[Music]
everybody welcome back to case studies
with the biz doc this week gets Full
Tilt Poker we’re going to talk about
what went wrong a little bit of the
history some lessons that you can learn
whether you’re running a t-shirt company
or one of the world’s largest online
poker sites we’ll start with the history
we go back back back back back back back
thirteen years to 2003 and a couple
years prior to that there was a
wonderful movie it was out called
rounders and you may remember the Matt
Damon
tremendous tremendous movie and it
gained popularity for poker which was
already coming up in popularity and then
enabled by the Internet we had this
online poker boom from oh three two oh
six four it was actually the online
poker player audience was doubling every
year which is really tremendous and Full
Tilt
was born in the middle of that they
actually came out of an Irish company
and the Irish company made software that
made the online poker experience
possible and that company led to the
creation of Full Tilt there was also
some professional poker players involved
and a founder ray Betar was involved
Chris Ferguson big poker star Howard
Lederer another big poker star all came
together to create Full Tilt Poker and
away it went and with all things on the
internet is regulation usually follows
close behind especially if you’re
dealing with banking finance or online
gambling and this was online gambling
people were putting money in they would
win they would lose he had an account
that was there and US steps in this big
boom is happening u.s. Congress steps in
with the unlawful online gaming act that
says listen online gaming is not
necessarily illegal but there are legal
and illegal ways to do it and so they
clarified it put a law in front of it
well basically as the history goes over
the next three years
you know Full Tilt continued to grow and
Full Tilt and poker stars were the two
biggest sites there’s a lot of little
ones coming up some super high-end ones
own the ad you know a few thousand
players but the big big mass of the
market was full tilt and Poker Stars
and by 2009 Full Tilt had 28 thousand
players now regardless of whether what
was going on was legal or illegal
there’s something in here I thought was
a great lesson and that caught my eye
when I was doing research back into the
history of Full Tilt in 2010 they
created something called rush poker but
which meant every time a table broke
like everybody else at the table you
know cashed in had no more money or
chips for that day they would instantly
and quickly move you to a spot at
another table rush poker so you could
keep playing your steak would come over
and boom you’re right back in the game
with somebody else you don’t have to
wait unlike the early days think about
like chat rooms on AOL or going back in
the dawn of chat in fact if there is no
one in a chat room talking about fantasy
football or something you want to talk
about it’s kind of a bummer and you had
to go hunt around for a new chat room
well that led to delays and it was a
delay and one person going from here to
here which meant a delay in which they
would be seeing the ads on things like
chat rooms stuff like that
well Full Tilt saw that as a delay in
that person gambling more money so the
creation of rush poker comes out which I
think was a great product innovation
again regardless of what’s about to
happen in 2011 I think was showing that
there was a great innovative product
team that was at the back there Full
Tilt Poker making all this happen and
making a game that you and I could go on
and enjoy poker and remove what’s called
latency or downtime this table breaks
boom we’re at a new table with people we
don’t know but we’re playing again well
that would be the peak of it and in 2011
some things were starting to show up
there were rumors abounded that people
had trouble getting their money out of
Full Tilt especially people that had
significant money and there was also
some rumors abounded that maybe some
banks that were in on it foreign banks
had actually been bribed all of this
rumors would come down on Black Friday
April 15th 2011 as the US government
came down like a hammer and shut down
five different domains including full
tilt and PokerStars which were probably
50% of the player market they were
probably 70% of the dollar gambled
market at least according to Forbes
magazine who had back a year prior in
2010 had said that the market was about
1.4 billion dollars of online poker
playing that’s not casinos that’s just
online that’s just us which is huge well
50 percent of the players 70 percent of
market everybody shut down the day after
ESPN which had been broadcasting some
things they went on full blackout they
took down all the ads he took out all
the house promotions they were doing
four new shows they canceled new shows
so if you don’t think that the federal
government was also knocking on ESPN’s
door saying hey you’re supporting
something that we’re about to put the
hammer down on then you’re not paying
attention and that’s exactly what
happened the whole place comes to
roaring halt the most damning figure
that was in all of this federal
indictment and everything that came down
the US government was claiming that they
owed 390 million dollars to the players
but they only had assets of around 60
million dollars oh my gosh and so they
were claiming this is a bit of a Ponzi
