Today it was widely reported that Groupe Bernard Tapie could not, in the end, come to terms with the U.S. Attorneys Office nor Full Tilt Poker, in a deal that has been for months, expected to make repayment to former FTP players, while launching the “New Full Tilt Poker”.
The following statement was issued to the media today by Laurent Tapie on the subject:
Groupe Bernard Tapie regrets to announce that, after seven months of intensive work, our efforts to obtain final approval of the United States Department of Justice of the agreement to acquire the assets of Full Tilt Poker have ended without success.
Ultimately, the deal failed due to two major issues.
The parties could not agree on a plan for repayment of ROW players.
GBT proposed a plan that would have resulted in immediate reinstatement of all ROW player balances, with a right to withdraw those funds over time, based on the size of the player balance and the extent of the player’s playing activity on the re-launched site. All players would have been permitted complete withdrawal of their balances, regardless of whether they played on the site, by a date certain, and 94.9% of ROW players would have been fully repaid on day 1. DOJ ultimately insisted on full repayment with right of withdrawal within 90 days for all players– a surprise demand made in the 11th hour, after months of good-faith negotiations by GBT.
The legal complications surrounding the deal – specifically, questions surrounding the legality of the forfeiture under non-US laws – also proved unresolvable.
All of the key assets of the FTP companies reside outside of the United States. A non-US court well might regard the purported forfeiture as a “fraudulent transaction” and declare it invalid or deem the acquirer of the assets responsible for all of those creditor obligations.
Given the $80 million purchase price, and the substantial amount of cash needed to relaunch FTP, those issues ultimately proved too substantial to overcome.
GBT is very conscious of the hopes it has created – among FTP employees that they will retain their jobs, among FTP players that they will recover their balances, and among the entire poker community that the world’s finest poker platform will be relaunched and bring a needed added element of competition to a world market that today is fully dominated by a single operator.
GBT cannot accept the end of those hopes.
For that reason, unless a concrete and legally viable solution is found in the very coming days to save the employees and repay the players of FTP, we will move to our own plan of action.
We understand from press reports that the DOJ may have entered into an agreement with PokerStars pursuant to which PokerStars will acquire the FTP assets. If accurate, we can only assume that PokerStars determined that it was willing to accept these legal and financial risks in order to resolve its own legal situation with DOJ.
If a PokerStars acquisition of FTP means that all FTP players will be fully repaid immediately, we are very happy for the players, as their final and full repayment has always been our priority.
We only regret that such a deal would signal further consolidation of a poker market already dominated by a single player – an outcome that may raise antitrust concerns and that, in the long run, is probably not good for players and for the whole online poker industry.
Let me try to make some of this clearer. According to my sources and all the information I have seen, there have been several different business models presented by GBT as possibilities over the last couple of months. Once it became clear that “repay or otherwise make whole” did not mean what FTP or possibly the DOJ thought that it meant, the plan morphed multiple times, in trying to make that deal happen. What you see below is only part of what potentially may have been the repayment plan, had the deal been completed.
ROW evolving repayment plan via GBT purchase:
Players with an account balance of less than $ 100 could be repaid in full or have that balance credited to their players account in the new company, virtually immediately. According to some sources, this was believed to encompass ~95% of account holders, and is what the media release today in fact, labeled as 94.9% of ROW players. What was left out of that release was that that purported 94.9% of player balances amounted to approximately $ 16,000,000.00.
The remaining 5.1% of players, with an approximate aggregate account balance of $ 168,000,000.00 fell into a different group.
Each player with a balance less than $ 500.00 fell into the “standard players” category.
Each player with a balance of more than $ 500.00 but less than $ 10,000 fell into the “silver players” category.
