A more interesting question (more interesting to me anyway) might be what people think the difference in value between US FT dollars players and RoW FT dollars players might be?

I realize you were asking Harry but if I can take a shot at answering your question it would go like this:

Present value of FT dollars:

RoW players: 95% (5% missing because there's always a possibility of a snafu) - cost of not having use of those funds for the past six months if Tapie is in fact going to launch FTP with all RoW players cashiers fully funded. 50% or less if Tapie is going to force players to clear bonuses to get their bankrolls back.

US players: 90% + assuming you don't have any tax problems. If you have tax problems all bets are off. lol



Don't be so logical.

If the DOJ wanted information on US player balances, transactions, etc., I assume that they could get it in a much more efficient way than by offering to facilitate the payment of US players themselves. For example, they could ask for it (and make it a condition of settlement if necessary). They could have similarly asked for that stuff from PokerStars if it interested them (Stars almost always cooperates with law enforcement anyway), and as far as I know they haven't done that.

Obviously it's possible that they send the list to the IRS (And FFS, just pay your goddam taxes. You make money playing a game for God's sake.), but it makes absolutely no sense that they're going through all this trouble (and potentially costing themselves tons of money.... we don't know yet) just to get that list.

Well after this awesome news, no, that would suck. My post there was hyperbole.

I would never have sold for less than .70% at any point. (at least post GBT) And that would have only been to reduce variance and the added benefit of the time value of money.

See above.

Would you suspect that the government would essentially pay out first and ask questions later?

A lot of people kept a big chunk of their net worth online, so they obviously wouldn't have been able to properly pay taxes on money they didn't have in their possession post black friday.

I can't imagine the DOJ dealing with that type of headache, so I would suspect they would just payout, perhaps forward to the IRS, and then expect you to make right with whatever you owe in taxes on your own. Am I off base here?

Depends what exactly you mean?

RE Players getting any money back from anywhere:

My position hasnt really changed that much. I have always believed that players would get more than 50% of their money back eventually but that it wouldnt come through an investor (Tapie or otherwise).

In fact I still believe the bulk of money would come from / will come from the shareholders and possibly the DoJ and the selling off of the FTP assets like the database and software.

I still do not believe Tapie is good news for players getting their money back and await to see what he actually is contributing to the deal.

As things stand at present it looks like Tapie will pick up the FTP assets (database and software and whatever else they ahve of value) for an as yet undisclosed amount which I reckon will be for a lot less than if they were put out to tender and the rest of the money generated will come from sources which will be disclosed hopefully in the next couple of weeks.

In time I think it will be shown that player funds will have come from sources other than Tapie and that the players could have gotten that/their money back without him.

Re Players getting their money back from Tapie:

I believe Tapie will contribute less than 10% of the player balances but this is a tough figure to be precise on and could easily still be around my original <=5% estimate.

Put simply I dont believe Tapie wants to pay players back directly, has never had any intention of paying the players back directly and expects to have other sources pay the players back for him.

We'll have to wait for the precise details at a later date in the hopefully not too distant future.

No clue.

I don't see how anyone could argue otherwise, if the DOJ remits account balances, then by definition they aren't 'paying' you they are just returning to you that which was stolen by Bitar et al.


Since this thread has devolved somewhat into an argument over who was right, I'd like to nominate Diamond Flush from Subject Poker as he was the one optimist who recognized all the pitfalls involved in this deal yet advised us not to lose hope.

Most of the other optimists just seemed to be making a 'sick read', but DF actually put all the parties on a range (albeit with more information than the rest of us).

In the following post, I'm going to speculate, leave lots of factors out, etc etc. I probably shouldn't do this because somebody's going to like write some article somewhere or something "NoahSD says that this is 100% true," but whatever, I think this is a pretty important point to make:

FTP's owners paid themselves $440M over 4 years. They stole somewhere on the order of $300M from players. (The actual amount stolen from players is still unknown.) So, if you don't include stealing from its customers, the company actually earned a net profit of roughly $140M over 4 years.

That's kinda like pathetic and stuff and much smaller than we all would've assumed. Part of that is probably because they paid themselves and their buddies in other ways that aren't included in the $440M, such as salaries to themselves, dividends from companies other than Tiltware, absurd salaries to their buddies, etc. But, let's use it as a baseline and look at some of the huge costs that they had:

* $159M DOJ seizure.
* $128M donation to US players for ****s and giggles I guess.
* $42M stolen by one payment processor (and likely more stolen by other payment processors).

All of those are costs associated with the US market, and they add up to $329M. (It ain't no coincidence, of course, that this number is very close to the number that the AGCC said was seized by the DOJ. They apparently can't distinguish between things like that.) So, if the US market had been less "questionably legal", it seems fair to say that they would've made $469M over that same period. That's $117M/year.

