither ultimately went to prison.
Black Friday as a turning point for online poker
Black Friday in online poker revolutionized the regulation of online gambling. The US introduced stricter laws, and legal online poker did not resume in the country (only in some US states) until several years later. Many jurisdictions began to require strict licensing conditions to prevent similar scandals from happening again. To this day, Black Friday remains one of the biggest scandals in gambling history and a reminder of how dangerous unregulated online gambling can be. For many gamblers, it was a day when they lost their life savings, but also an important lesson about transparency in the gambling industry.
Perhaps the worst consequence of the scandal on poker has been the decline in the popularity of the game. A number of top online professionals did not have access to their online poker accounts and therefore took a different career path. Popular TV shows such as High Stakes Poker ended as they were sponsored by the big poker sites. Live tournaments have also seen a decline, documenting the resulting distrust of players towards traditional tournaments as well. The story of Full Tilt Poker is a warning to the entire poker world. Although online poker continues to thrive, Black Friday remains a memento that even the biggest companies can get into trouble if they don't protect the trust and money of their players.
Source - Wikipedia, f5poker, Poker Pro, Download Poker
