FTP’s $60M Shortfall

June 16, 2011 - 3:33 PM EDT

From at least September of 2010 to February of 2011, Full Tilt Poker was crediting funds to US player accounts for deposits that never left their bank accounts.

As has always been the case, players who deposited by electronic funds transfer (also known as EFTs or “e-checks”) received the deposited funds instantly in their Full Tilt Poker accounts. Typically, these funds would be debited from the players’ bank accounts a few business days after their deposit.1 However, during the time period in question, many US players found that these funds were simply never taken from their bank accounts. Full Tilt had given them funds on their site for nothing.2

This story was known to the public for some time, but it was not immediately clear why this had happened or how widespread it was until May 23rd, when payment-processing middle-man Bradley Franzen pleaded guilty to various charges related to the Black Friday indictment. The US Attorney of the Southern District of New York released a press release about Franzen’s plea bargain and his allocution, which included the following paragraph:

According to his plea allocution and the Superseding Information, FRANZEN admitted that in early 2011 he had been asked to help Full Tilt Poker deal with a $60 million shortfall created by the company’s inability to find a payment processor to process transactions involving U.S. player accounts. The company was facing the shortfall because it continued to credit funds to player accounts despite being unable to actually debit (or”pull”) funds from customers.

In other words, this was not simply an accident, as many had suspected. Full Tilt Poker was actually accepting deposits and crediting player accounts without payment processors in place to collect the money. Full Tilt had effectively given players loans without telling them, under the assumption that they could collect the debt later. According to numerous sources inside both Full Tilt and PokerStars, FTP viewed this as an opportunity to gain US customers who were unable to deposit on Stars.3 This activity was so rampant that, according to Franzen’s allocution, the shortfall reached $60 million at its peak. Even for a company of Full Tilt’s size, that is a very large amount of money.

By early March of 2011, Full Tilt had begun attempting to collect the debts that resulted from these unprocessed deposits. The company sent out thousands of e-mails to players like the one below (with personal information redacted). The e-mail was followed a few days later with an attempted withdrawal from the recipient’s bank account.

These e-mails were the first time that most of these players had learned of the problem, so many thought there had been a mistake and some thought they were fraudulent. Some players changed their bank account details, reversed the transactions, or emptied their bank accounts before Full Tilt was able to remove the funds. Others thought that they had been hacked when they saw the money removed from their bank accounts.

A Full Tilt employee, who asked to remain anonymous, reported that FTP’s cashier and their regular customer service departments, which were already struggling to handle a typical workload, were overwhelmed by the ordeal. Other departments were reportedly called in to deal with the large volume of e-mails, reversed transactions, and complaints.4

The collection efforts were not entirely successful. Our source said that management told him early in the process that roughly 70% of attempts to collect had been successful thus far.5 Management reportedly presented this number as justification for the actions of the company. Our source went on to say that he believes the success rate dropped significantly as players realized what was happening and began to empty or close their bank accounts to avoid the charges.

Regardless of the success rate, Full Tilt did not have enough time to even attempt to collect all of the funds before Black Friday stopped their efforts. Subject: Poker has been unable to learn exactly what percent of unprocessed deposits the company had gotten to before the indictments, but we have confirmed from multiple sources that they did not finish.6 Any future attempt to collect the remaining funds would appear to violate Full Tilt’s domain name agreement with the DOJ, which includes the following:

While withdrawal of funds is expressly permitted, the deposit of funds by U.S. players is expressly prohibited. FTP agrees that any financial transactions with players located in the United States shall be strictly limited to the return of those players’ funds held in account with FTP.

Presumably, some of the players who were never charged for their deposits still have money on the site. So, it stands to reason that Full Tilt will be able to retrieve some of the remaining funds by simply deducting player balances directly from their accounts. What is not yet clear is how much money is unrecoverable and whether this is related to FTP’s failure to repay US players quickly.

Edited on 6/16/2011 4:27 PM EST: Fixed a number of minor grammatical errors. Thanks to Nate Meyvis.
Edited on 6/16/2011 5:44 PM EST: Added some clarification to the paragraph about other Full Tilt departments helping with the collection efforts and the accompanying footnote.


