Black Friday History Week: Warning Signs

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12 April 2012, Created By: PokerListings.com
Black Friday History Week: Warning Signs

When George W. Bush signed the Unlawful Internet Gambling Enforcement Act into law in 2006 he sent a message to online poker rooms: Stop offering online poker to the American market.

Some, like Party Poker and 888.com’s Pacific Poker, decided to heed that warning and pull out of the US despite losing the majority of their customer base.

Others like PokerStars, Full Tilt and UB/AP adopted a different interpretation of the new legislation and ramped up their US-facing marketing campaigns.

Following Black Friday, Full Tilt-sponsored player Brandon Adams told the Chicago Tribune, "Along with everyone else in the poker world, I'm shocked."

"The expectation was that there would be warning signs. These sites went from multibillion-dollar enterprises to on the ropes overnight."

But in hindsight we know there were warning signs and that they should have tipped us off to an impending Black Friday event. Here are the three biggest.

Department of Justice vs. Neteller

The first concrete sign that the US government was serious about enforcing the UIGEA came in January of 2007 when two of Neteller’s founders were arrested for what the Department of Justice alleged to be unlawful transactions between online gaming companies and American customers.

Preet Bharara
Preet Bharara became a US Attorney in 2009, two years after the Neteller case began.

Just days later Neteller announced it would no longer handle money for gamblers in the US.

After paying $136 million and undergoing a two-year period of intense DOJ scrutiny to make sure they’d stay out of the American market, the DOJ finally dismissed the complaint.

The Neteller case was a clear indication that in order to go after online poker rooms, the DOJ would be targeting payment processors.

IntaBet’s Daniel Tzvetkoff Arrested

One year almost to the day before Black Friday hit, known payment processor Daniel Tzvetkoff was arrested in Las Vegas on a litany of charges, including bank fraud, money laundering, conspiracy to operate and finance an illegal gambling business as well as processing electronic fund transfers in violation of the UIGEA.

It was the first time the UIGEA had officially been cited in an arrest, which should have started the alarm bells ringing.

The main reason Tzvetkoff’s arrest should have raised the red flag, however, was his ongoing legal problems with PokerStars, Full Tilt Poker and Absolute Poker.

It was reported by Australia’s Courier-Mail that Full Tilt’s parent company Kolyma Corporation had sued Tzvetkoff’s company Intabill for $52 million.

With intimate knowledge of how online poker rooms were moving money to and from the US, Tzvetkoff had valuable information to trade with the DOJ.

Phantom Deposits on Full Tilt Poker

Ray Bitar
Phantom deposits account for roughly $130 million of Full Tilt Poker's shortfall.

Near the beginning of 2011 players were beginning to report making deposits on Full Tilt and having money credited to their accounts, despite it never actually leaving their bank accounts.

Most chalked it up to red tape delays but some saw a likely connection between the payment processing problems and the UIGEA.

In this thread started in late 2010 numerous players talk about months going by without money being taken out of their accounts.

In a very prophetic post on Two Plus Two, “Snipez” writes the following in reference to money being credited to accounts without being withdrawn from player’s bank accounts.

It’s the first use of the word “phantom” in connection to this problem, and to make things more mysterious, Snipez joined the day he made this comment, and has never posted again on the forum.

There is no way that Full Tilt doesn't know about this. Lots of customers are emailing them asking why the money has not been taken from their account. It boggles my mind why they don't just disable Quick Deposit on the accounts in question? Of course people are going to begin gambling more aggressive and degeneratively with their "free phantom money." It's almost like a trap but I can't see any legal recourse for an offshore gambling site against a U.S. citizen. They are going to lose a lot of money from this and it's gonna be a disgusting mess for them and ruin their reputation.

By the time Black Friday rolled around Full Tilt Poker had accepted roughly $130 million in phantom deposits, a fact they never revealed to the public.

Check out our Black Friday Bulletin Board for a full accounting of what's happened since Black Friday.

Read More Black Friday History Week posts:

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