Each player with a balance of over $ 10,000.00 fell into the “gold players” category. 1
In each of these categories, in order for players to move more than the original $ 100 over to the unrestricted column (available for withdrawal), there would be significant playthrough requirements. The requirements appear to be staggered based on the balances but it is clear that the initial value of the new player account balance on which to play with, if one decided to play, is only a small percentage of the old account balance, based on the activity of the account in 2011. For the players used to playing mid-high stakes, they would need to make a fresh deposit in order to play in limits they were used to. After generating some substantial amount of rake, some more funds would be moved to the unrestricted column. It was expected that in many cases, this would take years to complete if only minimal(relative) deposits/playthrough was accomplished.
If players for some reason, did not partake in reactivating their playthrough, after a period of 6 months, their old FTP account balance would be hit with inactivity penalties. The planned penalty was 5% of the inactive balance per month and would continue until either the player became active in the new company or until their balance was depleted by the penalty charges. If a player had been charged some monthly inactivity fee then became active, the penalties charged would not be reinstated, they would start only with their already depleted balance. Although there was some promise that withdrawals should be approved and completed within originally a two year then a three year period, based on the above requirements and inactivity penalties, many players old account balances would already be depleted in less than the three year period.
Even for players that had 4,5, 6 or 7 figure balances, $ 100 of their balance would be available for unrestricted withdrawal or credit into their new account balance for play on the new site.
Players that requested withdrawal of their $ 100 would likely see that withdrawal take place within 30 days of relaunch.
Returning players would have been required to accept the above scenario in order to be considered for any repayment of old balances.
The above repayment scenario, found to be unacceptable by FTP and reportedly by DOJ as well, being unfair to players of FTP1, morphed several times more over the weeks leading up to the demise of the deal.
One change: GBT added some criteria that ROW players would be required to apply to US DOJ for remission before GBT ever became directly responsible for any balance over $100. GBT would then have made some agreement with DOJ to repay DOJ for payments that DOJ made to any qualified ROW player that were paid from the remission fund. Details on those repayments to DOJ are unclear except that GBT had incorporated some limit of responsibility, falling less than the full account balance, and possibly limited only to the amount of funds actually deposited by the players in question (net deposits), not their winnings or other additional value of account balances. If players refused to apply to US DOJ in this scenario, the new company assumed no further obligation for their balances.
When that scenario also was not approved, lastly, , GBT changed their plan again to no longer require returning players to apply to US DOJ for remission payments, although that was an option. The other option was for ROW players to not apply for remission (still not knowing how much that remission would have paid them), but to opt for a repayment plan solely through the new company. The only thing the new company would promise is that they would “repay or otherwise make whole, at their discretion” without limit, penalties or restrictions, the old balance, within a five year period. They could either reinstate the old balances under this plan or offer to exchange that balance for incentives or options as long as those other options were equal to repayment in full or its fair market value. ROW players would have had to agree to this scenario. There is some evidence that it was expected that most of the “standard” and “gold” players (less than $ 10,000 balances) , had they opted to play on the new site, would likely have been paid within 18 months. In later business models, the idea of inactivity penalties, was removed, then added back, then removed again. It is still unclear as to what the final model would have allowed in that regard.
Additional information not widely known is that although GBT had originally agreed to pay $ 80 million to the DOJ for those assets, they had also asked for a payment plan to do so, paying out only $60 million up front and the balance to follow in an agreed upon plan. Furthermore, GBT had recently made an agreement with one investor who would have invested $ 25 million for the new company. This investor’s identity, (an entity not an individual), is known to this author, and is recognizable in the industry, but since it is unclear whether they were aware of all the particulars of the business plan, shall remain unnamed at this time. What that investor may not have known, is that Tapie has been courting an additional investor, and had they come to terms with investor #2, investor #1 would have been history. (For clarity, neither of these investors are affiliated with the new buyer expected to complete a deal shortly with FTP and DOJ).
Details regarding the licensing plans, professional players considered as representatives, and additional surprising actions, taken by what was once thought to be the “white knight”, will be forthcoming in the next few days.
- There is at least one document that suggests these categories, “standard”,”gold” and “silver” are based on revenue generated during 2011,and not player balances, same values. The categorization of the 3 classes, however, with respect to the different classes of available funds becoming “unrestricted”, remains the same. ↩