  1. This lag of a few days naturally leads to the possibility of fraud. This is a significant cost for poker sites.
  2. Subject: Poker reviewed the records of one such individual, who was immediately charged for only about two thirds of his dozens of deposits. We’ve heard from many US players who say that they made many more deposits and were charged for none of them. We’ve also heard a lot of anecdotal evidence about people who reportedly intentionally scammed this system for tens of thousands of dollars, depositing the maximum of $2,500 repeatedly. It is not yet clear why this affected some EFT deposits but not others.
  3. PokerStars was discouraged from accepting deposits without payment processors in place by its licensing agreement with The Isle of Man Gambling Supervision Commission, which requires it to keep player funds in a separate account. Subject: Poker has heard from many reliable sources that Stars never engaged in such activity, and we’ve seen no evidence that suggests that they did. We are actively working to learn about any potential similar activity by the other sites that served US players at the time in question.
  4. This same Full Tilt employee, who displayed detailed knowledge of these events, reported, “For a while basically the whole company was dealing with players complaining about it, threatening to charge it back etc.” A different anonymous source, a manager in an unrelated department, suggested that this claim was exaggerated. Full Tilt is a large and opaque organization, so it is possible that both sources are describing the pieces of the company that they personally have seen. Both sources agreed that it is not uncommon for FTP employees to answer e-mails that are meant for other departments.
  5. Subject: Poker cannot independently confirm this number. It is third-hand information and should be regarded as such.
  6. We reviewed the records of one player who had yet to be contacted about roughly one third of the deposits that Full Tilt had failed to process immediately. One such deposit was made and approved in early November, but the player still has not been asked to pay, over seven months later. The player also received one of the above e-mails on April 15th, but the money was never taken from his account.

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32 Responses to FTP’s $60M Shortfall

  1. Reed Err
    June 16, 2011 at 3:43 PM EDT

    Kindly get over the footnote fetish. Thanks.

    • Rodney
      June 17, 2011 at 4:46 AM EDT

      You’re whats wrong with the world. It’s called journalism 101. Go back to school retard!

    • KMS
      June 20, 2011 at 11:58 AM EDT

      I know it looks weird but providing sources and facts is actually a good thing.

    • Jonemann
      June 30, 2011 at 8:25 PM EDT

      “You’re whats wrong with the world. It’s called journalism 101. Go back to school retard!”
      Not quite as harsh, but yeah, footnotes are good.

  2. Polka Glocks
    June 16, 2011 at 3:43 PM EDT

    Great article Noah, This makes me so glad I played exclusively on PokerStars, looks like the two companies were run in very different ways. Personally I hope that when some Federal legislation is finally passed, Stars will be allowed back in and FTP and the others are forever banned.

  3. Grange95
    June 16, 2011 at 3:45 PM EDT

    Nice report. Note that PokerStars, under Isle of Man regulations, was fully responsible for player funds held by a third-party payment processor if the funds were credited to the player’s account by the poker site. (See more detail re the regs here on my blog: http://craakker.blogspot.com/2011/05/regulation-segregation-and-cereus-case.html). So, basically Stars might have been tempted to do the same thing as Full Tilt, but they would’ve been on the risk for any funds they credited that they couldn’t eventually collect. No equivalent Alderney regulation explicitly allowed or prohibited Full Tilt from letting players play on the equivalent of credit or a “float”.

    • Noah Stephens-Davidowitz
      June 16, 2011 at 3:49 PM EDT

      Indeed. The Isle of Man’s regulations are quite strict about segregation.

      • Grange95
        June 17, 2011 at 12:09 AM EDT

        It’s not just segregation of funds, but the fact that when the site credited the player accounts, the player was entitled to the funds regardless of whether the transaction had been fully processed.

