(Disclaimer: I have no inside knowledge of the indicted companies' finances and the sum of my opinion is based solely off the public information released and the speculation drawn from poker forums and twitter)

I am going to discredit some fallacies I see and hear over and over again across the forums and the various "news" outlets that are reporting "hooray stars...boooo full tilt"

Fallacy 1: "Pokerstars segregated their funds. Therefore they care about the customer more and are a more forward-thinking company"

Pokerstars segregated their player funds (from operating funds and equity stakes) because they were legally obligated to segregate their player funds. No other reason. It costs them a lot of money to segregate funds. That's why there is a law to make them do so!

Everything in finance can be boiled down to an equation. This is a simple EV (Expected Value) equation everyone should be familiar with.

(EV gained from goodwill with customers to assure them of their segregated accounts)

+

(The EV of being first to release funds in the event of a DoJ action discounted by the probability of the DoJ actually moving to indict...basically future goodwill)

Compared to (<,>,=)

(The liquidity of having all company funds available)

+

(The interest gained on even low interest-bearing investments on the funds from the pool of player balances)

========================================

I can tell you with almost certainty that the second side of this equation far outweighs the first side. How do I know this? Because Full Tilt had the choice to bet on one side of this equation, and they picked the second. Stars had no choice. They had to pick the first due to their license.

Full Tilt worked out this equation. The only way they could have made a mistake in looking at this is if they severely underestimated the chances of a DoJ indictment. While possible, I think if they thought it was by any means close they would bet on the first side as it would put them in the same side with their rival and protect their future reputation.

Full Tilt, I believe correctly so, just doesn't think goodwill with the player pool is all that important. Who can blame them? UB cheated its players out of 10's of millions of dollars and still had meaningful market share years later. If UB had defaulted due to the scandal, I wonder if it would have shifted Full Tilt to the first side of the previous equation. Unfortunately for speculation's sake it's an impossible situation to assess without more information.

(The next two fallacies are based on a podcast I grabbed off @Kevmath and can be found here:

http://www.quadjacks.com/audio/33/the-next-round-of-poker-pink-slips-full-tilt-pok )

Fallacy 2: "Hopefully not just one, but many of them [FTP Red Pros] will stand up against being silenced. I've always felt when you are silenced that you are hiding something and that you are guilty of something..." (~2m25s into the link)

First of all, as anyone who has a girlfriend obsessed with Law and Order knows, speaking without an attorney present during any legal situation can only go poorly. If everyone brought in for questioning in L&O asked for a lawyer immediately, there would be no show. You could accidentally incriminate yourself of something you aren't even guilty of, creating leverage for the DoJ or at the very least cost yourself and others a lot of money in extra legal fees. This is just one of many things that can go wrong by "not being silenced."

The next point to denounce is that red pros have responsibility to play watchdog of Full Tilt's operations. Last I checked they had a contract to play poker on the site and be paid money for it. They advertise for them using their well-known image in live poker tournaments. That is the extent of their involvement. Eunjong Byun et al do not fly out to every board meeting.

Lastly, a standard clause in contracts of the type red pros would sign would be to not disseminate trade secrets. They are also most likely not allowed to defame Full Tilt in a public setting. There would be an exemption if the signee sought whistle-blower status, like what happened with UB, but otherwise Full Tilt could most likely sue any red pro speaking publicly against them right now.

Fallacy 3: "Not long ago, the DoJ did allow for the Full Tilt Poker players' funds in the United States to come out and be paid, yet I have heard nothing of anyone getting paid, and its now starting to seem obvious they don't have enough money to make payments..." (~2m40s in the link below)

As I stated above, Full Tilt obviously took the second side of the bet, pooling all of their money and using it in passive investments rather than segregating player funds. This is just smart business. I'd be more nervous about the money I have on FTP if they DID segregate their funds voluntarily, as it would give cause to believe Full Tilt would make poor business decisions in the future.

Unless they have a specific reason, large companies do not keep a large percent of their worth in cash. Cash tomorrow is worth less than cash today. You need to make cash today work for you to at least cover that depreciation to "break-even." This might sound like a funny concept to some people, but if you have $100 in your checking account today, its worth a small bit less tomorrow. This depreciation, coupled with the money you could have made by investing it elsewhere, creates an opportunity cost. When we are talking about the players' collective money, this opportunity cost is way too high to ignore.

Full Tilt is making an announcement May 15th. I am going to go out on a limb here and guess that U.S. cashouts will soon commence. Again, this is not based on any first-hand knowledge, just speculation. This day is exactly one month from the DoJ seizure. I am guessing Full Tilt did have a contingency plan. Perhaps it just was set to cover funds a month after the seizures, which would have been way ahead of schedule according to the Neteller precedence from 2007. Or maybe the DoJ froze the transient processing accounts at their highest water-mark, obviously waiting for players to be cashing out for taxes from both 2010 and the 1st quarter of 2011. Whatever the case, Full Tilt isn't going to process one U.S. Cashout until they can cover every dollar of every U.S. player balance. Perhaps the investments give a penalty if they withdrew before now. This is one of just many ways that could legitimately delay our cash outs.

People need to step back and think about what I have just written. Does this mean that I am 100% guaranteeing FTP pays everyone back soon? Absolutely not, although I hope it is the case since I have a good amount stuck on there. People just need opinions of people who have a background in how business and contracts work to ease their minds. That is why I wrote this blog. You don't need the ignorant rants of two guys grabbing ratings on some joke podcast. Read everything, absorb all the information you can, and think for yourself in this tumultuous time.

Pokerstars and Full Tilt are both well run companies. You don't get to the top of the online poker food chain by making bad business decisions. Pokerstars also didn't get there by being charitable. They are just making another good business decision. They are returning U.S. funds faster than anyone because they were forced to lose money on those funds since their inception. They have turned this previous loss into a jab at Full Tilt by beating them to the punch. I have confidence Full Tilt will now make their good business decision, which is to pay back U.S. players soon to continue operating as a major player in the international market. It just makes sense, though everything you will read or hear might say otherwise.