www.gamblingcompliance.comHopes for the survival of Full Tilt Poker faded yesterday when Alderney’s gambling regulators revoked the firm’s operator licences for “fundamentally misleading” them over hundreds of millions of dollars of missing funds, dismissing Full Tilt's proposals for financial rescue.
On Tuesday Full Tilt’s lawyers had asked the Alderney Gambling Control Commission’s tribunal to further postpone its announcement, so as not to prejudice ongoing commercial negotiations with a series of unnamed investors.
But after adjournments of 54 days during which Full Tilt attempted to secure a buyer, the AGCC found that Full Tilt, which was last week accused of running a “global Ponzi scheme” by US federal prosecutors, committed a string of serious regulatory breaches that justified the revocation of its licences, and had offered no coherent plans for refinancing.
André Wilsenach, Alderney’s chief regulator, told GamblingCompliance: “The AGCC has been made aware of a series of prospective purchasers. Our view — to the extent that we have been exposed to these buyers — is that we have not seen any indication of a buyer with a credible deal on the table.”
“If they had come to the commission with someone who had been to the US and had signed terms with the DoJ that would have been taken seriously but they did not.”
Full Tilt subsidiaries Vantage Ltd, Filco Ltd and Oxalic Ltd were all stripped of their e-gambling licences for offences including false reporting, unauthorised provision of credit, and failure to report material events.
In a press release published via an affiliate site, Full Tilt said that during the hearing it had "offered the testimony of an investor interested in acquiring the company".
Slamming the "damage done by the commission and its disregard for our players", Full Tilt said: "The commission’s decision to revoke Full Tilt Poker’s operating licences makes it more difficult to execute the sale of the company and hence repay its players."
Still, the AGCC yesterday left the door open for the resurrection of Full Tilt’s business under new management, but its determination notice detailed a withering litany of abuses.
Full Tilt failed to report to the Alderney regulators approximately $331m of funds seized by the US Department of Justice over a four-year period, according to the determination notice.
The 26-page notice also showed that Full Tilt subsidiary Vantage Ltd racked up at least $128m in uncollected payments from players.
“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,” the Alderney regulator said yesterday in a press release.
Wilsenach told GamblingCompliance that Alderney’s forensic accountants had uncovered a two-year-old trail of frozen accounts, which the company had abandoned, moving at every stage to new payment processors.
"It’s very evident that there were a number of covert actions by the DoJ which resulted in a contingency that Full Tilt never provided for," said Wilsenach.
“When the DoJ froze more funds on April 15 that was the last straw. There were a string of accounts that were no longer available for the operator to do anything with.”
A probe by accountants for the AGCC also revealed that Vantage Ltd carried out gambling transactions between players despite not being able to find any payment processors to collect their funds.
This meant poker was being played on "credit", AGCC commissioners ruled, despite Full Tilt assuring the regulator it “does not offer credit to customers, therefore no bad debts due to a default on credit should be incurred”.
The Alderney Commission’s decision, which Wilsenach conceded could now be appealed first at the Alderney Court then to the Royal Court in Guernsey, leaves Full Tilt’s hopes for a sale to an investor, believed to be the French entrepreneur Laurent Tapie, floundering.
Analysts yesterday said that any "white knight" deal would likely try to strip out key assets from the firm’s multi-million dollar legal liabilities, and might trigger the bankruptcy of the operating company.
“If you ring-fence just the technology, maybe you can sell that off,” Mike Campbell, analyst for Daniel Stewart, said. “But the player funds are a large part of the liabilities, and who’s going to come in and pick up that tab?”
One of the company’s prized assets, the marketing and technology back-up offered by Irish subsidiary Pocket Kings was left unharmed yesterday by the AGCC investigation.
Alderney’s commissioners ruled they had insufficient evidence on the Dublin-based operation, where Full Tilt plans to axe up to 250 jobs, to judge whether it was a “fit and proper person to be associated with the operations of an eGambling licensee”.
It was more bad news for Full Tilt’s bereft poker players, though, as the AGCC washed its hands of responsibility for lost funds claims.
“Unresolved claims by players against FTP become a matter for the police and civil authorities. Now that FTP’s licences have been revoked, AGCC no longer has jurisdiction over these companies,” the ruling said.
Alderney’s Wilsenach noted though that the AGCC would now seek to learn lessons from the events of the past five months: “It would be shortsighted of us and any regulator not to go back and retrospectively see what had taken place. The one issue that stands out for us is the issue of player funds and whether there is now a better way to secure those funds.”
Meanwhile, yesterday the United States Attorney’s Office for the Southern District of New York took the step of answering inquiries it had received from players seeking the recovery of their cash from the beleaguered operator, and said that it would now actively seek to pursue the funds on behalf of players, but could not be certain that money would eventually be returned.
The US authorities noted that Full Tilt had secured an agreement for the return of its domain name to allow player funds to be returned but had not used the opportunity because, "Full Tilt Poker did not in fact have player funds on hand to return to players".
“We cannot predict the duration of proceedings in this case, other than to state that they will last for many months at the least.”
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