PokerStars pulled a major coup by settling their indictments with the United States Department of Justice and in the process acquire the assets of Full Tilt Poker. PokerStars agreed to pay a total consideration of $731 million of which $184 million will be used to pay players from outside of the U.S. who are owed money from Full Tilt within 90 days and $547 million to be paid to the DOJ with part of the funds to be used to pay Full Tilt players from the U.S. Imagine the money this company has if they are handing over $731 million in liquid cash.
When we initially heard rumours about a takeover deal of Full Tilt for $750 million, something did not make sense. Why would anyone pay that kind of money for damaged goods when they can get it for a bargain? It all makes sense now as it appears evident that the Full Tilt lost player funds and the public perception that the DOJ’s crackdown on the online poker industry caused U.S. citizens to be parted from millions of dollars was the leverage that PokerStars needed to pull off a deal with the DOJ.
From the original Black Friday indictments, the combined companies of PokerStars, Full Tilt and UB were fined a total of $3 billion of which about $2.5 billion was estimated to be PokerStars’ and Full Tilt’s share. The settlement, while still a lot of money, pales in comparison but the opportunities are endless without the threat of a massive civil complaint by the U.S. government overhead.
Although there were many lawyers at work here to make this happen, the owner of the world’s largest online gambling empire, Isai Scheinberg, has once again demonstrated that he is a force to be reckoned with. It looks like Isai Scheinberg has bought his company’s freedom and that of Full Tilt’s and been given the key to the United States where his company would be allowed to apply for a license to operate when the legalization of poker becomes official. For a mere $731 million, a fraction of what PokerStars has earned throughout the years, the company is now considered clean. Though there is a condition that Mr. Scheinberg can no longer serve on his company’s board.
True to the U.S. legal system, a financial settlement was enough to drop severe criminal charges against the company and possibly even multi-year prison sentences.
For poker players who lost large sums of money, this is a sudden windfall. For U.S. players, it might be a mixed blessing as they may soon be facing the taxman in the process as the DOJ will be responsible for disbursing the funds and it’s likely the IRS will get involved and begin asking questions to players about their poker earnings.
What does this mean for PokerStars? They could possibly resume talks with companies such as Wynn to create an even bigger gaming powerhouse. An eventual public stock offering could be on the horizon which could potentially value the company in the area of $25 billion or more if we compare their estimated earnings to other internet companies. If that were to happen, the Scheinberg family, former Canadian residents and now living on the Isle of Man, already billionaires could become one of the ten wealthiest families on the planet.
Is there a chance that Full Tilt will commence to operate again? Although there have been widespread rumours about a reopening of Full Tilt, such as job postings for staff in Dublin, Ireland, the name Full Tilt is damaged. Is Full Tilt a name without all their pros like Phil Ivey? Will the new owner be willing to sponsor such an expensive team of pros and will players forget the ordeal they went through? Full Tilt was a great poker software but do PokerStars need to support two competing software platforms except to make it more difficult for competitors to take market share from them?
With potential competitor, social gaming giant Zynga, possibly the only company with a market penetration of poker players as vast as PokerStars aiming to get into real money poker, it would not come as a shock if PokerStars were to answer back with their own version of a social media based poker site, especially to cater to their millions of American players who haven’t been able to play on PokerStars, until such time as the gambling laws in the U.S. take form.
With the lawsuits behind them, PokerStars already the dominant force in the real money poker world, can continue their plans for total global domination with the U.S. market now within reach. Although the DOJ appear to have given them their blessing in the U.S. if Federal regulation comes, there is no certainty on how PokerStars would be welcomed at the State level and individual states may have a different opinion under an instrastate regulated system. States may find reasons to set up entry barriers against the company in the hopes of landing settlements from them.