In a stunning turn of events, Groupe Bernard Tapie’s proposed deal to buy Full Tilt Poker has been derailed after negotiations with the US Department of Justice collapsed due to failure to agree terms regarding the repayment of player funds. It has emerged in recent hours that PokerStars has reached an agreement to acquire its former competitor.
According to several reports circulating in the past 12 hours, PokerStars has agreed a settlement with the US DoJ that will lead to the purchase of Full Tilt Poker and, importantly, the repayment of all players still owed money after the closure of the Full Tilt site.
Groupe Bernard Tapie had been the frontrunner to finalise a deal for the former online poker giant until negotiations reached an impasse earlier today. A fee in the region of $750 million is rumoured to have been agreed for the acquisition and settlement to the DoJ, although we await confirmation of the finer details.
The French investment group’s push to buy troubled online poker operator Full Tilt Poker for $80 million fell through after the potential buyer couldn’t agree with the Department of Justice over how quickly players with money tied up on the site would be repaid, a lawyer for the group said.
Benham Dayanim, a Washington-based attorney for Groupe Bernard Tapie, said that prosecutors changed their offer earlier this month and wanted players repaid in full within 90 days of the sale: “We were not prepared to do that,” Dayanim said. “The DOJ did not make that a deal-breaker until the very end.”
Executives and others associated with Full Tilt were indicted a year ago on charges of money laundering and bank fraud. Prosecutors said they tricked banks into illegally processing funds for online gambling by disguising the payments as transactions for purchases like golf balls and flowers. PokerStars and Absolute Poker also had executives indicted in the same initial sweep.
PokerStars spokesman Eric Hollreiser said in a statement that the site is in confidential settlement discussions with the Department of Justice. He declined to give details. “As soon as we have information to share publicly we will do so,” Hollreiser said.
The sites were immediately shut down to Americans. Full Tilt was later closed to the rest of the world, after it lost its license to operate overseas. Gambling regulators on the British Channel Islands said at the time that the site lied to officials about its finances.
Since then, PokerStars has gained market share outside the United States, averaging 23,600 players – almost 42 per cent of the worldwide poker market – at any given moment during the past week, according to PokerScout.com.
The group backed by French business tycoon Bernard Tapie received a letter of agreement from the Department of Justice in November in hopes of brokering a sale of Full Tilt, restarting the site and getting its gamblers their money back. The Tapie group would have paid players outside the US while Americans who gambled at the site would send claims to the Justice Department. Current investors with stakes in Full Tilt would not have been allowed to have a stake in the new company.
The Tapie group planned to restore balances immediately to let players play poker, but needed more time before allowing them to withdraw all their money from the site, Dayanim said. The change came just as the deal with the Justice Department was being finalised.
“Clearly, we understood that they were negotiating with another party,” Dayanim said.
The deal also failed because the group couldn’t resolve whether creditors and courts would view the buyout as valid without coming after Tapie for Full Tilt’s other debts, Dayanim said. More time to restore player balances would have helped resolve that, but the 90-day demand made that unworkable, he said. “Ultimately, we made the best offer we could make,” Dayanim said.