Should operators be required to keep player funds separate from operating funds?

[MichaelCorfman]

Yesterday the U.S. Department of Justice filed a motion to amend its earlier civil complaint against Full Tilt Poker to include “additional allegations, claims, and defendants concerning a fraudulent scheme by Full Tilt Poker and its Board of Directors concerning the misuse of players’ funds."

One of the specific allegations was that Full Tilt mingled player and operating funds and paid out monies to the site owners without retaining sufficient funds to cover player balances. We reported this in the thread Breaking News: Feds call Fult Tilt a "Ponzi Scheme".

In our own investigations over the last day we've discovered that most online gaming regulators do not prohibit mingling operator and player funds. What is your opinion? Should operators be allowed to mix player funds with their own or should they be required to hold those funds in separate accounts?

Michael

[AmCan]

I think since money is transferring between player in poker the answer is yes. Wait for your rake before you start cashing out. For a casino, it's different. I recall steve wynn saying "in general, over the long term, we keep $1 of every $3 bet. In other words, about 67% of the money in chips in play and credits on machines, would come back to the players, i would think the casino should have at least 75% of the cash in play (including chips outstanding) on an average day, to always be able to cash out everyone. Online there are similar things that could be done. An industry group or licensing authority should come up with some numbers for the online gaming industry.

[baldidiot]

The players funds should definitely be held in a separate account. Actually, I thought this was already a requirement - kind of shocked to find out it isn't!

[GPWA Dan]

GPWA Managing Editor Vin Narayanan is in Milan now for EiG and just published a piece on this very topic:

MILAN, Italy -- Full Tilt Poker may have commingled player funds and operations money in bank accounts, but that didn't violate its license with the Alderney Gambling Control Commission (AGCC).

Alderney licensees are required to disclose to players whether they mix player deposits and operations money in bank accounts or keep them in separate accounts, an AGCC official familiar with the situation told Casino City today. But they are not required to keep the two separate.

Full Tilt elected to disclose they were commingling funds.

The issue of commingling player funds with operating expenses was a big topic of conversation at the European iGaming Congress & Expo in Milan, Italy on Wednesday as the online gambling industry grappled with how one of its stars, Full Tilt Poker, had fallen so quickly.

PKR CEO Malcolm Graham called on regulators to force operators into keeping money deposited by players separate from money used in operations.

"We hope regulation will lead to ring fencing accounts," Graham said.

In two separate panel discussions featuring online gambling regulators from throughout Europe, Casino City asked whether player deposits should be segregated from operations accounts.

Only one regulator responded with an adamant yes.

"To protect customers, (it's) stipulated operators can't spend on the players' funds. We regularly check the bank accounts with technology to make sure the two balances match," said Franceso Rodano, head of remote gaming for AAMS, the Italian regulatory agency for online gambling. "We also have bank guarantees in place," Rodano added.

"This is something that needs to be looked at," said Jersey Gambling Commission Chairman Graham White in a different panel discussion. "All regulators recognize this. There might be a technological solution...there is a quite simple program that can track the deposits."

AGCC CEO Andre Wilsenach was part of the same panel discussion as White and declined to address the issue. But his sense of frustration over Full Tilt came through clearly in a recent statement regarding the hearings being held this week about the company's Alderney license.

"I am disappointed with the tribunal’s decision that, notwithstanding my arguments to the contrary, the hearing will be held in private. I believe the public has a right to know the reasoning behind the decisions to suspend FTP’s licences and call a hearing, and to hear the evidence that will be put forward on my behalf."

[universal4]

Based upon a few comments and having had more time to think about it I would likely vote differently today.

If we were to demand that (100%) of the funds can not be comingled, why would we not have the exact same stipulation placed on banks or ANY other company or institution that allows customers to prepay into any kind of account from which services or products are purchase?

I would hope that when the US gets around to regulating online gaming that they take this into consideration.

The financial institutions of the world have recently PROVEN they can NOT do a very good job of managing our money, so why shouldn't they be FORCED to keep 100% of ALL depositer's funds seperate from any operating funds?

Rick
Universal4

[TheGamblingGuru]

Based upon a few comments and having had more time to think about it I would likely vote differently today.

If we were to demand that (100%) of the funds can not be comingled, why would we not have the exact same stipulation placed on banks or ANY other company or institution that allows customers to prepay into any kind of account from which services or products are purchase?

I would hope that when the US gets around to regulating online gaming that they take this into consideration.

The financial institutions of the world have recently PROVEN they can NOT do a very good job of managing our money, so why shouldn't they be FORCED to keep 100% of ALL depositer's funds seperate from any operating funds?

Rick
Universal4

The funds we have in Banks are insured by the FDIC, whereas our funds we have in online casinos and poker rooms are not insured at all.

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[michael1981]

The players funds should definitely be held in a separate account. Actually, I thought this was already a requirement - kind of shocked to find out it isn't!

I agree Keeping funds separate sounds like a good idea. Its more organised, and in case there is a dispute, its much easier to track and refund money back.

[Anthony]

I voted Yes, especially in light of what has been going on with Full Tilt. I don't feel it is too much to ask that the players funds be set aside.

[alexk]

Hi all,




I represent LuckyVegas77.com, and would like to inform you that we will soon be the first online casino licensed via the new regulations in Malta. Player funds are protected under Maltese Gaming Law, which can be located by searching Google for:Remote Gaming Regulations Subsidiary Legislation 438.04 LGA , or clicking the link I have provided to a .pdf file




If you read the paragraph at article 40 you will notice that Malta requires all player funds to be held in a separate bank account from the licensee’s funds, and that a bank guarantee has been issued in favor of the Malta Gaming Authority at abank approved by them. They enforce this via 30 day checks that thefunds available are equivalent to player funds. Also that in case of a discrepancy they can request a letter of guarantee be issued in their favor at the amount they request.




Please do read the entire law if you’re interested. If you have any questions about the process, how player funds are protected by this provision, or about LuckyVegas77 itself we will do our best to respond.




Thanks, Alex

[Anthony]

Here is the link to the LGA pdf.

http://lga.org.mt/common/file_provid...75379322172500