Matt Glantz is clearly a smart guy, a talented poker player and a man with no small amount of insight into the online poker industry.
That’s why it’s confusing to us how he could manage to get it so completely wrong in his latest blog post about the ongoing negotiations between PokerStars and the DOJ over the future of Full Tilt Poker.
In the post, Glantz argues that expectations of a deal between the DOJ and PokerStars are based on little more than “hopes and dreams” and identifies what he considers to be the two main stumbling blocks to any agreement between Stars and US authorities:
One can assume that there are two major reasons PokerStars would be interested in coming to a deal with the DOJ. First to avoid U.S. prosecution in any way and secondly to be allowed to operate legally in the U.S.
Glantz then asserts that the second issue – a guarantee from the DOJ that PokerStars would be allowed to operate legally in the US – is the “major hurdle” to a successful purchase of Full Tilt Poker by PokerStars.
There are a number of problems with this assertion. A few that immediately spring to mind:
PokerStars Has More Pressing Concerns Than Access to the US Market. The assertion that unfettered access to the future US market is the sticking point for Stars in negotiations with the DOJ seems a bit of a stretch in the face of the civil and criminal charges the company is facing. There are literally dozens of issues on the table in negotiations that simply must be a higher priority for Stars than the dubious value of access to the US market (more on that below).
PokerStars Knows That the DOJ Can’t Provide Such a Thing, So Why Would They Ask For It? This is the weirdest part of Glantz’s argument. His whole assertion basically rests on the idea that the DOJ can’t provide PokerStars with a guarantee that the company can operate in the US market since the market is likely to be state-based. He writes:
The DOJ has no power in who or what the states allow in their online world. The DOJ can cut any deal they want with PokerStars to free them and their principals from federal prosecution. They can agree not to block PokerStars from coming back into the U.S. in the future. But the problem lies in that the DOJ has no power over the states. How do they insist that the states allow PokerStars to operate in each jurisdiction?
Obviously this isn’t news to PokerStars or the DOJ. So if such a guarantee is impossible on face, and everyone involved knows it, why would PokerStars hold up negotiations demanding it? That just doesn’t make any sense, and at this point Glantz’s argument turns back on itself.
PokerStars Probably Doesn’t Care About the US Nearly as Much as the US Cares About PokerStars. The assumption that PokerStars would prize the US market above all other things would make sense if we were in 2007. But we’re not. The US online poker market is a very uncertain thing, basically theoretical at this point. It might be a large regulated market in five years, and it might just be a handful of states sputtering along with a few sparsely-populated online poker rooms. Even those “in the know” don’t know, and that uncertainty makes the market far less attractive to a room like PokerStars.
It’s hard for US players to realize, but PokerStars has far more profitable regions for growth – and we’re talking concrete growth and profit, not some potential that may or may not be realized at some point in the future. There’s no way the room is holding up negotiations with the DOJ that could resolve the charges faced by the company over the issue of access to what amounts to an online poker market with very murky potential.
… and the deal could fall apart at any point. We just don’t think it will have anything to do with the reasons his post brings up.
What could sideline a deal for Full Tilt Poker? Certainly the litany of pending litigation involving the company could put the brakes on any agreement (although the DOJ has moved to strike all major suits that we’re aware of, a judge could easily throw a wrench into the works), as could a lack of agreement on exactly how much money PokerStars should pony up to settle the charges from the DOJ. As the pace of negotiations to date suggests, this is a hyper-complicated deal with many competing agendas that aren’t going to line up without a good amount of give on both sides.
Glantz’s opinion carries a good amount of weight in the poker world (and rightfully so) – there have been no small amount of tweets and articles echoing his latest position as an authoritative one. While Glantz has been right in the past about FTP, we respectfully submit that this time he’s a bit off the mark – and therefore, that the hype created by his position is unfounded.