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What you describe people did at FullTiltPoker is called a Ponzi scheme.

dublinben 13y ago
Not at all. A Poker Site didn't make any claims of guaranteed returns on your 'investment.' They probably considered player deposits to become virtual Poker Dollars, that have no legal value.
- wpietri 13y ago
  That might be a too-generous interpretation. They could also be bad at business, which is pretty common. With some people it's more, "Hey, there's a pile of money in this account. I like money! Why don't I take some." The separation of accounts is very much a learned set of disciplines. Some never learned it, and some just don't get it.
- at-fates-hands 13y ago
  >>> A Poker Site didn't make any claims of guaranteed returns on your 'investment.' This is irrelevant. They didn't need to make any guarantees on investment, they just needed more players. Just because they didn't need to bait people to play doesn't mean it wasn't a Ponzi scheme. What defines a Ponzi Scheme is this: http://en.wikipedia.org/wiki/Ponzi_scheme http://en.wikipedia.org/wiki/Ponzi_scheme "A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation" Which is exactly what FTP was doing.
yscale 13y ago
No, it wasn't a ponzi scheme. FTP was a real, legitimately profitable business, and it could have run quite successfully without secretly borrowing from the customers. But secretly borrowing from the customers allowed the directors of the business to give themselves $400mm with no waiting, whereas operating as they claimed they were (with segregated accounts for the customer money) would've required that they wait a few years to pull that much out. The plan fell apart when some laws changed in the US, and the outflows started exceeding inflows, but the directors were unable and/or unwilling to put the money they'd taken out of the company back into the company. It's quite likely this was because several of them used the money to speculate in the real estate market.

Not at all. A Poker Site didn't make any claims of guaranteed returns on your 'investment.' They probably considered player deposits to become virtual Poker Dollars, that have no legal value.

wpietri 13y ago
That might be a too-generous interpretation. They could also be bad at business, which is pretty common. With some people it's more, "Hey, there's a pile of money in this account. I like money! Why don't I take some." The separation of accounts is very much a learned set of disciplines. Some never learned it, and some just don't get it.
at-fates-hands 13y ago
>>> A Poker Site didn't make any claims of guaranteed returns on your 'investment.' This is irrelevant. They didn't need to make any guarantees on investment, they just needed more players. Just because they didn't need to bait people to play doesn't mean it wasn't a Ponzi scheme. What defines a Ponzi Scheme is this: http://en.wikipedia.org/wiki/Ponzi_scheme http://en.wikipedia.org/wiki/Ponzi_scheme "A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation" Which is exactly what FTP was doing.

yscale 13y ago

No, it wasn't a ponzi scheme. FTP was a real, legitimately profitable business, and it could have run quite successfully without secretly borrowing from the customers. But secretly borrowing from the customers allowed the directors of the business to give themselves $400mm with no waiting, whereas operating as they claimed they were (with segregated accounts for the customer money) would've required that they wait a few years to pull that much out. The plan fell apart when some laws changed in the US, and the outflows started exceeding inflows, but the directors were unable and/or unwilling to put the money they'd taken out of the company back into the company. It's quite likely this was because several of them used the money to speculate in the real estate market.