By Nathaniel Popper, Los Angeles Times
July 1, 2011
A leading online poker company shut down by federal prosecutors is set to be bought by a group of European investors in a deal that could allow U.S. players to recover as much as $150 million.
Full Tilt Poker was one of three online poker sites that had its American operations shut down on April 15 when the founders of all three sites were indicted on charges of bank fraud, money laundering and violating gambling laws.
Full Tilt, Poker Stars and Absolute Bet continued to operate outside the United States, though Wednesday, Full Tilt's international operations were suspended by regulators in the British Channel Islands.
Full Tilt has not been able to pay back the roughly $150 million that U.S. players reportedly had in their accounts when the indictments were announced in Manhattan federal court, sparking outrage among players and a lawsuit from a top professional poker player sponsored by Full Tilt.
Poker Stars has returned more than $120 million that players had in their accounts. Absolute Bet, the smallest of the three companies shut down, hasn't repaid players.
Attorneys associated with Full Tilt said the company signed an agreement Thursday with a group of investors who would put up enough money to pay back players and in doing so attain a majority stake in Full Tilt's Irish parent company, Pocket Kings. The attorneys spoke anonymously because of the sensitivity of ongoing negotiations with the federal prosecutors in Manhattan who brought the charges.
The money is also intended to allow the company to settle a civil lawsuit brought against it by the U.S. attorney's office at the same time as the criminal indictment, the attorneys said.
The government is seeking to recover $3 billion from Full Tilt, Poker Stars and Absolute Poker.
A spokeswoman for the U.S. attorney's office declined to comment.
The player who sued Full Tilt, Phil Ivey, sat out the World Series of Poker, which is currently taking place in Las Vegas, to protest the company's inability to repay players. Ivey was set to withdraw his lawsuit in Nevada state court Thursday, according to his attorney David Chesnoff.
"Mr. Ivey intends to dismiss his lawsuit as he believes Full Tilt is taking steps to see that the players are paid," Chesnoff said.
The deal was signed just a day after Full Tilt Poker's European operations were shut down by the gambling authorities on Alderney, a British crown dependency where Full Tilt is licensed. The Alderney Gambling Control Commission said in a statement that Full Tilt was "operating contrary to Alderney legislation. The nature of the findings necessitated the taking of immediate action in the public interest."
Attorneys close to Full Tilt said that the deal reached Thursday was part of broader negotiations to clear up its legal problems with Alderney and U.S. prosecutors.