One of the most interesting and arguably informative articles to appear on the Cereus network online poker sites Absolute Poker and UBPoker appeared over the weekend in the St Petersburg Times.
Clearly the product of considerable research by three or more business journalists, the piece covers the initial founding of the enterprise between 2000-2002 by four frat brothers from the University of Montana - Scott Tom and Garin Gustafson were allegedly the poker experts; whilst Shane Blackford and Oscar Hilt Tatum IV had family money and contacts.
The appeal of the growing online poker phenomenon, along with the contacts available to the founders, enabled them to raise millions in initial capital for the venture.
The authors trace the development of the company through records and interviews with investors, most of them apparently unhappy with the lack of returns occasioned by legal difficulties and flawed business decisions that bedeviled the sites.
"The (Absolute Poker) site, one of the first of its kind, grew like wildfire. Soon nearly 30,000 players were logging on at once, trying their luck at games like Texas Hold'em. In just four years, annual revenues rocketed past $200 million," the authors reveal.
"Congress put a serious crimp in online gambling in 2006, but Absolute Poker found ways to keep dealing virtual hands. Even two cheating scandals didn't stop the cash flow."
The piece goes on to describe the business machinations that saw the originally Costa Rica-based sites transferred to a former chief of the Kahnawake Mohawk tribe in Canada for a million dollars and later what appeared to be a takeover by Blanca Games, as attempts were made to build ownership and interest firewalls against the threat of US enforcement actions.
Companies in Norway and Portugal like Madeira Fjord were opened to move finances around, and plans were actioned to develop fall back software and hosting facilities in Panama and the issue of $250 million notes bearing 12% per annum interest.
It's a fascinating tale of business manoeuvreing in a difficult and competitive environment; the impact of the UIGEA; and the recent US federal indictments that name the sites in question and at least one of the founders make the story all the more topical.
It's worth the read at http://www.tampabay.com/news/business/article1166818.ece
Source: InfoPowa News