This is a cross post from a thread on 2+2 which can be found hereMicrogaming Poker was launched in 2003, an offshoot of online gambling software provider
Microgaming. Originally called "Prima Poker", it was rebranded to reflect the provider's name in 2006.
The
Wikipedia Mirogaming entry makes interesting reading:
In late February 2008, twenty-seven Microgaming-powered poker rooms closed when their licensee Tusk Investment Corporation Limited went into insolvent liquidation, leaving all players who had funds in those rooms to claim as unsecured creditors in the liquidation.
It is not yet known whether players will recover any of their money.
So, what happened?
On February 15th 2008, online gambling operation eCOGRA announced the
suspension of eCOGRA seals from the six Microgaming casinos belonging to the Casino Action group:
The matter was also reported in the
Casinomeister eCOGRA seals suspension thread.
On February 20th, a representative of Casino Action gave the following
update:
We have been in discussions with eCogra and these purely administrative issues will be resolved shortly.
In no way has our honesty, integrity or customer service been questioned and our reputation speaks for itself!
We are expecting our eCogra seals will be reinstated very soon, but in the meantime it is business as usual.
This turned out to be a quite spectacularly untrue.
Just seven days later, Microgaming issued the following
Tusk licence termination statement, reported by online gambling commentator Brian Cullingworth:
Company Statement:
Microgaming announces that it has terminated its software licence with Tusk Investment Corporation - with immediate effect, after having received Tusk's notification of its plans to put the Company into liquidation.
Microgaming is presently gathering all facts related to this matter and will provide further announcements as and when information becomes available.'
About Tusk
Tusk Investment Corporation Limited operates a number of casino sites and poker rooms:
Casinos:
Challenge Casino
Golden Reef Casino
Music Hall Casino
Nostalgia Casino
UK Casino Club
Big Casino
Poker rooms:
Battlefield Poker
Royal Card Club
Red Nines
Arctic Poker
Raw Poker
Poker.ie
Daily Poker
Flush Draw Poker
Will Bet Poker
Bet Road Poker
Grand Central Poker
Off The Rail Poker
Privy Poker
Berserk Poker
Atomik Poker
Dave's Poker Room
Hetman Poker
Hot Pepper Poker
Poker Seas
TilttAA Poker
Loose Games Poker
CPT Gaming Poker
Ice Bear Poker
GoHard Poker
Caya Poker
Mr Urban Poker
Poker Sweden
Euro Poker Dream
That eCOGRA had described the financial collapse of six casinos and twenty eight poker rooms as an "administrational issue", and failed to issue any pertinent warning as to the severity of the matter at any point, is just one of many damning indictments of the online gambling industry that were seen as this issue continued to play out.
A month later, Microgaming announced that liquidators had been appointed - see the
20th March press release:
COMPANY STATEMENT: UPDATE 20/3/08
ISLE OF MAN - Microgaming can confirm that a Brisbane based liquidator has been appointed by Tusk Corporation and ratified by the regulatory authorities in Vanuatu. Microgaming has been in contact with the liquidator and been informed that they are currently in the process of gathering all the relevant financial information from Tusk Corporation. The liquidator made it clear that this process may take some time, however, Microgaming has been led to believe that affected players will receive information on how to lodge their claims with the liquidator by the end of next week. Microgaming appreciates that the slow process is causing continued frustration among the playing community, but unfortunately it is not in a position to influence the speed of the legal process. Microgaming will endeavour to keep players informed as more information is made available.
On the same day, in the
Casino Rewards adds six casinos to its network article, PR Web announced that the six casinos were to be taken over by the
Casino Rewards group:
March 20, 2008 -- All online casinos operating under the Casino Action group will soon be under the Casino Rewards management, and ready for a grand reopening on March 25, 2008.
All player accounts in the aforementioned casinos will be safely transferred to the Casino Rewards network, with all account balances, withdrawals, and bonus credits available for immediate use
So, in the end things turned out satisfactorily for the customers of the six casinos.
But what about the customers of the twenty eight poker rooms? Who is responsible for paying these players their balances?
