More Microgaming Poker Troubles

[pokeraddict]

You do not have permission to view link Log in or register now.

It looks like they are trying to run off certain skins. Now withdrawals are suspended on the skin.

 

[ChopleyIOM]

Forgive my ignorance but the story doesn't make an awful lot of sense to me, I understand the basic thrust of it (players can now only play at 2 tables at a time instead of 10), but what's in it for MG to make that change, and what's a 'skin'?

 

[jetset]

I suspect that this may be the real reason for 5050's departure:

ONLINE POKER SITE'S SOFTWARE LICENCE SUSPENDED BY MICROGAMING

Operator in 'material breach of contract'

The Microgaming Poker Network has suspended the operations of licensee 5050 Poker Limited, claiming in a public statement that the operator is in 'material breach of contract', and that the directors of 5050 have been aware they were in breach since June 14 this year.

The network does not appear to have completely written off its licensee, however - the statement notes that: 'Game play will be reinstated once the breach is satisfactorily rectified.'

No details of the breach have been given.

5050 Poker Limited's website shows the owner as 5050Poker Holding AB, whose stock is available on the Nasdaq OMX First North exchange. The company was founded in March 2007, based on the concept of offering loyal players shares in the company.

The website lists management as Patrick Sjögren (CEO) and Meta Martinsson (CFO), with the operational base in Malta.

In August 2009 the company licensed online poker from Microgaming.

It operates online poker, casino and sports betting services under LGA Malta and Curacao licensing

 

[pokeraddict]

It seems they are unhappy with 5050 being a rakeback skin/having too many winners and this is their solution, running them off. This theory goes in line with the new rake allocation that is about to happen. My concern is that this skin is suspending cashouts. Did MG have another busted licensee?

 

[pokeraddict]

Forgive my ignorance but the story doesn't make an awful lot of sense to me, I understand the basic thrust of it (players can now only play at 2 tables at a time instead of 10), but what's in it for MG to make that change, and what's a 'skin'?

A skin is a member of the network. Each Microgaming site is essentially the same software. The skin just looks different. The motivation of making it 2 table max is that it will run off the multi tablers who tend to be winners. These players also generate the most rake, but some networks do not care about that. Some networks want all of their poker players to be the same skill level so that they never have to pay anyone because the rake eats all of the deposits.

 

[Tengil]

They also try to force out Diamondbet (limited to 4 tables) a skin similar to 5050 (and PL). Also their new rakemodel is aiming towards that. Everything probably orcestrated by Unibet and Ladbrokes.

The whole network should be rogued. Playing an active roles in the TUSK scam and also for hiring EurolinxLydia (like WTF?) to be head of network games.

 

[Tengil]

The player funds should be safe. From their site: 5050poker guarantees all players funds and all funds are audited by a third part auditor from Deloitte.
Also their balance sheet doesnt seem to contradict that.

Also a typo in last post.

 

[jetset]

25th June 2012

MICROGAMING POKER NETWORK TERMINATES CONTRACT WITH 5050POKER LTD

ISLE OF MAN – Further to the press statement of Friday 15 July 2012 on the suspension of game play for 5050Poker Ltd, the Microgaming Poker Network regrets to announce that it has terminated its contract with 5050Poker Ltd, with immediate effect.

The decision was taken after giving 5050Poker Ltd over a week to redress a material breach of their contract, being the non-payment of monies owed to cure their overdrawn network clearing account. Although 5050Poker Limited was given the opportunity to rectify the breach so that the suspension could be lifted, they have failed to respond. As such the Microgaming Poker Network had no choice but to terminate the contract.

Ends

 

[jetset]

It looks as though 5050Poker management has been doing some pretty questionable financial stuff for some time, and by the board's own admission the player funds have been plundered to pay operational expenses before the row with Microgaming.

Now, belatedly, execs are being fired and the company is going into liquidation...and yet again the players are going to be left holding the baby, probably getting only 15 percent of their cash back if they're fortunate.

And once again it is clear that the LGA was not on top of the situation regarding segregation of player funds.