scheme and a Ponzi scheme is where you
keep bringing people in who pay some
money and then these people at the top
of a pyramid get that money and so they
think they got into a game and they’re
getting paid whereas realities these
people are only paid because the bottom
of the pyramid gets bigger and bigger
and at some point in time it stops
growing and then nobody gets paid the
whole thing falls over and it’s exposed
as a fraud that’s a Ponzi scheme if you
haven’t heard that term so they saved
this a Ponzi scheme all the new players
coming in with a couple hundred bucks to
start their account we’re actually
helping to to liquidate some of the
accounts that were up here because they
were claiming that money had been moved
out of the accounts that Betar Ferguson
and letterer regardless of you know what
you felt about gaming or online poker in
general US government was saying you’re
doing this the wrong way
you’ve been siphoning money off we
believe you’ve been laundering it
through foreign banks we believe foreign
banks have actually had
kid is bribed to assist with this so
it’s kind of like you ever saw the movie
Scarface you know and he goes into the
bank in Florida with great army duffel
bags full of money and he’s telling him
look I’ll give you 15% of this money
just run it through this way we run it
through that way and that was a bribe
well they claim that Full Tilt Poker was
doing something very very similar back
in 2009 to 2011 is that money was
bribing banks they were laundering it
and the founders were pulling it out and
they did not have the cash in the bank
to come back so it’s a tale with two
cities if you know this came down pretty
heavy in the end rabbit are surrendered
I think it was 40 million dollars in
assets and the investigation turned up
that Chris Ferguson actually received 25
million to himself that came out of it
as I donorship B’s or whatever there’s
nothing wrong with that if it was real
profit but if it was coming out of the
bucket that had money for all the
players then that’s dead wrong and
that’s what the government felt well all
this madness happens and a year later
PokerStars it was number two and was
allegedly kind of playing by the rules
at least close to the rules they
acquired Full Tilt Poker
for right around half a billion dollars
and they two years later had worked the
plan for these players they’ve been
waiting three years started receiving
their money and that was part of the
agreement for purchase and I believe it
was in conjunction with um US government
cooperation that said players would
start getting their money and 15 and so
here you have it’s coming back on a
global basis or still a lockdown in the
United States but people are getting
their money and then comes what we call
a white knight a white knight is a
company or investor that shows up and
kind of saves the day and they usually
have a contact an idea to add to the
business or they are another rival
business that’s going to take it in and
as a result they saved the day well that
would be Amaya Gaming Amaya Gaming
bought PokerStars which now owns Full
Tilt both of them
five billion dollars so here you have
you know eleven years after it all
starts Maya gaming comes in and buys
this stuff for five billion dollars
because in the background on the global
get a scale this online poker was still
growing remember that one point four
billion now the market was so big Amaya
thinks is worth five billion dollars
there is only one word for that and that
is damn that’s a lot of money for a
market on in terms of online poker
playing well and the next thing that
happened the state of New Jersey gave
Amaya a license for PokerStars and Full
Tilt and Full Tilt’s now just a brand
under PokerStars because PokerStars owns
the whole thing and they re launched on
March 21st 2016 the US players once
again could play poker online against
each other and do it under the umbrella
of a company which we believe is doing
everything fair so I think there’s two
moles to the story the first is you know
founder greed is not unique to online
poker founder greed is not you know
unique to you know a software startup
founder greed happens in Kickstarter
companies that take money and never
really build anything it’s out there and
it’s horrifying and when you see it it
just makes you sick but what was also
going on here is Full Tilt had jumped
into a market and built software to
enable something new and the software
that they did such as Russ poker proved
to be that there were sharp product
people in there so it was on the good
side it was about 2:00 sharp product
people building a really entertaining
thing that thousands of thousand people
around the world want to participate in
but then on the dark side whatever
happened here whatever was going on
greed and siphoning it off cause the
cops to show up on Black Friday and put
it together
well we’re staying with the gambling
theme and next week what we are going to
do live from Las Vegas is we are going
to dive into draftkings and FanDuel and
until then I need the pillow boom see I
was making a bet that he would actually
throw it to me and guess what I won the
bet
please subscribe to value
the best channel on the internet for
interesting content educational content
about entrepreneurship until next time
I’m Thomas I hope I let you better night [Music]
everybody welcome back to case studies
