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Microgaming poker scandal: licensee in liquidation, and poker players abandoned and owed $5,300,000


Wednesday, March 25, 2009

Microgaming poker scandal: licensee in liquidation, and poker players abandoned and owed $5,300,000

This is another long article, so I've broken it down into twelve sections for the sake of readability. Clicking on any of these index links will take you to the relevant section below.

• Microgaming poker
• Removal of eCOGRA seals from the Tusk group casinos, and casino response
• Microgaming revokes the Tusk group's license
• Liquidators are appointed, "Casino Rewards" takes over the Tusk casinos
• The poker rooms: the skin concept and arrangement with Microgaming
• Microgaming ignores the poker players AND their skin business partners
• Microgaming breaks silence to deny any responsibility
• Is Microgaming going to honour the balances of the Tusk players?
• Should Microgaming honour these balances?
• Players can expect no more than 15% from the liquidation of Tusk
• Full list of Microgaming poker rooms
• Comments


Microgaming poker


Microgaming Poker was launched in 2003, an offshoot of online gambling software provider Microgaming. Originally called "Prima Poker", it was rebranded to reflect the provider's name in 2006.


The Wikipedia Microgaming entry makes interesting reading:


In late February 2008, twenty-seven Microgaming-powered poker rooms closed when their licensee Tusk Investment Corporation Limited went into insolvent liquidation, leaving all players who had funds in those rooms to claim as unsecured creditors in the liquidation.

It is not yet known whether players will recover any of their money.


So, what happened?


Removal of eCOGRA seals from the Tusk group casinos, and casino response


On February 15th 2008, online gambling operation eCOGRA announced the suspension of eCOGRA seals from the six Microgaming casinos belonging to the Casino Action group:


An onsite review was recently conducted by eCOGRA`s Compliance and Advisory Services staff at the operations for the following casinos as part of a normal seal renewal process:

Challenge - www.challengecasino.com
Golden Reef - www.goldenreefcasino.com
I Big Casino - www.ibigcasino.com
Music Hall - www.musichallcasino.com
Nostalgia - www.nostalgiacasino.com
UK Casino Club - www.ukcasinoclub.com

The audit revealed failures in compliance with eCOGRA`s Generally Accepted Practices. It has therefore been decided to suspend these seals pending further investigation.


The matter was also reported in the Casinomeister eCOGRA seals suspension thread.

On February 20th, a representative of Casino Action gave the following update:


We have been in discussions with eCogra and these purely administrative issues will be resolved shortly.

In no way has our honesty, integrity or customer service been questioned and our reputation speaks for itself!

We are expecting our eCogra seals will be reinstated very soon, but in the meantime it is business as usual.


This turned out to be a quite spectacularly untrue.


Microgaming revokes the Tusk group's license


Just seven days later, Microgaming issued the following Tusk licence termination statement, reported by online gambling commentator Brian Cullingworth:


Company Statement:

Microgaming announces that it has terminated its software licence with Tusk Investment Corporation - with immediate effect, after having received Tusk's notification of its plans to put the Company into liquidation.

Microgaming is presently gathering all facts related to this matter and will provide further announcements as and when information becomes available.'

About Tusk

Tusk Investment Corporation Limited operates a number of casino sites and poker rooms:

Casinos:

Challenge Casino
Golden Reef Casino
Music Hall Casino
Nostalgia Casino
UK Casino Club
Big Casino

Poker rooms:

Battlefield Poker
Royal Card Club
Red Nines
Arctic Poker
Raw Poker
Poker.ie
Daily Poker
Flush Draw Poker
Will Bet Poker
Bet Road Poker
Grand Central Poker
Off The Rail Poker
Privy Poker
Berserk Poker
Atomik Poker
Dave's Poker Room
Hetman Poker
Hot Pepper Poker
Poker Seas
TilttAA Poker
Loose Games Poker
CPT Gaming Poker
Ice Bear Poker
GoHard Poker
Caya Poker
Mr Urban Poker
Poker Sweden
Euro Poker Dream


That eCOGRA had described the financial collapse of six casinos and twenty eight poker rooms as an "administrational issue", and failed to issue any pertinent warning as to the severity of the matter at any point, is just one of many damning indictments of the online gambling industry that were seen as this issue continued to play out.


Liquidators are appointed, and the "Casino Rewards" group takes over the Tusk casinos


A month later, Microgaming announced that liquidators had been appointed - see the 20th March press release:


COMPANY STATEMENT: UPDATE 20/3/08

ISLE OF MAN - Microgaming can confirm that a Brisbane based liquidator has been appointed by Tusk Corporation and ratified by the regulatory authorities in Vanuatu. Microgaming has been in contact with the liquidator and been informed that they are currently in the process of gathering all the relevant financial information from Tusk Corporation. The liquidator made it clear that this process may take some time, however, Microgaming has been led to believe that affected players will receive information on how to lodge their claims with the liquidator by the end of next week. Microgaming appreciates that the slow process is causing continued frustration among the playing community, but unfortunately it is not in a position to influence the speed of the legal process. Microgaming will endeavour to keep players informed as more information is made available.



