Full Tilt Poker has entered into an exclusive bargaining agreement with a prospective European investor.
The agreement, reached on June 30th, requires Full Tilt to stop negotiations with other prospective investors for at least three weeks while the primary suitor conducts due diligence investigations and negotiates with the poker site’s executives. Due diligence presumably poses a significant hurdle in this case because Full Tilt is an opaque entity with a complex corporate structure, an indicted executive, a PokerStars-Full-Tilt-UB-AP-et-al" target="_blank" title="Civil Complaint">civil complaint against it from the United States Department of Justice’s, and public troubles with regulators in Alderney, France, and the Kahnawake Mohawk Territory. Subject: Poker has confirmed from numerous sources that the US DOJ, the Alderney Gambling Control Commission, and the French regulatory authority ARJEL are all actively communicating with both Full Tilt and the prospective investor.
A reliable source who spoke on the condition of strict anonymity said that Full Tilt’s primary request is enough money to repay players and to cover a potential settlement of the United States Department of Justice’s civil complaint against the poker site.1 Since Full Tilt agreed to this exclusive agreement in spite of the presence of other suitors, the poker site’s executives presumably believe that the primary investor is likely to meet these terms.
This exclusivity agreement is the same agreement reported by the Los Angeles Times, which was widely misinterpreted as a finished agreement to sell some of the company.2 Subject: Poker wishes to stress that no such deal has been finalized, and to our knowledge, Full Tilt has not yet raised any capital from any investors. The actual deal simply involves exclusive negotiations, though it may lead to a sale in the future.
The prospective investor was introduced to Full Tilt executives in mid May by Phil Ivey, a Team Full Tilt member and a partial owner of the poker site. Shortly afterwards, on May 31st, Ivey released a public statement complaining about the fact that players had not been paid and filed a civil complaint against Tiltware, one of the companies behind Full Tilt Poker. Full Tilt responded quickly with a remarkably angry public reply claiming that Mr. Ivey’s lawsuit was hurting negotiations with prospective investors. Ivey withdrew his lawsuit on June 30th, the same day that the exclusivity agreement was signed. Subject: Poker has heard conflicting reports about how Ivey’s public feud with the poker site has influenced negotiations.
Full Tilt Poker has been unable to repay its US players since the US Department of Justice indicted its principals and filed suit against some of the many companies behind the poker site on April 15th. It has recently had troubles repaying non-US players as well. On June 29th, Full Tilt’s main regulator, the Alderney Gambling Control Commission, suspended the site’s licenses. Subject: Poker has reported throughout on the company’s largely secret attempts to raise capital in order to repay players, and we will continue to investigate and report on what we learn.
Edited on 7/11/2011 8:08 AM EDT: Added link to Poker News article about Tiltware’s response to Phil Ivey’s lawsuit.
Our source said that the Department of Justice has already outlined the terms of a potential civil settlement with Full Tilt Poker. However, Subject: Poker is unable to verify this claim, and this is the first that we’ve heard of such advanced negotiations with the DOJ. ↩
Subject: Poker regrets publishing an article announcing the LA Times report and thus contributing to the misunderstanding. ↩