That number makes so much more sense, right?

Of course, there are tons of other costs that are much higher for US players than for non-US players: payment processing, legal costs, even marketing. And, of course, FTP was run about as stupidly as possible, so there are tons of simple ways that anyone who was half-competent could have raised profits or lowered costs. They could have, for example, not loaned David Benyamine some absurd amount of money and then let him pay it back by paying him an absurd salary to wear a patch. But, whatever. Let's just stick with this number.

I believe the standard estimate for US vs. ROW rake on FTP is 40% US, 60% ROW. So, if FTP suddenly lost all its US players on April 15th but received no hit to their reputation or lost any customers as a result of the shrunken player pool, it seems reasonable to assume that they would have earned about $117M * .6 = $70M/year.

(You might notice that this means that this implies that the US market actually cost FTP money. This is certainly possible, but remember that for a very long time FTP generated much more than 40% of its rake from the US. So, my $70M/year number is not the number that FTP would have earned if it juts stayed out of the US but rather the number that it would earn if it left the US on 4/15. Note that this also implies that this number is an underestimate because the effects of US processing fees are exaggerated by the high % of US rake in earlier years.)

But, it did receive a hit to its reputation, of course, and it will lose players as a result of its shrunken player pool (since more players makes more liquidity, which attracts more players). Let's say that that hit will cost it 65% of its revenue, leaving it with $25M/year.

Again, this is likely a low estimate because I didn't consider basic cost-saving/anti-stupidity measures and I was pretty harsh with most of my numbers. So, let's bump it up to $30M to account for some of that. I still think this is likely a low estimate.

Now, we don't know the terms of the deal yet, but say a reasonable estimate for how much Tapie is planning to pay is $400M. You can think of that as a repayment of players plus $100M to the DOJ (in addition to the money already seized), or you can think of it as repayment of ROW players plus a $250M fine to the DOJ, who then repays US players. Either way, it still costs roughly the same amount.

Well.. that's 7.5% interest on his money, assuming no growth at all, with relatively pessimistic numbers, and not accounting for appreciation of the underlying assets. That ain't bad, right? And, of course, that ain't even mentioning possible ways that Tapie could use the company with his existing holdings (which apparently is a huge selling point for him).

So, I mean, when people say that repaying players (whether partially through the DOJ or not) and paying a DOJ fine isn't worth buying FTP, I think they're just wrong. If I had a networth greater than, say, $3 billion, I'd buy the thing myself if the actual books numbers looked anything like what I just laid out.


(Some people will doubtless read this post and think "But, once he gives that money to the DOJ/ROW players, he can't get it back." These people don't understand what it means to buy a business. When you buy a business, you typically give your money to somebody else who then takes that money and buys a gold-plated house or whatever. In exchange, you get the business. In theory, you should be able to sell that business to someone else for roughly the same price, but in practice, that's sometimes/often not the case.

The same exact thing is true (though to a lesser extent) when you buy a stock. There's no guarantee that you'll find someone who's willing to buy it back from you if you feel like selling it (especially if you trade in weird obscure companies). Investments aren't bank accounts, and people who buy companies for a living know that.)

I agree. Like I mentioned earlier I never rated FTP money at less than .70/1.00, but I'll never know how "right" I really was, even if everybody gets paid out 100%. I just knew that so often the pessimists take on things were mostly based on people reading between the lines and seeing the worst possible in every nuance, when so often these things were very clearly not the case.

I always thought poker players were some of the most efficient critical thinkers, yet the inability of the community as a whole at digesting obvious information blew my mind. Everything that had even the slightest bit of ambiguity was just blown as far out of proportion as possible.

FWIW I enjoyed pretty much everybody's posts, from the more bearish posters to the more bullish. It was always an interesting discussion, and pushed my own ability to think objectively. The only ones that ever pissed me off were the "LOL gg ft kiss our money goodbye stop acting like you're ever seeing your money blah blah lol land of the free etc" posts. And yes, nobody should be celebrating just yet, but god I want all of those people to eventually eat it in a huge way, they all deserve it, sorry.

A bit nitty on the numbers, but I'm guessing that was your intention, and you're not even factoring the value of ISPT owning it's own poker site to co-promote it's tournaments.

I thought FTP was a steal for him when he appeared willing to pay $300M plus DOJ settlement, now it appears he got it for $200M (RoW debt + startup costs) plus settlement - makes me wonder how many other investment groups are wishing they had his balls.

I understand you say you are speculating and that all the details are not out yet but are you telling me that you believe Tapie is going to put $400 million into buying out FTP?

That he is going to cover all the player fund refunds/shortfall himself/personally/his investment group?

