The Ponzi scheme that is online poker

After this week’s paltry press release by the site, Full Tilt Poker is looking more and more like a Ponzi scheme gone amok. In fact, when you examine every online Poker Room that has ever run into some sort of trouble, only PokerStars has turned out to be a credible player in the online poker market -the rest, like Full Tilt Poker, have turned out to be Ponzi schemes.

For those of you unfamiliar with what a Ponzi scheme, it’s basically a company using funds they take in to pay off previous obligations. So while Full Tilt Poker and the other online poker rooms –sans PokerStars– were using player deposits for marketing and operational costs, as well as to pay their founders and investors, they would then use “new” player deposits to handle any withdrawal requests from their existing clientele!

As more and more evidence leaks out to the poker playing public, these unregulated sites are really showing their true colors; not only were we sold “a safe and secure online poker environment” but as it turns out there were illegal practices taking place involving shell corporations; shady accounting practices such as the Full Tilt Poker E-Checks debacle; and millions of dollars of loans handed out to employees and owners of the company; all the while the site is operating with only a small percentage of player funds available at any time!

While the poker world has been outraged at the US DOJ’s actions on Black Friday, we should also be somewhat thankful that his house of cards has been brought crashing down, and even though many players are out a lot of money, it could have been far worse had the Ponzi scheme been allowed to continue.

For now at least, we no longer have to worry about online poker sites paying their current players with the new deposits they are taking in, while at the same time they are using player deposits for all sorts of operating expenses.

Unfortunately, the only way to prevent Ponzi schemes is through regulation. And even though the damage has already been done, we must insure that this never happens again; it’s time for poker players around the world to unite and demand a regulated online poker world. Until poker is regulated in the United States there will be very little chance of things changing in the future.