From :
http://www.rakefree.com/faq13.htm#faqLAP: There were some troubles with that first room you operated. What happened?Dutch Boyd : There were lots of troubles with Pokerspot. First off, the market had changed dramatically in the 9 months it took us to get up and running. Paradise Poker released their software two months after we started the Pokerspot project, and they were worlds ahead of Planet Poker. They still had a lot left to be desired in their software, though, such as the hi-low games, spread-limit betting, and tournaments. We released our software in May 2000 and it was pretty much empty. We didn’t yet have tournaments, which would come a few months later. We didn’t save any money to market the thing, and we had a lot of difficulties running it. And we didn’t build any type of back-office management tools to help us run the thing… so we pretty much had none of the competitive advantages that we set out to have. We were running this little cardroom with hardly any players, and we were having trouble managing it. We pretty much were winging things like customer support and the financial side of things. Things like cashouts were all done manually, and we had no Customer Relations Management solutions… the first four months we were up, we were using Outlook Express to manage all of our customer support emails. We were very much over our head.
Things started looking up in September 2000, when we released our tournaments. We were the first online cardroom to offer online poker tournaments, and none of the other sites would catch up for a good 9 months (when Pokerstars released their software). This started drawing a lot of traffic to the site. We developed our back-office tools and things were going a lot smoother. By December, we were in third place behind Paradise and Planet and looking pretty good. We raked $100k that month and we were growing at an astonishing rate. People loved those poker tournaments. In January, we raked $160k. Things didn’t look like they were going to slow down. And we were finally starting to get to the point where we had a marketing budget.
That January, though, things fell apart. We were pushing all of the credit card deposits through a company called Net Pro Ltd. I met them a few times at the various gaming conferences. Back then, there weren’t too many ways to get money into an online gaming account (and this is still a major problem facing online operators). We couldn’t process credit card transactions like a retail business.
In the middle of January, Net Pro told us that they hadn’t gotten the funds that they processed for us (all of the credit card transactions from the middle of December until then) from their bank. They said it was a temporary problem, and that we’d just have to sit tight for a week while they work it out. At the time, it didn’t seem like it was going to be as big of a deal as it turned out to be. They assured us we’d be getting all of those deposits, and that it wouldn’t take more than a week or so.
Two weeks later, it became clear that it wasn’t a temporary problem at all. They stopped answering their phones and we were left holding the bag for 6 weeks of credit card deposits. We had several hundred cashout requests with no way of paying them out. And without new chips entering the system, all of the action on the site died very quickly.
There were about 1000 players who had money on deposit with us. Many of them were able to charge back their credit cards and at least not be on the hook for the money that they deposited. But there was no way to make good on any of the money that they had won. It was a big disaster.
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LAP: Many people don't believe your story about the PokerSpot funds being kept from you. What do you have to say to the folks that believe you "took the money and ran"?Dutch Boyd : I understand how people can blame me for losing their money, and think that the whole site was a scam to run off with a few hundred thousand in player deposits. And it’s pretty hard to explain to a customer that they aren’t getting their cashout because your site had problems with a business partner. Players don’t understand how complicated it is to run these online sites… when they make a deposit and it shows up in their account, it would make sense that the online site has their money in a bank account somewhere, when in reality that online site is depending on another company to make good on that purchase.
A lot of people naturally assume that I took all of that money and partied, buying a big house in the Carribean and breast implants for a blonde girlfriend. But that isn’t true. When Pokerspot failed, it ruined me. I didn’t have a way to pay my rent, I didn’t have a job anymore, and I had no idea how I was going to turn it all around.
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LAP: What steps did you take to try and recover the money? Dutch Boyd : The first thing we did was try and get our money from Net Pro. We filed a lawsuit, and did everything we could to pressure them into giving us the deposits. But it became pretty clear that they didn’t have the money. In law school, one of the first sayings that you learn is “you can’t squeeze blood from a turnip”. It means that if some 19 year old kid gets drunk and crashes his car into your house, sure… you can sue him. You can probably even with a few hundred thousand. But you’re not going to see any of it, since he doesn’t have any money. He’s judgment proof. With Net Pro, it was the same thing. They didn’t have any money to collect.
So after that, it became clear that we’d have to figure out another way to pay the players back. The only way I could see doing that was by selling the business. We had a few assets… a userlist of about 8500 players, some pretty decent software, and a pending patent for the online poker tournaments we developed. We shopped around a bit and had some offers. We finally agreed on an offer from a large Montreal-based online casino. They agreed to give us all jobs and $1 million for the software… $500k would be ear-marked to pay back the players. We moved up to Montreal and started working with them. About four months into the deal, they called us into their office and told us that they were no longer interested in paying back the player debt… they’d give us $300k for the software (which wasn’t nearly enough to pay back the players) and we could still have our jobs with them. We turned it down and decided we’d be better off trying to salvage some of the deals that we had turned down which would include paying back the Pokerspot players. By then, though, none of the old offers still stood. The original developers had to take other jobs, and without them being able to support the software, I was unable to find a buyer.
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LAP: After Pokerspot's demise what did you do? (i.e. for work, play, etc.)Dutch Boyd : I wasn’t feeling too high on life after the Pokerspot project failed. It is a very discouraging thing having a failed business. You put your heart into something for a few years, and watch it grow. I went through a pretty bad depression after the site went down. I drank a lot and didn’t have a lot of interest in things. I picked up a few consulting gigs for online casinos and cardrooms, which gave me enough money to pay my rent and eat. I played a lot of pool.
This was also the time when I propped in San Jose. I did pretty well for the few months I was out there. I went out to San Jose in 2002 with about $2k and turned it into $25k the first month I was out there. I won a half dozen of the tournaments at Garden City that month, and took second in one of the bigger San Pablo events. So I made a little money out in California… then I moved back to Missouri to figure out what I was going to do.
I picked up another consulting gig earlier this year and moved to Antigua for a few months. It was a pretty relaxing time for me… pretty much just advising a sportsbook out there who was trying to make the next big cardroom. That’s when I came up with the idea of having a rakefree cardroom. I tried to get the sportsbook behind it, but they didn’t see the business sense in giving up a potential $50 million a year in rakes. But I thought it had a lot of potential, so I came back to the states to work on it in May.
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