    • Polka Glocks
      June 16, 2011 at 3:53 PM EDT

      Also an excellent informative article

  4. Kevin
    June 16, 2011 at 3:56 PM EDT

    Good article. I’m curious how much cash they have on hand to handle current issues. I’m guessing it is not very much considering the relative silence they’ve maintained on paying back USA players. (And FTP, if you are reading this, we aren’t stupid, we see right thru this, so ‘fess up).

    I’m glad I don’t have much money on FTP at all. If they were willing to do this, which is totally reckless, it makes me wonder what else they are/were doing.

    • Noah Stephens-Davidowitz
      June 20, 2011 at 4:18 PM EDT

      Hi Kevin,
      We’d like to know too. It appears to me that very few people actually know how much money FTP has, so I don’t anticipate ever knowing much about FTP’s financials.

      If you believe this article, then FTP apparently has at least one mid-eight-figure bank account. And, while FTP hasn’t quite said direclty that they don’t have enough to repay players, they have said that they’re trying to raise capital. That and the information in this article is pretty much all that is known publicly.

  5. jonatan
    June 17, 2011 at 2:00 PM EDT

    LOL@people now saying PS is a much better company than FTP. In the end of the day PS have also accepted deposits and processed withdrawls to US players which is completly illegal.

    Both companies are run equally bad or even better the US gov is the biggest crooks of them all. If they would let people do wtf they wanted to do with their already taxed money this would never have happened.

    Why has it taken US so damn long to sort a license, some countries have done this in less than 6 months?

    I think its fair to say they have planned to do this a while, basically because US is short on money themselves. They have froozen, what, 25 offshore accounts for FTP alone. This is a company that for years now been generating roughly $2,5-$3,5 mill/day in gross rake revenue.

    $60mill is about 1 month worth so I would not say that they are short of money. They have simply kept all eggs in the same basket and it´s now been stolen by the U.S.A.

    • Owjadi
      June 17, 2011 at 11:58 PM EDT

      Good article. Unfortunately, comments like this from jonatan, filled with absurdities, distortions and half baked facts muddy the whole situation. Nobody should take this guy seriously.

      It’s looking less certain that FTP will be able to offer US players a 100% refund. Hopefully there will be some settlement without too many revelations regarding FTP’s corporate accounting. Unless there is a smooth transition towards unlocking these frozen accounts, it could become very messy and drag on for years. Possibly effecting a broader section of FTP’s client base.

      Looking forward, I can only hope the Feds get it right and we end up with effectively licences and regulated on-line poker, with the minimum of delay. I’m not overly confident, but if they do maybe Black Friday will have been worth it.

      • Danny Mccaul
        June 19, 2011 at 1:17 AM EDT

        No he is right the DoJ is in the business of making/taking money. Also it is good to point out that we should feel somewhat violated because on of our personal freedoms that we enjoyed from the privacy of our own homes was taken. All they needed was a technicality and the jumped on the chance. A let’s not forget the sly under handed attachment of the UGIEA to an unrelated bill in 2006. Just because Jona didn’t word it the way you would like to hear it Owjadi doesn’t make it any less correct that The US DoJ has indeed frozen the vast majority of FTP capital.

        Looking forward, I would have to say I hope the FED listens to the peoples unhappy words that seem not able to be heard over the sound of money being counted. Furthermore, they need to be aware that a chunk of what they are freezing up right now is US Private Citizen’s Property. Unless Uncle Sam wants to handle the books and pay out all the balances due here, they need to wise up and let FTP pay the players back by freeing up the Balance Due. Don’t give me no forfeiture BS on this because it only applies to FTP(and other defendants) not the US Private Citizen.

        As for the 60m dollar deficit that’s just a business mistake by FTP. They will have to deal with that shortcoming in profits.

        We already pay income tax, those of us that are honest about our winnings have had those taxed already as well. We pay sales tax when we spend it, Users tax if spent online. And yet the Idiots are 14+ TRILLION dollars in debt?? So lets give them more money to not spend on bills???

        Get real, because it’s time to wake up from that brainwashed namby pamby dreamland they want you in. There are far more important things the DoJ should be concerned with right now. I find big government’s recent actions to be off course, unrelated to real National Security, and just plain deplorable! This along with the Patriot Act are major causes for concern and could be the cancer that kills the Idea that once was America.