5050 POKER FINANCIAL SITUATION IN THE OPEN

5050 Poker players can expect no more than 15 percent of their account balance back

A media advisory posted on the 5050 Poker Holding AB website has addressed 5050 Poker Ltd’s player payment concerns and it is not good news.

5050 Poker Ltd will be liquidated or possibly sold due to the Maltese Lotteries and Gaming Authority's (LGA) request for guarantees at a level that exceed the assets in the company, said a company statement.

Furthermore, Patrick Sjögren, 5050 Poker Holding AB's managing director has been axed and Cem Yeter and Olle Langenius, Directors of 5050 Poker Holding, have been tasked with a further investigation into the fiasco with a view to saving as much of the shareholders’ value as possible.

5050 Poker Holding AB's Board of Directors claim that Microgaming's “suddenly imposed table limit” and the subsequent cessation of its operations along with fines it says were dealt out by Microgaming for "having too many winning players" resulted in a run on the bank by players effectively leaving the company with insufficient funds to cover player balances.

The Board further claims that the company's financial situation went undetected as it (the Board) was provided falsified information on the player's fund, operational costs and the size of the company's assets.

An internal investigation by 5050 Poker Holding AB revealed the following:

- The operational costs of 5050 Poker Ltd has for a long time exceeded the revenues, resulting in players’ funds being used in the operations of the company.

- Fines imposed by Microgaming in excess of Euro 150 000 had incorrectly been withdrawn from players' accounts.

The bad news for players is that the value of available assets will be used to pay back players on a proportional ratio. The Board said "there is no reason to believe that the ratio will be higher than 15 percent of the actual balance of the players’ funds."

The company's unnamed auditing firms will also have some tough questions to answer as both 5050 Poker Ltd and 5050 Poker Holding AB reportedly underwent an audit for the 2011 fiscal year.

The full advisory can be accessed at Link Removed ( Old/Invalid)

 

[Mousey]

And once again it is clear that the LGA was not on top of the situation regarding segregation of player funds.

I am no longer amazed at these reports... disgusted... horrified... nauseated....

Honest to gawd.... someone with deep financial pockets, political clout, and cajones ought to be bringing allllll kinds of litigation against LGA ..... Hell... even the government where the LGA is 'located' should boot them and fine them and and and... tar and feather them... and wipe them off the face of the online gambling map for fraud.

They are useless. They are a non entity. They do not exist. LGA is a name, and a license a worthless piece of paper......

 

[pokeraddict]

I am sure Microgaming will once again claim no responsibility for another failed licensee. I know there are legit MG licensees and some of them are the most well respected in the world but this company has shown over and over again that they care zero about security of player funds. Presumably this all started because 5050 had too many winners. This means the poker room was taking money out of the ecosystem. If 5050 was pulling money out of the poker network then where is that money? It is the same as Eurolinx, MG is keeping it.

Regardless of what Microgaming thinks, this is their problem. It is too bad people still play on their poker network. They have proven there is a near zero chance that player deposits are secure. If a licensee gets in trouble MG will just clean their hands of the problem and continue on with their business as long as they get their royalties. </MG rant>

I was going to type an LGA rant but I don't have the hours needed to type it.

 

[jetset]

I am sure Microgaming will once again claim no responsibility for another failed licensee. I know there are legit MG licensees and some of them are the most well respected in the world but this company has shown over and over again that they care zero about security of player funds. Presumably this all started because 5050 had too many winners. This means the poker room was taking money out of the ecosystem. If 5050 was pulling money out of the poker network then where is that money? It is the same as Eurolinx, MG is keeping it.

Regardless of what Microgaming thinks, this is their problem. It is too bad people still play on their poker network. They have proven there is a near zero chance that player deposits are secure. If a licensee gets in trouble MG will just clean their hands of the problem and continue on with their business as long as they get their royalties. </MG rant>

I was going to type an LGA rant but I don't have the hours needed to type it.

