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Analysis of Alleged Full Tilt Buyout by PokerStars[ return to main articles page ]

By: Adam Small    [See all articles by Adam Small]
Published on Apr 24th, 2012
For months and months, poker players everywhere have been frustrated by numerous news bits about the possible impending sale of Full Tilt Poker. With hundreds of millions in player balances dangling in the wind, the anxiety over this story has clearly been justified. Today, it appears we have received some real news: PokerStars is apparently purchasing Full Tilt Poker for $750 million and will pay back all player balances worldwide.

So what does all this mean, and what incentive did PokerStars have to make this deal?

The reasons for PokerStars seem obvious to me. They had an opportunity to do three things, all of which are of huge value to their company.

First, they can make good with the DOJ. It's generally assumed that this deal is directly related to PokerStars having come to terms with the DOJ in regard to the charges that were levied on Black Friday. PokerStars covering US player balances is a big part of this. The DOJ can avoid public backlash from US citizens without cost to taxpayers. That's a big win for the DOJ. By making this deal, it's possible that PokerStars will have an opportunity at some point to legally reenter the US market. Even if not, though, ending their squabbles with the DOJ has major value to them.

Second, they're avoiding once again having to contend with the biggest competitor they've had in the last 5+ years. Nobody really knows if Full Tilt would be a force once again under new ownership, but PokerStars spent many millions of dollars trying to outflank them over the years. Now, they can rest peacefully knowing that their market dominance will remain intact for the time being. Instead of finding ways to counter Full Tilt's advantages, such as their software and the Rush Poker concept, those valuable advantages will now belong exclusively to PokerStars.

Third, PokerStars looks like a hero to poker players everywhere. It's a huge win for them from a PR perspective. For any current or prospective customers who ever doubted their commitment to protecting player balances, doubt no more. Their (and Full Tilt's) former US customers will also remember this well if PokerStars is someday back in the US market. PokerStars will forever be the company that swooped in out of nowhere and saved thousands of poker players from getting shorted immensely on their payouts.

As far as what's going to happen with some of the nitty-gritty issues that players and industry people will be concerned about, I have a few guesses.

My first guess is a big one, and probably one a lot of people will disagree with. I think that PokerStars will either close the Full Tilt brand or make it a "skin" of PokerStars. I'm aware that the sources today have stated that there will be two separate sites. PokerStars has some incentive to keep it that way, as there are a number of users who prefer each of the two types of software and have loyalties for one reason or another to a particular brand.

But, there is a lot of baggage associated with the Full Tilt brand. It will always remind people of Howard Lederer and Chris Ferguson, if nothing else. Both FTP and Stars require millions of dollars per year in software development and maintenance costs. FTP has some enormous liabilities in the form of bad affiliate deals that were costing them hundreds of millions per year prior to their shutdown. It'd be easier for PokerStars to simply hit the reset button on all the mistakes Full Tilt has made than to try and dig their way out of Full Tilt's problems.

Regarding rakeback, I previously considered it 5% at best that a new owner would honor existing rakeback deals for players on Full Tilt. That number has gone down to 0% as of today. Whether or not they continue to operate the Full Tilt Poker brand, PokerStars is well aware of the many problems generated by the rakeback scheme. The last thing they want is people trading around and selling accounts based on those accounts having special privileges. I assume they will stick a knife in it on day one and replace it with a loyalty program for all customers, just as they have on PokerStars.

Similarly, revenue sharing affiliates should not expect their deals to be honored. There's some possibility that PokerStars offers a few large affiliates some sort of buyout in order to establish a good relationship with them going forward. I lean toward very few affiliates getting anything at all for prior sign-ups.

I'm sure there will be all kinds of speculation about this posted today, and I'm looking forward to hearing the opinions of many others in the industry. It looks like the path is cleared for players everywhere to get their Full Tilt money back. And no matter where else this takes us, that has to be a good thing.

Comments

  1. WEEEEEEEEEEEEEEEEEEEEE
     
  2. ummm...no deal has been announced
     
  3.  
    Originally Posted by McBain74 View Post

    ummm...no deal has been announced

    That is definitely true. The article's title does say "alleged".
     
