Let’s talk about Black Friday. No, not the day after Thanksgiving where people in America ‘give thanks’ by getting up at 4am to save $50 on a flat screen TV.
It happened, it happened fast and it completely annihilated what was a flourishing industry in the United States. – Brian Balsbaugh
I imagine most players woke up on Friday April 15th, 2011, expecting nothing particularly special to happen. Little did they know they were in for a surprise.
Because when they logged into their PokerStars, Full Tilt, Absolute or Ultimate Bet account, they were greeted with a message from the Department of Justice who said this domain was seized by the FBI. Players quickly dubbed this day Black Friday.
So, what the heck happened? Well, it was a series of events. It started with the FBI arrested Daniel Tzvetkoff. He was the head of Intabill, a now defunct payment processor that helped poker sites mask transactions to look like retail store transactions (and not gambling transactions) so banks would process them.
The FBI twisted his arm a bit, threatening him with a 75+ year prison sentenced. So he sang like a canary, outing his clients such as PokerStars and Full Tilt.
New York US Attorney Preet Bharara was able to create a case of using this information, starting with charging these sites with a Class A misdemeanor for running a game of chance (illegally) within New York.
Side note: The Unlawful Internet Gambling Enforcement Act is a type of law that needs to be attached to a crime/charge. Long story short, it can’t stand alone which is the reason why Bharara started with the Class A misdemeanor.
This prompted the FBI and Department of Justice to seize the 4 domains and indict 11 people associated with the companies and related processing companies on felony charges that included money laundering, fraud, violating the UIGEA, etc.
The people indicted include:
The Department of Justice also froze 75 banks in 14 countries and PokerStars and Friends were forced to close up shop to US customers, which accounted for as much as 40% of their business. And that was just on Day 1.
The months – years, in some cases – were interesting, to say the least. It was business as usual for PokerStars. They cashed out American players within the first couple of weeks following their indictment. And they were the only ones.
A couple months following the indictment Blanca Gaming, the parent company to Ultimate Bet and Absolute Poker, released a statement saying they were going to file bankruptcy. A couple days later they laid off their pros.
Full Tilt Poker said in a statement there wasn’t a legal payment channel for them to use for cash outs, and that they had no accounting of the millions taken by the DOJ.
This didn’t go over well with players …or the US Government. It sparked multiple investigations that led the Alderney Gambling Control Commission to suspend their license on June 29th, 2011. No one was able to play on FTP after that.
Then news broke that Full Tilt was seeking investors so they could pay back players (as much as $150 million).
Shortly after more news broke saying the US Government was claiming Full Tilt was a ponzi scheme because several members of the company (including Chris Ferguson and Howard Lederer) received hundreds of millions – more than $440 million – since 2007. MORE than enough to pay players back.
This turned into an ordeal outside of the Black Friday indictments. Both Howard Lederer and Chris Fergus had civil suits to deal with that resulted in them giving up millions in profit sharing revenue, properties, vehicles and bank accounts. They both managed to avoid jail sentences, as did Isai Scheinberg (for now). But the others? They weren’t so lucky.
On 12/20/2011, Absolute Poker co-founder Brent Buckly pled guilty to misleading banks, setting himself up for a 12-18 month prison sentence. He ultimately was sentenced to 14 months.
Ira Rubin entered a plea agreement, pleading guilty to 3 of 9 counts of conspiracy to commit bank fraud. He’s expected to serve 18-24 months.
John Campos was hit with a single misdemeanor and Chad Elie pled guilty to conspiring to commit bank fraud and for operating an illegal gambling business.
In April 2013, Ray Bitar reached a deal to plead guilty to criminal charges. He was sentenced to time served and was ordered to give up his assets which included various homes and $40 million. Bitar got off light on account that he’s a Class IV heart transplant candidate. He was facing 65 years in prison.
Things are only getting worse for him health-wise. According to Allen Cunningham (previous FTP Red Pro), Ray is unlikely to live longer than 2 years and is almost broke. Most Black Friday victims would say he’s getting exactly what he deserves.
Players got the short end of the stick. Not only could they not play a game they loved – and for some, the game that paid their bills – but they were out millions of dollars to boot. Approximately $140 million, if you want a more concrete number.
Some players were forced to find jobs. Others turned to live poker. The rest moved to online gambling friendly countries like Canada, United Kingdom or Costa Rica so they could continue playing, assuming they had anything left for bankrolls.
Full Tilt customers waited nearly 3 years before they got their money back. The first year players were waiting to see if Full Tilt would get bought out by Groupe Benard Tapie. But that fell through. Shortly after PokerStars reached an agreement with the Department of Justice to acquire Full Tilt Poker.
The settlement was worth $750 million dollars. $547 million would be paid over the next 3 years which would be used to reimburse previous US-based FTP customers. That reimbursement process finally started on February 28th, 2014 when The Garden City Group paid out more than $76 million to 27,500 players.
One recipient was Mike Sowers, whom won of the largest tournaments on FTP just weeks prior to Black Friday which netted him $500,000. Then there was Josh Brikis, who woke up with an extra 5-figures in his bank account.
My thoughts on [April 15, 2011] were never that I wasn’t going to get my money, Josh Brikis said. “It grew [to that fear] over time … Like everyone else I just wish that day never happened and I could just sit in my house and not leave my son to go play online poker. And today … well now I wish I bought all the FTP money everyone was selling.”
Then you have Dan “Jungleman12” Cates who was rumored to have one of the largest outstanding balances on Full Tilt Poker. He tweeted that he got his wire on February 27th, 2014.
Not all players were paid back in February, though. According to John Pappas of the PPA there was still another $60-ish million owed to players. Those monies were sent out throughout 2014.
For the most part …Black Friday is a mere memory. (Okay, okay …a nightmare.)
Nowadays the biggest reminder of Black Friday is whenever there’s news that PokerStars is trying to enter the legal/regulated US market. That was part of their deal with the DOJ – that they could reenter the US market depending on each state’s laws. However, they’ve had no luck as of yet. Many blamed that Isai Scheinberg (founder of PokerStars) still being apart of the day-to-day operations.
So what did PokerStars do? They sold their company. They sold it to Canada-based Amaya for $4.9 BILLION. The move was to separate Isai Scheiberg from the company so PokerStars would have a chance at getting some playing time in the US. For now they’re still riding the pine. But given how persistent PokerStars is (and has been), who knows how long that will last. Anything is possible.