On the same day, in the Casino Rewards adds six casinos to its network article, PR Web announced that the six casinos were to be taken over by the Casino Rewards group:


March 20, 2008 -- All online casinos operating under the Casino Action group will soon be under the Casino Rewards management, and ready for a grand reopening on March 25, 2008.

All player accounts in the aforementioned casinos will be safely transferred to the Casino Rewards network, with all account balances, withdrawals, and bonus credits available for immediate use.


So, in the end things turned out satisfactorily for the customers of the six casinos.


But what about the customers of the twenty eight poker rooms? Who is responsible for paying these players their balances?


The poker rooms: Tusk skin "Red Nines" describes the skin concept and their arrangement with Microgaming


These poker rooms were all "skins", or "white labels", of Tusk Investment Corportation, operating their poker branch under the name "My Poker Profit". Skins are glorified affiliate sites which send players to the parent company (in this case, Tusk) but with no access to player funds, the financial side being handled exclusively by the parent company. The "skin" has information on player numbers and maybe other relatively trivial matters, but they have no control over the finances.


For an excellent operator's description of the skin concept, and other relevant matters, see the open letter to Microgaming written by one of the skin owners, Red Nines Poker:


At the end of 2005, Rednines contacted Microgaming (then named Prima Poker) to explore the possibilities of becoming a skin into the Microgaming network.

We were advised by Microgaming to contact Tusk to get a deal through them instead, since they had a deal in place with Microgaming which made it possible for new partners to get a skin up and running within days.

This process is known as a white label solution, which means that our work on Rednines.com would basically be to get players, and get a revenue share of these players. In other words, Tusk / MyPokerProfit.com would take care of everything from Payment Gateways, holding on to player funds, dealing with Microgaming and handling customer support.

The only information we had access to was the players signed up through Rednines.com, we could see their names, emails and their current rake. We had no way of even making a deposit to a players account without going through Tusk / MyPokerProfit first. In fact any poker room related issue had to go through TUSK.



Microgaming ignores the poker players AND their skin business partners


The poker side of the Tusk collapse has been discussed at huge length in the 27 Microgaming skins to close discussion at the 2+2 forum. I have not read every one of the 3000+ posts, but what I have read represents little useful information; for the most part, players are expressing their general confusion and anger, and a hope that their balances will not be lost.


One startling fact to emerge from the discussion is that the skin operators appear to have been treated with the same scant disregard by software provider Microgaming as the players. If you look again at the Red Nines open letter:


Rednines.com is no longer running, along with BattlefieldPoker.com and several other white label solutions of Tusk / MyPokerProfit. Microgaming has not reached out to us, nor have we been able to get a hold of anyone with a say in Microgaming that could help us solve what happened. Even though it is several months since Tusk went bankrupt we have at several occasions tried to get a hold of someone that could take responsibility for what happened - unfortunately without success.

I have been told by many that they feel Rednines.com should pay up for player balances and their losses, and I can understand their frustration. The problem is that we never saw any of these deposits, we simply got a revenue share for our players rake. This was around $25,000 gross profit every month for the months we were operative. Microgaming was actually making a bigger profit than us on our players.

I would like to see Microgaming take a stand in this matter, and be the responsible party, which means they should pay for the player balances.


This latter feeling is also expressed by the players, some of whom took it for granted that Microgaming would honour their balances - these comments are taken from the mighty 2+2 thread:


I believe Microgaming has covered players' balances when things like this have happened with casinos running their software before.


All the balances are covered by Micro Gaming.


Microgaming has been around since before online poker, and I don't think a player has ever lost money when one of their casinos or poker rooms shut down. I'm sure your money is safe.


In this case I would think that Microgaming would step in to cover player balances, and as such your money should be safe.


I really doubt that Microgaming will allow the money in accounts to be lost.


Unfortunately, notwithstanding the opinions and hopes of both players and skin operators alike, Microgaming has failed to communicate.


Microgaming breaks silence to deny any responsibility


In mid-2008, six months after Tusk / My Poker Profit collapsed, Microgaming received a letter from a lawyer representing one of the players who had a large investment, notifying them of a proposed court action. The player in question reported the matter in this short 2+2 post:


MG denies responsibility



My dad sent microgaming a letter notifying them he was intending to take them to court. Within 4 days he got a response from a firm in Toronto( they have hired legal counsel already) saying they take no responsibility and that our accusations against them were erroneous.


So: no comment from Microgaming, apart from one denial of responsibility when they were forced to respond.


There are therefore two questions to ask:


1: Is Microgaming going to honour the balances of the players involved in the Tusk collapse?


They may yet, but it doesn't look good. They have been uncommunicative to all involved parties, and the one occasion that they chose to break silence was to deny any responsability. It may be the case that they are waiting for the liquidation to run its course, at which point they'll survey the damage and take the necessary remedial action.

However, since they know the numbers involved from the liquidation report (see below), they know exactly the extent of their potential liability and should therefore be able to give some sort of indication of their intentions. The fact that they have not done so suggests to me that they are not planning on making the players whole.

So it's not looking good.