        Thank you, Goodnight!

        • Will
          June 19, 2011 at 3:39 PM EDT

          Danny, you should be a brain surgeon. You have it pegged just right. The idiots who believe the idiots running/ruining our country are the problem.

    • Will
      June 19, 2011 at 3:36 PM EDT

      Online Poker is not gambling and is not illegal. If you were a lawyer or at least educated in the law, you would know that. Just because some inept government official SAYS it is illegal does not make it so.

  6. Kevin
    June 19, 2011 at 12:27 PM EDT

    I’m not quite sure if people are deluded, naive, or just do not have a clear understanding of the facts on this case, when they make ridiculous statements like the U.S government was just being opportunistic in laying charges and seizing bank accounts in some “conspiracy theory” idea that they did it in order to make a quick buck.

    Let’s be real.

    The $3 billion dollars the government is seeking in fines and forfeitures, while a ridiculous amount of money to 99.9% of the planet, is relatively small given the overall size of the U.S budget and deficit and total debt, which is in the trillions of dollars.

    The U.S government has been burning thru $1-2 billion “a week” fighting wars in Afghanistan and Iraq. Remember that B-2 stealth bomber that crashed about two years ago? Well that was close to $2 billion right there..most expensive airplane crash in history. (And coincedentally that one bomber is about 2/3 of the fines and forfeitures amount). And these are just one small piece of the budgetary pie.

    So the idea that the government moved in to seize the funds to balance its budget somehow, is absurd. The amount, while not trivial at all to individuals, is trivial compared to the overall size of the deficit/debt.

    The idea that the DoJ jumped on a “technicality” is also…naive…and i’m being nice in saying that. Bank and wire fraud are not “technicality” issues. Those laws have been on the books since 1961, and the Americans have a pretty good track record prosecuting those crimes, primarily because they are open and shut kinda cases. Those charges alone have nothing to do with whether poker is a “game of chance or skill”, and just by themselves those charges carry 20-25 year prison terms.

    The DoJ and other jurisdictions were clearly investigating the sites for ‘years’, building a case. So again, the idea that they were being opportunistic is naive. This was clearly not a “they wake up one morning and decide to prosecute the poker sites for kicks” kinda decision.

    The idea that the DoJ is somehow “obligated” to repay player funds is..(shakes my head).

    That money which one person described as “US Private Citizen’s Property” can also be considered proceeds of crime. People knew full well that online poker was a gamble with regards to its legality. The current U.S Attorney General stated quite clearly in his confirmation hearings that he felt what the sites were doing was in violation of the UIGEA among other things. With that in mind, the U.S government is certainly not under any obligation whatsoever to return any money they seized. The fact that the government has already said they have no interest in keeping players funds should be regarded as a “gift” by the poker playing public. The only reason that players haven’t gotten their money from FTP, is clearly because of very, very poor accounting and management issues.

    A sixty-million dollar deficit is “just a business mistake by FTP”? I emphasize the word “just” here. It’s not “just” a mistake. FTP was clearly not segregating player funds from operational funds, that’s a big no-no, and FTP had been previously adamant that they did segregate them. Clearly they lied. I question what other things there are that we haven’t found out yet, that they were lying about. Their silence on the whole issue certainly doesn’t build confidence.

    I’m not happy at all with what is going on with poker right now, don’t get me wrong. But to simply “blame the government” for all of poker’s woes right now is to ignore the problems that the poker sites themselves created.

    • Owjadi
      June 20, 2011 at 6:04 AM EDT

      Agreed! We all have our own point of view but ‘ranting’ solves nothing and does nothing to increase anyone’s understanding.

      You could also mention that the DoJ has NOT ‘seized’ all this money but ‘reportedly’ has succeeded in having certain accounts frozen. But even this is disputed (see http://www.gambling911.com/poker/many-operators-have-doubts-full-tilt-poker-funds-actually-frozen-061711.html for one typical discussion). It’s certain that overseas institutions are not going to be shipping out bags of money just to help the US economy. It will be interesting to see how this plays out.