I find this rather surprising considering the statements that have eminated from his camp to date where things like shareholders and DoJ and RoW players are expected to make contributions to the $300 million for player funds in one way or another.

Very nice post Noah, it was nice to see a breakdown of the numbers.

The investment seems too risky for a 7.5% return but perhaps coupled with other business opportunities Tapie sees good potential?


Also, I'd be very surprised to hear Tapie got an investment group to put up $400 million to get FT back up and running but Tapie has about $300 million more dollars than I have so he might know something I don't. (In other words I think he's in a position to get FT for considerably less than $400 million. Exactly how he plans to do so remains to be seen.)


edit: There's one other reason I think a $400 million investment is very risky. It appears legalized online poker in the US might not be too far away and as a result I'm sure Tapie is hoping to get FT back serving US customers. The problem with this is there will likely be increased worldwide competition also. Wynn and Caesar's aren't only going to be servicing US players. Tapie is smart and has likely taken all of this into consideration but there are so many uncertainties surrounding online poker going forward I just don't see taking a $400 million gamble being worth it.

Great post. Clears up a lot for me and I'm sure others.

He asked you what you value player balances right now. Why do u give a vrap what tapie contributes or not. Bottom line is the guy is doing work and it is in the best interest for him and it bodes well for the players as it looks at the moment. Tapie is god and you should kne before them

Noah,

My biggest issue is I don't think FTP was all that profitable. I think they had a massive marketing budget and they never made nearly as much as people seem to think.

If they were making 100+ million a year and stole 400 million from players that is 800 million missing over the last four years. Take out seizures and you still have a massive amount of money out there which nobody seems to have any idea where it is.

Plus with that kind of profit level they would not have had to pillage player funds and in fact would have been horribly stupid. We gave all seen the note on 6 million in withdrawals would be fatal for them. If the company was netting. 8-10 million a month that would be impossible. Plus with their business their cash flow alone would have been enough to handle much larger withdrawals. Clearly their expenses were way more than anyone understood and I suspect if they ever had a proper audit done now that it is entirely possible FTP was not profitable or barely profitable.

This does not mean it could not be profitable it just means that a bunch of monkeys fell into a high cash flow business and spent themselves into a hole. It is. It hard to do the money comes in and they spend it. Problem is the money has liabilities attached.

I think FTP management were horrible at business, mismanaged it into the ground to the point of losing money and just kept spending the player deposits to dig the hole deeper.

I will add retreading what you said you did touch on full tilts ridiculous spending.

People need to get off the idea that the doj involvement in payouts is a sinister plot. They don't trust anyone involved, they already have some of the money and they have all of the leverage. FTP is not a continuing concern like ps was and the doj is still dealing with a fraud case.

I think the doj doing anything but taking control of the money would have been irresponsible on their part.

I agree it is possible that the information is shared and kept on file with the IRS for future reference but it has nothing to do with why the doj is overseeing US funds.

When someone who's negotiating says that they want to pay $0 for something and get lots of profits from it, I don't take them very seriously. The fact that they've come to an agreement with the DOJ makes it pretty clear that some of the more absurd things that they were suggesting were just part of their natural strategy to ask for the world at the start of negotiations.

Anyway, all I was saying is that it's not unreasonable at all for someone to actually just pay the damn $400M and get a really sweet company in exchange. I mostly bothered to do it in response to your repeated posts saying otherwise.

I think you're mixing up definitions of the word risky.

Buying FTP is risky because there are likely to be skeletons in its closet that will be a pain in the ass to clean up.

But, that's not the financial definition of risk. It's not like some startup where there's a good chance that it will just be some money pit that never turns a profit or like a risky financial company that owns tons of debts that are very unlikely to be repaid. Obviously there's a decent spread on the amount of money that it will make annually (say anywhere between $0 and $75M or so), but I don't think that that's a particularly scary thing for a dude who buys failing companies for a living.


Unless you're a very very rich man, Tapie probably has a lot more than $300 million more than you have. He was awarded 405M euros ($560M at today's rate) in 2008 as a result of a court case against a large French bank. And apparently he go 135M euros ($186M at today's rate) in 2005 for some court case.

I mean, his history is ridiculously complicated, so I can't really estimate his networth too accurately, but I don't think it's a stretch to suggest that he can come up with $400M.

We should all question FTPs profitability bc of the fact the owners weren't willing to reinvest to save the company b4 disaster struck. At a time when it would have only cost them US player balances + settling with doj...

As and when he pays back all players all their money I will kiss his feet and bow before him....and not before.

You have to remember this guy is basically a crook. As some have pointed out maybe you do need a professional crook to replace the amateur ones at FTP who stole all the player money.