with the biz doc this week gets Full
Tilt Poker we’re going to talk about
what went wrong a little bit of the
history some lessons that you can learn
whether you’re running a t-shirt company
or one of the world’s largest online
poker sites we’ll start with the history
we go back back back back back back back
thirteen years to 2003 and a couple
years prior to that there was a
wonderful movie it was out called
rounders and you may remember the Matt
Damon
tremendous tremendous movie and it
gained popularity for poker which was
already coming up in popularity and then
enabled by the Internet we had this
online poker boom from oh three two oh
six four it was actually the online
poker player audience was doubling every
year which is really tremendous and Full
Tilt
was born in the middle of that they
actually came out of an Irish company
and the Irish company made software that
made the online poker experience
possible and that company led to the
creation of Full Tilt there was also
some professional poker players involved
and a founder ray Betar was involved
Chris Ferguson big poker star Howard
Lederer another big poker star all came
together to create Full Tilt Poker and
away it went and with all things on the
internet is regulation usually follows
close behind especially if you’re
dealing with banking finance or online
gambling and this was online gambling
people were putting money in they would
win they would lose he had an account
that was there and US steps in this big
boom is happening u.s. Congress steps in
with the unlawful online gaming act that
says listen online gaming is not
necessarily illegal but there are legal
and illegal ways to do it and so they
clarified it put a law in front of it
well basically as the history goes over
the next three years
you know Full Tilt continued to grow and
Full Tilt and poker stars were the two
biggest sites there’s a lot of little
ones coming up some super high-end ones
own the ad you know a few thousand
players but the big big mass of the
market was full tilt and Poker Stars
and by 2009 Full Tilt had 28 thousand
players now regardless of whether what
was going on was legal or illegal
there’s something in here I thought was
a great lesson and that caught my eye
when I was doing research back into the
history of Full Tilt in 2010 they
created something called rush poker but
which meant every time a table broke
like everybody else at the table you
know cashed in had no more money or
chips for that day they would instantly
and quickly move you to a spot at
another table rush poker so you could
keep playing your steak would come over
and boom you’re right back in the game
with somebody else you don’t have to
wait unlike the early days think about
like chat rooms on AOL or going back in
the dawn of chat in fact if there is no
one in a chat room talking about fantasy
football or something you want to talk
about it’s kind of a bummer and you had
to go hunt around for a new chat room
well that led to delays and it was a
delay and one person going from here to
here which meant a delay in which they
would be seeing the ads on things like
chat rooms stuff like that
well Full Tilt saw that as a delay in
that person gambling more money so the
creation of rush poker comes out which I
think was a great product innovation
again regardless of what’s about to
happen in 2011 I think was showing that
there was a great innovative product
team that was at the back there Full
Tilt Poker making all this happen and
making a game that you and I could go on
and enjoy poker and remove what’s called
latency or downtime this table breaks
boom we’re at a new table with people we
don’t know but we’re playing again well
that would be the peak of it and in 2011
some things were starting to show up
there were rumors abounded that people
had trouble getting their money out of
Full Tilt especially people that had
significant money and there was also
some rumors abounded that maybe some
banks that were in on it foreign banks
had actually been bribed all of this
rumors would come down on Black Friday
April 15th 2011 as the US government
came down like a hammer and shut down
five different domains including full
tilt and PokerStars which were probably
50% of the player market they were
probably 70% of the dollar gambled
market at least according to Forbes
magazine who had back a year prior in
2010 had said that the market was about
1.4 billion dollars of online poker
playing that’s not casinos that’s just
online that’s just us which is huge well
50 percent of the players 70 percent of
market everybody shut down the day after
ESPN which had been broadcasting some
things they went on full blackout they
took down all the ads he took out all
the house promotions they were doing
four new shows they canceled new shows
so if you don’t think that the federal
government was also knocking on ESPN’s
door saying hey you’re supporting
something that we’re about to put the
hammer down on then you’re not paying
attention and that’s exactly what
happened the whole place comes to
roaring halt the most damning figure
that was in all of this federal
indictment and everything that came down
the US government was claiming that they
owed 390 million dollars to the players
but they only had assets of around 60
million dollars oh my gosh and so they
were claiming this is a bit of a Ponzi