      I want to see online poker legalize. But not even the PPA argues that the government doesn’t have a role to play. In the past I have seen many forum discussions regarding the legitimacy of online poker. Many have argued that the poker sites make enough money from rakes, would not risk getting caught cheating, or even would not benefit through cheating. Not once have I seen anyone suggest that the networks are effectively regulated to prevent them from cheating. Obviously this would be a nonsense anyway as they are effectively self-regulated. This is a cloud hanging over online poker that we now have the opportunity to remove.

  7. Danny Mccaul
    June 20, 2011 at 7:20 PM EDT

    To defraud someone means that you must TAKE from them. They made these banks money. The fact the funds were mislabeled was the crime here. However the main point that you are missing is that in the mean time we the end user are the ones really feeling the punishment. That’s as real as it gets, like it or don’t.

  8. Kevin
    June 21, 2011 at 12:53 PM EDT

    From Wikipedia: Fraud
    In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent “discoveries”, e.g. in science, to gain prestige rather than immediate monetary gain.
    Meaning..you don’t necessarily have to “TAKE” from them.

    Fraud also applies to people who intentionally deceive for “personal gain”.

    Creating non-existent internet companies (ie. online golf companies=intentional deception), so that online poker transactions could be processed, from which people personally profitted (the company owners who made money from rake and juice= personal gain) could clearly meet this definition.

    I’m not missing any point at all…

    I’ve clearly said i’m not happy about the whole situation, but to think that this day could never have come, is being unrealistic, the government has made its position clear for quite some time.

  9. Danny Mccaul
    June 21, 2011 at 3:06 PM EDT

    They have also made it clear they are unfit to oversee anything in a Fiscally responsible way.

  10. Alex
    June 21, 2011 at 7:45 PM EDT

    I’ve never been one to think that the major sites were rigged and this is only fringe speculation but I wonder if there was any legitamacy to the run good upon deposit conspiracy. If FT was basically providing loans to many new players wouldn’t it be in their best interest to make sure they run good initially? Hmm…just asking.

  11. Steve
    June 22, 2011 at 3:08 PM EDT

    Very interesting article. As a minor note, the footnotes are great (though would be better if they were sidenotes ala Grantland).

    • Noah Stephens-Davidowitz
      June 22, 2011 at 11:46 PM EDT

      Thanks for the tip. I’ll talk it over with the others, and we’ll see how it looks on the test site.

      • Jason
        June 24, 2011 at 12:05 PM EDT

        Thanks guys. Doggy is the best position to get full insertion.

    • Noah Stephens-Davidowitz
      June 30, 2011 at 3:15 PM EDT

      Unfortunately, sidenotes aren’t really possible with our current layout. Maybe if we change themes at some point we’ll switch to them.

  12. Lee Jones
    June 24, 2011 at 12:49 PM EDT

    The world desperately needs more fact-checked journalism; the Internet has all but killed the newspaper, which was the last journalistic medium that demanded some kind of factual rigor. The demand for instantaneous updates, scooping your competitors by three minutes, etc., has destroyed much of the fact-checking we used to take for granted in our news.

    “Subject: Poker” is a breath of fresh air on this front and I’m heartened to see Noah and Thomas sticking to their guns on the integrity vs. speed issue. Keep the citations coming (footnote, side-note, whatever). Check and double-check your sources. We can all wait another day (or another week) to get the story if we can then read that story and say, “Here is the truth as it is best understood.”

    Regards, Lee

  13. Bad Poker Player
    June 26, 2011 at 6:16 PM EDT

    Throughout the past many months I have asked this question both of numerous people and on several websites. I continue to be confused. Please allow me to inquire here.

    I seem to be one of those Full Tilt depositors to which this article refers. Between November 2010 and March 2011, I made a number (nearly twenty) of “Quick Deposits” totaling several thousands of dollars. To date none have been processed through my bank.