These poker rooms were all "skins", or "white labels", of Tusk Investment Corportation, operating their poker branch under the name "My Poker Profit". Skins are glorified affiliate sites which send players to the parent company (in this case, Tusk) but with no access to player funds, the financial side being handled exclusively by the parent company. The "skin" has information on player numbers and maybe other relatively trivial matters, but they have no control over the finances.
For an excellent operator's description of the skin concept, and other relevant matters, see the
open letter to Microgaming written by one of the skin owners, Red Nines Poker:
At the end of 2005, Rednines contacted Microgaming (then named Prima Poker) to explore the possibilities of becoming a skin into the Microgaming network.
We were advised by Microgaming to contact Tusk to get a deal through them instead, since they had a deal in place with Microgaming which made it possible for new partners to get a skin up and running within days.
This process is known as a white label solution, which means that our work on Rednines.com would basically be to get players, and get a revenue share of these players. In other words, Tusk / MyPokerProfit.com would take care of everything from Payment Gateways, holding on to player funds, dealing with Microgaming and handling customer support.
The only information we had access to was the players signed up through Rednines.com, we could see their names, emails and their current rake. We had no way of even making a deposit to a players account without going through Tusk / MyPokerProfit first. In fact any poker room related issue had to go through TUSK.
The poker side of the Tusk collapse has been discussed at huge length in the
27 Microgaming skins to close discussion at the 2+2 forum. I have not read every one of the 3000+ posts, but what I have read represents little useful information; for the most part, players are expressing their general confusion and anger, and a hope that their balances will not be lost.
One startling fact to emerge from the discussion is that the skin operators appear to have been treated with the same scant disregard by software provider Microgaming as the players. If you look again at the
Red Nines open letter:
Rednines.com is no longer running, along with BattlefieldPoker.com and several other white label solutions of Tusk / MyPokerProfit. Microgaming has not reached out to us, nor have we been able to get a hold of anyone with a say in Microgaming that could help us solve what happened. Even though it is several months since Tusk went bankrupt we have at several occasions tried to get a hold of someone that could take responsibility for what happened - unfortunately without success.
I have been told by many that they feel Rednines.com should pay up for player balances and their losses, and I can understand their frustration. The problem is that we never saw any of these deposits, we simply got a revenue share for our players rake. This was around $25,000 gross profit every month for the months we were operative. Microgaming was actually making a bigger profit than us on our players.
I would like to see Microgaming take a stand in this matter, and be the responsible party, which means they should pay for the player balances.
This latter feeling is also expressed by the players, some of whom took it for granted that Microgaming would honour their balances - these comments are taken from the mighty 2+2 thread:
I believe Microgaming has covered players' balances when things like this have happened with casinos running their software before.
Quote:
All the balances are covered by Micro Gaming.
Quote:
Microgaming has been around since before online poker, and I don't think a player has ever lost money when one of their casinos or poker rooms shut down. I'm sure your money is safe.
Quote:
In this case I would think that Microgaming would step in to cover player balances, and as such your money should be safe.
Quote:
I really doubt that Microgaming will allow the money in accounts to be lost.
Unfortunately, notwithstanding the opinions and hopes of both players and skin operators alike, Microgaming has failed to communicate.
In mid-2008, six months after Tusk / My Poker Profit collapsed, Microgaming received a letter from a lawyer representing one of the players who had a large investment, notifying them of a proposed court action. The player in question reported the matter in this short
2+2 post:
My dad sent microgaming a letter notifying them he was intending to take them to court. Within 4 days he got a response from a firm in Toronto( they have hired legal counsel already) saying they take no responsibility and that our accusations against them were erroneous.
So: no comment from Microgaming, apart from one denial of responsibility when they were forced to respond.
There are therefore two questions to ask:
1: Is Microgaming going to honour the balances of the players involved in the Tusk collapse?
They may yet, but it doesn't look good. They have been uncommunicative to all involved parties, and the one occasion that they chose to break silence was to deny any responsability. It may be the case that they are waiting for the liquidation to run its course, at which point they'll survey the damage and take the necessary remedial action.
However, since they know the numbers involved from the liquidation report (see below), they know exactly the extent of their potential liability and should therefore be able to give some sort of indication of their intentions. The fact that they have not done so suggests to me that they are not planning on making the players whole.
