Woe Woe Woe is Full Tilt

For anyone who hasn't heard yet, Phil Ivey released a statement via facebook yesterday that is now right on his homepage for all to read, about the current situation going on at full tilt, a company in which Ivey is an investor. Without bothering to summarize everything (you can read the whole thing it at the link above, it is pretty short), suffice it to say that Ivey is disappointed and embarrassed that -- due to the "inactivity and indecision of others" -- full tilt has not yet paid out its U.S. players, which Ivey calls unacceptable and something for which he has filed suit against tiltware, the maker of the full tilt software, and that Ivey is not going to play the WSOP this year when others cannot due to failure of full tilt to return their funds. The most interesting part of the release to me is the last paragraph, where Ivey says, "I sincerely hope this statement will ignite those capable of resolving the problems into immediate action and would like to clarify that until a solution is reached that cements the security of all players, both US and International, I will, as I have for the last six weeks, dedicate the entirety of my time and efforts to finding a solution for those who have been wronged by the painfully slow process of repayment. It certainly sounds to me like Ivey is of the opinion that it is somehow someone's decision who is involved with the management of full tilt not to pay out the players. While I doubt that that is expressly true just as I wrote it there, something tells me that Ivey -- a clear insider with mostly everyone involved with full tilt management among the professional players' circuit -- knows a lot more than he is leading on here, and that he is directly and deliberately trying to send a strong message to one or more of his poker "friends" via this public announcement, since his private urgings do not seem to be working.

But the thing that has me much more pissed is the stone cold confirmation -- unfortunate though it is -- of literally every single thing I've said here about full tilt over the past month or so since it became obvious that player cashouts were not forthcoming from the U.S.'s formerly second-largest online poker site, coming out of ftpdoug on the 2+2 boards. For those who don't know (and I am no kind of 2+2 hound, but I've spent enough time there to know doug from various full tilt issues in the past, he is confirmed legit), ftpdoug works for full tilt and has appeared countless times in the forums -- and I think even here at my blog way back in the day after I ranted about full tilt intentionally pulling the plug on the servers on a night when they were going to have to pay out massive overlay across the board in their nighttime mtts -- to explain full tilt's position, give updates on status of corrections and problems, and just to generally disseminate information from full tilt to the masses.

Well, ftpdoug posted the following the other day on the 2+2 forums, and I'll just repost the whole thing here for those who have not yet seen it:

To our customers:

We acknowledge that our lack of communication reflects poorly on us, and rightfully so. We have been too optimistic in estimating how long it would take to sort through the issues we have faced since Black Friday. And as frustrating as the delays have been for us, we recognize that it cannot compare to the frustration you have been feeling.

We further recognize that our lack of communication has led to much speculation and many unsubstantiated rumors, which have often been contradictory. With this message, we hope to clear up as much confusion as we can, while at the same time keeping in mind the constraints imposed on us as a result of the cases brought in the Southern District of New York.

The most pressing questions:

1. When will the US players be paid?

We still do not have a specific timeframe for this. There has been, and remains, no bigger priority than getting US players paid as soon as possible, and we have been working around the clock to get this done.

2. Is FTP bankrupt?

No. FTP's worldwide business is healthy and, although we've had some short-term challenges, it is operating as normal.

From: http://www.gamblingcontrol.org/userf...2020110516.pdf

"The AGCC’s investigation into the affairs of it licensee Vantage Limited, trading as Full Tilt.com, is ongoing; initial investigations indicate no reason to believe that player fund transactions are fundamentally threatened by any consequence of the US authorities' actions. Delays caused by these actions are in the process of resolution, with normal service now being restored for non-US players. We understand that progress in respect of US player fund repatriation is anticipated and will be the subject of a separate statement from Full Tilt in due course. The Commission will remain engaged in this process."

3. What is the company doing to speed up payouts to the US players?

We are raising capital to ensure that the US players are paid out in full as quickly as possible.

It is important to remember that Full Tilt Poker has always paid out our players, even in the face of previous legal obstacles or factors not in our control, such as payment processor defaults and prior actions by the US government which resulted in US player funds being seized.

In all of these previous instances, Full Tilt Poker has covered these losses and intends to do the same again.