However the US contingent do not seem to understand what it means to fix a soccer match to ensure you get to play Eruopean soccer such as the Champions League.

Gettin into the Champions league proper is probably worth ukp 50 million to a club in endorsements and TV rights etc etc

The US equivalent would be if an NFL team bribing another team to throw the Superbowl final.

How would you like the owner of an NFL team who bought a Superbowl win by bribing the officials and opposing players taking over an online poker site.

I do not like the guy one bit (Tapie) but will give him the credit he deserves if he pays back all the players their funds.

I'm not sure how this contradicts anything I said.

I mean.. we have a pretty good idea at this point where the money went. After rakeback and promotions, affiliate payments (which are massive of course), processing fees (also massive), operating expenses (maybe half a billion), and reasonable marketing expenditures, the company probably made on the order of $600M in its lifetime.

Of the stupid shady crap that happened, the vast majority of it went to the owners, on the order of $500M for the lifetime of the company or $440M over the past 4 years. Then the next highest share probably went to their buddies in the form of salaries and bonuses and profit sharing and TV shows for them to look cool on. Then the next highest share to the DOJ's $159M. Then the next highest share was a gift to various echeck depositors to the tune of $128M. Then Tzvetkoff stole $42M (though I have no clue what happened tto that money).

Add those numbers up, and you'll see that the owners took/gave away about $300M-$350M more than the company actually earned. That's where players got screwed.

I forgot his award was $405 euros (I have to learn to quit being lazy and start looking things up. Google really isn't that hard to use. lol). I knew it was large but I guess I have the number "$300 million" stuck on the brain for whatever reason. And no I'm not worth $100 million +.... (unfortunately)

I never doubted he could come up with $400 million for the right investment as rich people usually have tons of rich friends/business partners etc. Whether or not Ft proves to be a good investment remains to be seen. Once players get paid back it won't really matter.

You're right, he's certainly not writing anyone a check for $400M, but in order to open the site he's going to have to allocate the money for RoW deposits ($170M?) and turn the lights on ($30M?) and pay the DOJ settlement ($200M?) in installments.

He said he would offer stake in the company to large account holders to reduce the amount of that $170M that is actually withdrawn, so you could say he is paying $400M ($170M + $30M + $200) or you could say he is paying as little as $100M ($30M +$70M + settlement paid from profits) if enough people take shares and new customers deposit.

I think the bottom line is he got a great deal by not being afraid to have his (good, LOL) name attached to a scandal.

[QUOTE=NoahSD;29644254]When someone who's negotiating says that they want to pay $0 for something and get lots of profits from it, I don't take them very seriously. The fact that they've come to an agreement with the DOJ makes it pretty clear that some of the more absurd things that they were suggesting were just part of their natural strategy to ask for the world at the start of negotiations.

Anyway, all I was saying is that it's not unreasonable at all for someone to actually just pay the damn $400M and get a really sweet company in exchange. I mostly bothered to do it in response to your repeated posts saying otherwise.


Fair enough but I find it equally absurd that you are saying Tapie is so readily prepared to fork out $400 million for FTP which is to include DoJ contribution/fine/player refunds.

FTP is not worth $400 million by a very VERY long way reagrdless of whatever figures you choose to use in your valuation of the company.

I challenge any business like minded person on this forum to tell me how much they think a new FTP would have to make from RoW players to justify that ridiculously high valuation you have placed on FTP.

However I asked you to explain the $400 million and would appreciate an answer?

Do you say he will put $400 million up for FTP?

Does this $400 million come from him and his investors or is some coming from elsewhere like RoW sacrificing money owed for equity and shareholder money etc etc etc

This is definitely a good point, but there are a few things to note about this:

1) The owners might not have much money left. If there's one thing that we know about these people, it's that they're idiots with money.

2) Even if the owners do have money, I don't trust them to make anywhere close to a rational assessment about the value of anything. If there's one thing that we know about these people, it's that they're idiots with money.

3) One (two? still not sure if burtnick owned stock) of the owners has been indicted as a result of his involvement in FTP. Four (five?) of them have been sued by the DOJ, with a long list of allegations that they still haven't been formally charged with, all because of their involvement with the company. If the major shareholders are smart (and I can't stress enough that most of them are not), they're ****ting their pants right now. They probably wantt nothing to do with this company anymore.

4) If they do have money and it happens to be in Singapore or the Isle of Man or Qatar or Costa Rica or in a duffel bag or whatever, they probably don't want to move it right now.

5) Even though the DOJ obviously has the list of shareholders at this point and probably knows about lots of bank transactions, etc, they still might want to dispute any allegation that they owned any of the company in a potential court case.

6) Even if they do have collectively $400M, that doesn't mean that they have enough money to make investing $400M in one company a good idea.