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Feds Call Full-Tilt Poker a 'Global Ponzi Scheme'
blair1q writes "Popular (and heavily advertised) poker website Full-Tilt Poker was sued today by the U.S. government, following an investigation that revealed it to be a massive Ponzi Scheme. The principals in the company set up a complicated system to direct funds from subscribers' poker accounts into their own bank accounts. This was in contravention of their own claim that users' money was untouched. Players' accounts amounted to $390 million, but the company only has $60 million in the bank, having over time distributed $440 million to its own directors and executives."
Real casinos are not required to keep cash on hand for the full value of the chips they give players, and the reason is quite simple - the games are designed such that the casino will always make money! This is even more true in a virtual casino! Every once in a while, someone wins a lot of money, but it's usually at the expense of other players or nothing that can't be recovered in a day or two. However, now that the cat is out of the bag, a lot of players may end up trying to cash out at once.
except for the fact that you don't go to jail if you choose not to play online poker.
It may seem like a fractional reserve banking system... to those that don't know how a regulated casino is managed. A legitimate casino will always hold sufficient cash to cover all of the chips in play. What ever chips the croupier wins from the players at the point the table closes... only then can the casino take the money to the bank.
Luke, help me take this mask off
US books are open. Private companies' books are not. Definition of Ponzi scheme involves fraud; how can you have fraud when the books are open? Perry and other illiterates are not questioning the values in the books; therefore Social Security is not a Ponzi Scheme. Any questions?
Social Security is not a ponzi scheme but Congress may be running it like one.
The fraud is that money is collected for one purpose but spent for another. For example when the boomers were in their working years the social security surplus was spent by Congress elsewhere. Congress left IOUs. If those IOUs are not somehow paid back then there was fraud. Given that the only solutions being proposed for upcoming shortfalls is to collect more revenue or to reduce benefits the "run like ponzi scheme" meme is plausible.