A Literal Awakening
On April 15, 2011, I was taking an afternoon nap, and my girlfriend came barging into the room.
"I heard something big just happened! I think you want to see this."
It hit the news that the Department of Justice busted and shut down three major US poker sites: Pokerstars, Full Tilt, and UB.
At the time, I ran a site called donkdown.com (which had some similarities to this site, as well as some of the same users you see today), and we immediately started an "emergency radio show" to discuss it. The show was an instant hit. I broadcasted along with Bryan Micon and Brandon "Drexel" Gerson, and we did our best to evaluate the situation, and had on a wide array of guests to chime in with their opinions.
After about 4 hours of this, Micon became tired of it. "I'm going to play digital poker, there's not much more to say right now", said Micon. With that, he turned off the show, and we signed off.
Quadjacks, a small site which had unsuccessfully been trying to make a name for itself, saw an opportunity. Realizing that we had walked away from a large and eager audience looking for answers, they picked up the ball and ran with it. Marco Valerio and the others got on and broadcasted for several days straight, with some taking a few hours to sleep while others carried on, and suddenly they were on the map.
Where's Our Money?
Back in poker land, everything was chaotic. Full Tilt had a message up that our money was safe, but was it really? Pokerstars continued operating, but shut out US players. They also promised we would get paid. UB was just down. What was happening? Were our online poker bankrolls gone?
The answer was: "Sort of."
Indeed, the US government finally cracked down on the three largest online poker sites -- UB, Pokerstars, and Full Tilt -- after 4 1/2 years of them clearly breaking the 2006 law ("UIGEA") forbidding the deposit or withdrawal of real money for internet gambling. However, the government wasn't interested in keeping our money. Their plan was simple: Force the sites to stop accepting American customers, have these customers get paid their balances in full, and reap the rewards of gigantic fines that these successful sites would pay to keep themselves up and their principals out of prison.
Unfortunately, there was a small problem with that plan: Two of the three sites were broke.
Full Tilt lies... and lies... and lies
Pokerstars fairly quickly took responsibility. They made a rapid agreement with the DOJ to leave the US market and pay all customers. They even agreed to convert the players' frequent player point (FPP) balances and pay that out, as well. While the FPP payouts weren't quite as generous as they seemed, and were actually somewhat of a Superman III style scam, Pokerstars did indeed fork over the money for the balances. In fact, the money hit our bank accounts very quickly.
Unfortunately, Full Tilt was a different story. Despite repeatedly claiming our money was safe, and continuing to operate in the rest of the world, something was definitely wrong. They weren't presenting the proof of funds, weren't paying any Americans, and were being strangely evasive regarding all questions. It turned out that Full Tilt had stolen nearly all of the money on deposit -- hundreds of millions of dollars -- and were operating the site somewhat like a Ponzi scheme. Full Tilt had naively believed that a day like Black Friday would never come, so they figured they could appropriate all money on deposit, as long as there was barely enough around to cover cashouts. It also didn't help that Full Tilt was having issues with finding a payment processor, so they were allowing people to "deposit" without actually debiting their bank accounts -- with plans to get a processor and do it later. For Full Tilt, Black Friday was partially bad timing, but more about egregious theft. It took many months before Full Tilt admitted that the money was gone. Board member Howard Lederer did an embarrassing interview with Pokernews, where he just made himself look more guilty.
UB was even less forthcoming. The site just vanished. It also became even more clear that the supposed "new ownership" which took over after the 2008 cheating scandal was just the same ol' cheaters -- something which was long suspected. Like Full Tilt, UB also stole all the money. For the second time, UB had blatantly cheated its customer base. Fool me once, shame on you, fool me twice, shame on me! This made new site ambassadors Joe Sebok and Prahlad Friedman look especially foolish, as they had spent the past several months loudly swearing that the "New UB" was honest and trustworthy. Sebok eventually apologized for his role in the whole thing. Prahlad never did.
After some time passed, and the smoke cleared, it became certain that we weren't getting our money from either site, unless a miracle occurred.
And what would happen to online poker in the US? Would it die? Would the remaining smaller sites be busted? Would it somehow be legalized? Nobody knew... at least not yet.
END PART 1
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