Full Tilt Poker, PokerStars, and the U.S. Department of Justice announced today that Poker Stars will acquire Full Tilt Poker’s assets in a transaction that ends the DOJ’s civil forfeiture case against Full Tilt. Both Full Tilt and PokerStars ran online poker sites in the U.S., and in 2011 the DOJ charged both of them with violating U.S. anti-gambling laws.
Jeff Ifrah, founding partner of Ifrah Law, was instrumental in negotiating this unusual three-way transaction. The following is a set of questions and answers with Mr. Ifrah about the path-breaking deal:
Question: Would you describe this as a unique case?
Answer: As attorney for Full Tilt, I found this to be the case of a lifetime. I don’t know if John Grisham could have thought this one up. The problem was very complicated and required an understanding of the industry, the players and the U.S. government to help Full Tilt realize the best possible outcome under the circumstances. My firm and Full Tilt had the interests of the players and the future of online poker at heart — we knew that getting the players paid had to be a part of this transaction. A lot of people pulled together to make this a win-win for the players, Full Tilt, and PokerStars, and it was very exciting and gratifying to be involved in.
Question: What is this transaction all about?
Answer: In this transaction, Full Tilt has agreed to forfeit all of its assets to the United States in exchange for a full release from the government’s case against it. As the next step in the transaction, PokerStars will pay the U.S. government $547 million over three years. Part of this payment will be used by the U.S. government to repay former U.S. Full Tilt Poker players
Question: When the U.S. government stepped in and froze the assets of online poker operators on April 15, 2011, many people who were playing poker on the sites lost access to their funds. Will the people who played poker on Full Tilt be paid back as a result of this transaction?
Answer: April 15, 2011 has come to be known as “Black Friday” by online poker players because so many of them lost access to their funds. An integral part of today’s transaction is that Full Tilt’s new owner, PokerStars, will provide enough funds for U.S. players to be repaid in full. However, the funds will be administered and distributed by the Justice Department’s Asset Forfeiture Section in Washington, D.C. It is our hope and belief that Justice will reimburse all players 100% of their funds in the near future.
Question: In addition to the settlement of the government’s case and the repayment of the players, what does this transaction mean for the online poker industry?
Answer: As a major player in the industry, Full Tilt has a great deal of useful software, know-how, and a strong client base. However, many believed that the pending Justice Department case against Full Tilt would taint the assets and make them and the Full Tilt name essentially unusable. Now that the government has taken the assets and sold them to PokerStars, the Full Tilt name will get a new start – to the benefit of all poker players.
Question: Does this mean that PokerStars will now be free to market online poker to U.S. residents?
Answer: Not precisely at this point. In this transaction, neither PokerStars nor the U.S. government is expressing any view on the legality of online poker in the United States. However, as various U.S. states, especially Nevada and New Jersey, move closer to legalization of online poker within their borders, I am hopeful that PokerStars will be able to provide legal online gaming services using the Full Tilt assets that it acquired, among others.
Question: Does this clear up all legal charges pending against the CEO’s of Poker Stars and Full Tilt?
Answer: No, the charges against the heads of both companies will stand, but this deal removes all taint against the assets of Full Tilt.
Ifrah Law is a leading white-collar criminal defense firm that specializes in igaming.