    As the “Black Friday” story unfolded I began to understand why. Yet I continue to wonder what, if anything, I should do about these unprocessed deposits.

    It has been suggested that those in my position leave the funds in the bank account and take a ‘wait and see’ approach. Others suggest closing the account and ‘forget about it.’ Neither of these approaches seem to resolve my daily consternation — and both raise questions.

    My questions are, I suppose, both legal and moral in nature.

    Were these deposits (and/or the processing thereof) illegal? If yes, could any future “deal” with the Department of Justice reverse the previous “illegality”? If so, how?

    Morally (as I see it), in good faith I made these deposits. I “lost” the money. Someone “won” it. Where, if anywhere, does the “moral” issue factor into the “legal” one?

    Is there a statute of limitations regarding (these) banking transactions? If a deal is made between Full Tilt and the DoJ (which I suspect there will be) will this deal include allowing FT to process these deposits — or just allow FT to return funds? If the former must (should) I maintain the funds in my bank account ad infinitum?

    Perhaps understandably the vast majority of online posts I read discuss the concerns of those to whom FT “owes” money. Very few are from those in my situation. While I realize there are, as yet, no definitive answers I would very much appreciate some educated opinions and “best guesses.”


    • Johnny TwoBits
      June 29, 2011 at 4:31 PM EDT

      My advice – tell your bank not to honor any debits that FTP tries to make. (They’re prohibited from doing so anyway, so you probably don’t even need to.) Or you could just close the account, if it makes you feel better. Nothing wrong with that.

      Leglly, you’ve got every reason to believe that you didn’t get what you paid for. You were paying for the service of on-line poker, which includes the ability to withdraw any winnings you might have made. In actuality, you didn’t have that ability. Thus, FTP didn’t provide you the services that you paid for, they’re in breach of contract (written or not), and this discharges any remaining duty you might have had under the contract. Basically, everyone was playing with play money as of the moment FTP became unable to honor withdrawals, and in paying real money you were victimized. Even if your situation were different in that you lost the money and were actually charged, an attorney could make the argument there that FTP should have to pay you back, again because it didn’t provide the services that it sold to you.

      As for the DOJ’s ability to attach the funds in your account based on the judgment against FTP, no worries there either. You’re certainly not an accomplice or conspirator with regards to the wire-fraud charge because you didn’t know FTP was committing wire fraud. Afaik, that’s all FTP’s been charged with. And if the DOJ ever tries FTP for a criminal violation of the 2006 law itself and tries to get at consumers’ funds through the allegation that they participated knowingly in illegal activity, it would fall pretty flat. It’s an easy argument to make that the 2006 law is void on its face for vagueness because it fails to define the term “gambling”, which it seeks to criminalize. There’d be huge problems there also with conolidating the cases and/or proving the necessary mens rea of every single defendant the DOJ could indict. They’re really, really unlikely to go there.

      TLDR – you’re probably safe, but to be certain just tell your bank what’s going on.

      • Bad Poker Player
        July 4, 2011 at 1:00 AM EDT

        Thanks for your reply, TwoBits. Thanks kind of the way I see it.

        Still, no offense, I wish a major poker related website (and/or a few lawyers) would write about this issue — one which has caused me considerable concern for nearly eight months.

  14. Orange Brisk
    June 29, 2011 at 5:40 PM EDT

    I love this site…I play PLAYMONEY and have found a vast amount of free guidance and opportunity for free councelling by the worlds premier poker players. I aspire to become a well educated, informed, experienced poker player. FTP gave me all those opportunities FOR FREE. I was enjoying the free play..benefiting from the experiences and would like to see FTP’s free site return. Can I get an AMEN?

    • Nicholas Barnett
      July 3, 2011 at 2:53 AM EDT

      So true about the ‘free’ things. The DOJ cost players not only their bankrolls but got the sites to start barring US players from even playing freerolls…I played through 3 rounds of freeroll qualifying b/4 Black Friday on AP only to lose my Main Even Freeroll seat for a free shot at the WSOP Main Event (in addition to 2yrs of tnmt winnings…

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