Slashdot Mirror
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."
Check again, in Nevada it only need be available "next business day". Casinos can also issue payouts in credit or checks in case insufficient cash exists on premises. Look up the regulations around the Corporate Treasury Waiver and Bank Balance Waiver. So, yes, the casino must cover every bet on the floor - but not necessarily in cash, which was my original point.
>> So in other words is exactly like social security, except for the fact that you don't go to jail if you choose not to play online poker.
That's cute, and completely inaccurate.
Any retirement investment method is counting on the gradual growth of the value its investments over time. Most methods assume investment into activities that will result in value-added business from which surplus value can be extracted. Since any one investment has a risk of either under-performing or going completely tits-up, risk is managed by making a diverse group of investments.
The US Federal Government is "invested" in the prosperity of the US. Social Security is therefore diversified over an entire national economy, recovering taxes from a range of activities. The advantages of this "ultimate index fund" are low administrative overhead and risk.
Both private and public retirement plans are predicated on the assumption that there is long term growth in the investments, the basis for the continued function of a modern market economy. If/when this isn't the case, the paradigm falls apart, and members of a cash economy would need to salt away the entire value needed to provide for their post-earning years.
Luke, help me take this mask off
Actually, it is the very definition of a Ponzi scheme.
There should be two distinct piles of money here. First, we have the business's money. I don't know how they earn this (percentage of play maybe), but it doesn't really matter. This is the money they can use to operate the business. For this fund, it is perfectly reasonable to expect money to keep coming in, that is how businesses operate.
However, there should be a separate pile of money that belongs to the account holders. This is NOT the business's money. They should, at any time, be able to pay off every single account holder every penny they hold in the account. If you have to keep having new accounts (or more money added to them) to pay off other accounts, that is a Ponzi scheme.