scheme and a Ponzi scheme is where you
keep bringing people in who pay some
money and then these people at the top
of a pyramid get that money and so they
think they got into a game and they’re
getting paid whereas realities these
people are only paid because the bottom
of the pyramid gets bigger and bigger
and at some point in time it stops
growing and then nobody gets paid the
whole thing falls over and it’s exposed
as a fraud that’s a Ponzi scheme if you
haven’t heard that term so they saved
this a Ponzi scheme all the new players
coming in with a couple hundred bucks to
start their account we’re actually
helping to to liquidate some of the
accounts that were up here because they
were claiming that money had been moved
out of the accounts that Betar Ferguson
and letterer regardless of you know what
you felt about gaming or online poker in
general US government was saying you’re
doing this the wrong way
you’ve been siphoning money off we
believe you’ve been laundering it
through foreign banks we believe foreign
banks have actually had
kid is bribed to assist with this so
it’s kind of like you ever saw the movie
Scarface you know and he goes into the
bank in Florida with great army duffel
bags full of money and he’s telling him
look I’ll give you 15% of this money
just run it through this way we run it
through that way and that was a bribe
well they claim that Full Tilt Poker was
doing something very very similar back
in 2009 to 2011 is that money was
bribing banks they were laundering it
and the founders were pulling it out and
they did not have the cash in the bank
to come back so it’s a tale with two
cities if you know this came down pretty
heavy in the end rabbit are surrendered
I think it was 40 million dollars in
assets and the investigation turned up
that Chris Ferguson actually received 25
million to himself that came out of it
as I donorship B’s or whatever there’s
nothing wrong with that if it was real
profit but if it was coming out of the
bucket that had money for all the
players then that’s dead wrong and
that’s what the government felt well all
this madness happens and a year later
PokerStars it was number two and was
allegedly kind of playing by the rules
at least close to the rules they
acquired Full Tilt Poker
for right around half a billion dollars
and they two years later had worked the
plan for these players they’ve been
waiting three years started receiving
their money and that was part of the
agreement for purchase and I believe it
was in conjunction with um US government
cooperation that said players would
start getting their money and 15 and so
here you have it’s coming back on a
global basis or still a lockdown in the
United States but people are getting
their money and then comes what we call
a white knight a white knight is a
company or investor that shows up and
kind of saves the day and they usually
have a contact an idea to add to the
business or they are another rival
business that’s going to take it in and
as a result they saved the day well that
would be Amaya Gaming Amaya Gaming
bought PokerStars which now owns Full
Tilt both of them
five billion dollars so here you have
you know eleven years after it all
starts Maya gaming comes in and buys
this stuff for five billion dollars
because in the background on the global
get a scale this online poker was still
growing remember that one point four
billion now the market was so big Amaya
thinks is worth five billion dollars
there is only one word for that and that
is damn that’s a lot of money for a
market on in terms of online poker
playing well and the next thing that
happened the state of New Jersey gave
Amaya a license for PokerStars and Full
Tilt and Full Tilt’s now just a brand
under PokerStars because PokerStars owns
the whole thing and they re launched on
March 21st 2016 the US players once
again could play poker online against
each other and do it under the umbrella
of a company which we believe is doing
everything fair so I think there’s two
moles to the story the first is you know
founder greed is not unique to online
poker founder greed is not you know
unique to you know a software startup
founder greed happens in Kickstarter
companies that take money and never
really build anything it’s out there and
it’s horrifying and when you see it it
just makes you sick but what was also
going on here is Full Tilt had jumped
into a market and built software to
enable something new and the software
that they did such as Russ poker proved
to be that there were sharp product
people in there so it was on the good
side it was about 2:00 sharp product
people building a really entertaining
thing that thousands of thousand people
around the world want to participate in
but then on the dark side whatever
happened here whatever was going on
greed and siphoning it off cause the
cops to show up on Black Friday and put
it together
well we’re staying with the gambling
theme and next week what we are going to
do live from Las Vegas is we are going
to dive into draftkings and FanDuel and
until then I need the pillow boom see I
was making a bet that he would actually
throw it to me and guess what I won the
bet
please subscribe to value
the best channel on the internet for
interesting content educational content
about entrepreneurship until next time
I’m Thomas I hope I let you better night [Music]
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