4. Why are the Full Tilt Pros remaining silent?

It is not their choice. But they are constrained by the pending legal actions.

As a final note, we understand -- and have always understood -- the effect that our brief statements have had not only on our customers, but also on our reputation. It has not been easy to stay silent and watch the damage being done to our company brand and personal reputations, but we need to be mindful of the complicated and serious legal issues raised in the pending cases.

The emphasis in blue is mine, not ftpdoug's, but it is those two highlighted portions which just smack me in the face most. So, for starters, for anyone who actually doubted that full tilt did not have the cash on hand to pay out the U.S. players, ftpdoug has now confirmed it. They have to raise capital in order to pay out the U.S. players. That's it, plain and simple. If you don't know, "raise capital" is a fancy way for saying "get money from someone". Period. They don't have sufficient funds on hand to pay out their U.S. fan base. I've said it for weeks, people have commented that I am overreacting, etc. Well, now you can't say that anymore.

And by the way, let's be clear about one thing. "We're raising capital" is exactly what Lehman Brothers CEO Dick Fuld said over and over and over for the month or two immediately prior to Lehman's declaration of bankruptcy. "We're raising capital" unfortunately means the same thing in this case as "We're hoping to raise capital", because full tilt does not yet have a deal in place, and again it is obvious at this point that they will not have the funds to pay out the U.S. players unless they do in fact raise that capital, by some accounts (admittedly this is pure rumor I believe) estimated to be as much as $150 million. Dick Fuld just needed 4 or 5 billion invested and said for weeks that he had several options to choose from. But then his U.S. competitors turned him down. Then Citi and Bank of America said no thanks. Eventually it was down to the Korean Investment Bank, who was apparently very close to agreeing to a deal but walked away at the 11th hour over issues over who would have control over the company after the investment. It's amazing, really, how quickly "We're raising capital" can become "We couldn't raise the necessary capital", especially when your underlying business model may be suspect to a lot of potential investors out there.

Will someone invest $150 million in full tilt, to give them enough money to pay their U.S. players, on the hopes that they can survive and provide a good return on that $150 million investment with the site's flagging presence outside the United States, and dim prospects of ever re-entering the lucrative U.S. market? Would you invest $150 million in that business? Maybe. They do have Rush Poker as others have pointed out, they do seem to have the majority of the biggest worldwide poker pros as sponsors (for now), and they have those multi-entry tournaments that no one else seems to have yet. So there is probably some intellectual property assets there worth a pretty penny. But if you think I think that them "raising capital" sufficient enough to pay out their U.S. players is a done deal, then you crazy.

And moreover, the way I see it, full tilt doesn't really think it's a done deal either, despite a lot of the rhetoric you see from the company to the contrary. I can't help but think that ftpdoug's use of the word "intend" where I highlighted it above instead of saying instead something like "and full tilt will do so in this case as well" I think says it all. Even in writing his comments, ftpdoug in my mind has some inside knowledge that the capital-raising talks are far from any actual commitments of funds, and to me his use of the word "intend" there stands out like a sore thumb. And I should mention as well that the company's recent response to Ivey -- essentially positioning Ivey as the reason why full tilt may be unable to secure new financing -- sounds exactly like what the beginning of the end would sound like to me, if that proves to be what this is.

I'm taking a stand here guys: I have officially flipped from the side of believing we would eventually get paid out by full tilt -- where I've been ever since the moment I read about the indictments and arrests of Black Friday -- and now I think it is probably slightly more likely than not that we do not get full payouts from the company. I referred to this a couple of weeks back, but something about a bunch of professional poker players being in charge of the company ultimately does not at all give me the sense that my best financial interests will be in the forefront at all times. Sure, Lederer's house may be for sale for $30 million right now, but like I said last week here, I guarantee you he wont' go through with it if (1) it's not enough to pay the U.S. players and save the company anyways, and (2) he's the only poker pro putting up his own money like that. And I'm not hearing anything else out of anyone affiliated with the site, or any poker pro for that matter, or now ftpdoug or the full tilt press releases, that lead me to believe they are any closer than I am right now to raising $150 million of fresh cash for their business.