2: Should Microgaming honour these balances?


This one's easy. Yes. Microgaming should compensate the poker customers of failed licensee Tusk Investment Corporation, notwithstanding the fact that, as the software provider, they have no legal liability. There are two reasons for this:

In the first place, it's the right thing to do and they've done it before.

It's the right thing to do because the players are, at the end of the day, customers of Microgaming. Players, for their part, then have the confidence of knowing that, whichever licensee or skin they're patronising, they are safe because Microgaming is safe. Good for Microgaming, good for the players.


When the Tropika group failed in 2001, Microgaming paid - see the Microgaming to pay all Tropika players thread from Winneronline.

When Goodfellas Casino failed, Microgaming paid - see the Goodfellas thread at Winneronline.


On these occasions, Microgaming did the right thing and should receive all due credit.

Why would they not now?


In the second place, Microgaming have resposibility for having directed the skins to Tusk in the first place - look again at the open letter at 2+2:


We met Microgaming and their representatives at a hotel in London in early 2006 in connection with the ICE gaming show. During this meeting Microgaming stressed the fact that they were backlogged in the process of accepting and adding new skins to their network already.

We were then advised by Microgaming to contact Tusk (also known as MyPokerProfit.com) to get a deal through them instead, since they had a deal in place with Microgaming which made it possible for new partners to get a skin up and running within days.

This was far away from what we would prefer. Maybe we are guilty of being naive, but as Microgaming said it was an easy way to join the network, and Tusk/MyPokerProfits way of doing business was condoned by Microgaming themselves. This made the deal seem legit and secure for us.

In addition to this, Microgaming said that once we were integrated in Tusk/MyPokerProfit’s system, it would be an easy process to re-convert us over to Microgaming as a regular partner once their queue was less backlogged.



So, Microgaming specifically directed these potential skin customers to Tusk.

And Tusk failed.


If you look at the liquidator's report to creditors, you can see that during the financial year in which Microgaming recommended Tusk to skins Battlefiend and Red Nines, they were hardly doing well:


Tusk annual profit loss figures



Total profit $282,000 for the year.


Maybe in late 2005, when Microgaming made the Tusk recommendation to these skins, they were doing less badly.

Or maybe they only had the 2005 report to go by, which may have been better.

Or maybe Microgaming knew that Tusk was struggling, and tried to help by sending them skin customers. Now there's a thought.

Or maybe they didn't look at the figures at all.

However, at the end of the day, Microgaming recommended Tusk.


Players can expect no more than 15% from the liquidation of Tusk


Assuming Microgaming fails to honour the players, they can they expect to receive around fifteen percent of their balances from the liquidation:


Tusk creditors
Tusk cash in bank



The $1,400,000 cash in the bank against the $9,000,000 total creditors is about 15%.

Of that $9,000,000, the sum total of the poker player balances is a cool $5,312,923:


Tusk individual creditors



Hopefully, Microgaming will break silence on this and offer to compensate the affected players. If they do not, it will be their first failure in these circumstances, and it will send a big, fat, red warning to players that their deposits at Microgaming operations are no longer safe.


Full list of Microgaming poker rooms


As such, here is a full list of the Microgaming poker clients:

24 Poker
32Red Poker
Apuestas Poker
Aspinalls Poker
Aztec Riches Poker
Bet On Bet Poker
Betshop Poker
Betway Poker
Canbet Poker
Captain Cook's Poker
Carlos Poker
Colosseum Poker
Cool Hand Poker
Crazy Poker
Eurolinx Poker
Globet Poker
Gnuf Poker
Go Wild Poker
Golden Riviera Poker
Golden Tiger Poker
Grand Bay Poker
Intertops Poker
Jbet poker
Jennings Poker
Ladbrokes Poker
MM Poker
Nordic Bet Poker
Poker Rewards
Poker Share
Poker Time
Pokerwize
Purple Lounge Poker
Roxy Poker
Royal Vegas Poker
Spin Palace Poker
Stan James Poker
Tell Poker
Triobet Poker
Unibet Poker
Virtual City Poker
Wild Jack Poker


The point of listing all these Microgaming poker rooms is not to warn players to not patronise them - some, like Ladbrokes, are big names and very solid.

The point is to be aware that should any of them fail, it must not be automatically assumed that Microgaming will bail out the players, as once was the case; as such, players should not simply rely on the name of Microgaming when choosing to play there.


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5 Previous Comments


I never knew Microgaming advised people to go with Tusk. That was not their smartest move.

By Blogger Sandracer, at 3:35 pm  


Wow Microgaming looks really bad here. I'll be cashing out my money from eurolinx. Definitely do not feel safe playing on their network. Guess its back to pokerstars for me.

By Anonymous jeff krauss, at 6:32 pm  


The player whose dad got to date the only response from Microgaming has claimed that Microgaming have held these funds from the word go and were attempting to scam the players - see his Microgaming attempting to scam the players money post.

A monumental claim, which would probably spell the end for Microgaming if true.

By Blogger 100% Gambler, at 3:45 pm  


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By Anonymous Anonymous, at 4:12 pm  


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