  4.  
    Originally Posted by Dan View Post

    That is definitely true. The article's title does say "alleged".

    Not sure how credible this source is but they say the deal is done.

    link
     
  5.  
    Originally Posted by chaz78 View Post

    WEEEEEEEEEEEEEEEEEEEEE


    Word.
  6. Please tell me it's true. One fucking time!!!!
     
  7. so if this does go down does that mean when i log onto my PS acct that I currently cant use for real money play will have money in it that i can w/d?
  8.  
    Originally Posted by poisoneye1986 View Post

    so if this does go down does that mean when i log onto my PS acct that I currently cant use for real money play will have money in it that i can w/d?

    Nobody knows that kind of details - I'm sure they'll all be very clear if and when the deal is completed though
     
    Thread Starter
  9. "Whether or not they continue to operate the Full Tilt Poker brand, PokerStars is well aware of the many problems generated by the rakeback scheme. The last thing they want is people trading around and selling accounts based on those accounts having special privileges."

    Can you elaborate on this? What was so onerous about the old FTPs rakeback scheme that makes it unworkable?
     
  10. What effect though will this have on regulation actually being passed in the US though? I don't think those casinos in the US applying for licenses will be too thrilled with this?
  11. stars should buy ap/ub for the ultimate bet with the doj that would be absolute to all peeps
     1
    7
  12. just buy every pokersite and form a full monopoly on the online poker scene.
  13. buy UB/AP next plz? lol
     
  14.  
    Originally Posted by boneralert View Post

    "Whether or not they continue to operate the Full Tilt Poker brand, PokerStars is well aware of the many problems generated by the rakeback scheme. The last thing they want is people trading around and selling accounts based on those accounts having special privileges."

    Can you elaborate on this? What was so onerous about the old FTPs rakeback scheme that makes it unworkable?


    Sure. The disaster of it is having multiple "classes" of accounts that are a) impossible to convert to other classes and b) based not on customer merit/value but rather something arbitrary like the method by which a customer first registered, possibly years ago.

    This also creates a black market of account exchange where people go to great lengths to trade or purchase "better" accounts or work around rules to create new accounts.

    Finally, because of the rakeback system going through affiliates, many affiliates simply positioned themselves as middle men for customers wanting rakeback. Instead of actually doing their job (generating new leads for poker sites), affiliates were intercepting already generated leads and taking a cut. This does double damage to rooms because it not only costs them money but also discourages some actually valuable affiliates (those who generate true leads) from participating
     
    Thread Starter
  15. This is amazing news.
  16.  
    Originally Posted by andyvanslyke View Post

    buy UB/AP next plz? lol

    Rofl
  17. HUSS?
     
  18.  
    Originally Posted by FlopeDeNuts View Post

    HUSS?

    Re-enter us? sheeeit...Im ready, got assload of bills, bring it..I'll get me that pokertracker5 with the Binford 9000 drivers in it and I'll be slayin some stacks!! (do table selectors filter by country?)
  19.  
    Originally Posted by Adam View Post

    Sure. The disaster of it is having multiple "classes" of accounts that are a) impossible to convert to other classes and b) based not on customer merit/value but rather something arbitrary like the method by which a customer first registered, possibly years ago.

    This also creates a black market of account exchange where people go to great lengths to trade or purchase "better" accounts or work around rules to create new accounts.

    Finally, because of the rakeback system going through affiliates, many affiliates simply positioned themselves as middle men for customers wanting rakeback. Instead of actually doing their job (generating new leads for poker sites), affiliates were intercepting already generated leads and taking a cut. This does double damage to rooms because it not only costs them money but also discourages some actually valuable affiliates (those who generate true leads) from participating

    Why didnt the sites just contact all their best regs and offer them something directly? I always thought they would close that loophole and just take it for themselves.

    Am i missing something here?
  20.  
    Originally Posted by andyvanslyke View Post

    buy UB/AP next plz? lol

    Here it is-> + 1 time...
     1
 
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