So it's not looking good.
2: Should Microgaming honour these balances?
This one's easy. Yes. Microgaming should compensate the poker customers of failed licensee Tusk Investment Corporation, notwithstanding the fact that, as the software provider, they have no legal liability. There are two reasons for this:
In the first place, it's the right thing to do and they've done it before.
It's the right thing to do because the players are, at the end of the day, customers of Microgaming. Players, for their part, then have the confidence of knowing that, whichever licensee or skin they're patronising, they are safe because Microgaming is safe. Good for Microgaming, good for the players.
When the Tropika group failed in 2001, Microgaming paid - see the
Microgaming to pay all Tropika players thread from Winneronline.
When Goodfellas Casino failed, Microgaming paid - see the
Goodfellas thread at Winneronline.
On these occasions, Microgaming did the right thing and should receive all due credit.
Why would they not now?
In the second place, Microgaming have resposibility for having directed the skins to Tusk in the first place - look again at the
open letter at 2+2:
We met Microgaming and their representatives at a hotel in London in early 2006 in connection with the ICE gaming show. During this meeting Microgaming stressed the fact that they were backlogged in the process of accepting and adding new skins to their network already.
We were then advised by Microgaming to contact Tusk (also known as MyPokerProfit.com) to get a deal through them instead, since they had a deal in place with Microgaming which made it possible for new partners to get a skin up and running within days.
This was far away from what we would prefer. Maybe we are guilty of being naive, but as Microgaming said it was an easy way to join the network, and Tusk/MyPokerProfits way of doing business was condoned by Microgaming themselves. This made the deal seem legit and secure for us.
In addition to this, Microgaming said that once we were integrated in Tusk/MyPokerProfit’s system, it would be an easy process to re-convert us over to Microgaming as a regular partner once their queue was less backlogged.
So, Microgaming specifically directed these potential skin customers to Tusk.
And Tusk failed.
If you look at the
liquidator's report to creditors, you can see that during the financial year in which Microgaming recommended Tusk to skins Battlefield and Red Nines, they were hardly doing well - total profit $282,000 for the year.
Maybe in late 2005, when Microgaming made the Tusk recommendation to these skins, they were doing less badly.
Or maybe they only had the 2005 report to go by, which may have been better.
Or maybe Microgaming knew that Tusk was struggling, and tried to help by sending them skin customers. Now there's a thought.
Or maybe they didn't look at the figures at all.
However, at the end of the day,
Microgaming recommended Tusk.
Assuming Microgaming fails to honour the players, they can they expect to receive around fifteen percent of their balances from the liquidation - the $1,400,000 cash in the bank against the $9,000,000 total creditors is about 15%.
Of that $9,000,000, the sum total of the poker player balances is a cool $5,312,923:
Hopefully, Microgaming will break silence on this and offer to compensate the affected players. If they do not, it will be their first failure in these circumstances, and it will send a big, fat, red warning to players that their deposits at Microgaming operations are no longer safe.
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The above is an authorised reproduction, with a few alterations and deletions (images) necessitated by the forum software, of Caruso's original article:
http://www.hundredpercentgambling.com/2009/03/microgaming-poker-scandal-licensee-in.htm---------------
Cliffnotes:-Microgaming Poker encourages new skins to use its white label company, TUSK Investment Corp, to handle player funds.
-February 2008, Microgaming revokes TUSK’s license and TUSK announces insolvency. A liquidation firm is appointed to handle the dismantling of TUSK.
-28 poker rooms handled by TUSK including Battlefield Poker and Red Nines poker are immediately frozen and no one has been able to move money since.
-All player money and skin sites’ money is immediately frozen and remains unattainable.
-Microgaming says nothing to anyone, not the players, skin owners, or liquidators.
-Their ONE response was to a player (bigt2k4) in response to proposed legal action in which they denied any responsibility.
-Finally after a year, the liquidators report that TUSK has enough money left to reimburse players only 15% of their Microgaming account balances.
-These players were Microgaming customers, and through their silence, Microgaming has made it clear they have no intention of reimbursing their players the approximate $5 million that they will lose
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