4th July 2012

MICROGAMING POKER NETWORK CLARIFICATION IN RESPECT OF 5050 POKER STATEMENT 3 JULY 2012

ISLE OF MAN – Microgaming Poker Network (“MPN”) has taken note of a statement by 5050 Poker, placed on its website and dated 3rd July 2012. We think it important to clarify certain points raised within the statement.

5050 Poker did not pay €150,000 in fines. From April 2010 to June 2012, a system of reallocation of funds between Operators, called “Rake Reconciliation”, was used on the Network. Rake Reconciliation corrected the imbalance that occurs in a poker network ecosystem when rake is the only valuation metric. Similar methods are in use on other networks and are industry standard. It is this system of funds reallocation that is referred to in 5050 Poker’s statement, not “fines”. It is important to note that the reallocation of funds takes place between Operators within the Clearing House bank account, which at no time holds player balances from any Operator on the Network. MPN cannot access an Operator’s player accounts.

The suggestion that MPN imposed a simultaneous table restriction on 12 June 2012 without prior warning is incorrect. On 4 May 2012, all operators on the Network, including 5050 Poker, were notified of the restriction rule, which states that the number of simultaneous tables a single player may play on an operator may be temporarily reduced for the betterment of the network ecology. The specific application of this rule to 5050 Poker was notified to them mid May, and put into effect in June. The rule was put into action with three operators, one of whom was 5050 Poker.

-ENDS-

 

[vinylweatherman]

4th July 2012

MICROGAMING POKER NETWORK CLARIFICATION IN RESPECT OF 5050 POKER STATEMENT 3 JULY 2012

ISLE OF MAN – Microgaming Poker Network (“MPN”) has taken note of a statement by 5050 Poker, placed on its website and dated 3rd July 2012. We think it important to clarify certain points raised within the statement.

5050 Poker did not pay €150,000 in fines. From April 2010 to June 2012, a system of reallocation of funds between Operators, called “Rake Reconciliation”, was used on the Network. Rake Reconciliation corrected the imbalance that occurs in a poker network ecosystem when rake is the only valuation metric. Similar methods are in use on other networks and are industry standard. It is this system of funds reallocation that is referred to in 5050 Poker’s statement, not “fines”. It is important to note that the reallocation of funds takes place between Operators within the Clearing House bank account, which at no time holds player balances from any Operator on the Network. MPN cannot access an Operator’s player accounts.

The suggestion that MPN imposed a simultaneous table restriction on 12 June 2012 without prior warning is incorrect. On 4 May 2012, all operators on the Network, including 5050 Poker, were notified of the restriction rule, which states that the number of simultaneous tables a single player may play on an operator may be temporarily reduced for the betterment of the network ecology. The specific application of this rule to 5050 Poker was notified to them mid May, and put into effect in June. The rule was put into action with three operators, one of whom was 5050 Poker.

-ENDS-

The problem seems to be that imposing this rule on only SOME operators triggers a "run on the bank" as players bail to operators not subject to the restriction. It is this "run" that exposes any "dodgy" financials that were previously "under the radar", and can even bring an operator down.

Purple Lounge were up to no good, but it was the sudden and unpopular move from MPN to Entraction that triggered the mass migration of poker players and their balances that sucked them dry and brought them down.

I have to wonder how many more poker operators are playing fast and loose like this, and are only getting away with it because they have not had a mass call on player balances due to a migration of players.

Had player funds been properly segregated, such actions by MPN, or indeed mass migrations of players, would not bring a company down to the extent that players couldn't be paid.

There is clearly a serious failing in the procedures being used to safeguard player balances if TWO companies can "get one over" on MPN and the LGA in the first half of the year. Not to forget that Full Tilt more of less did the same, and "got one over" the Alderney regulators.

We can no longer write this off as "an isolated incident with a rogue operator". It seems that a culture has been allowed to develop whereby unacceptable risks are being taken with player balances on the assumption that there will never be a mass withdrawal by players as a whole big enough to "break the bank".

 

[pokeraddict]

You have to wonder how many MG poker rooms are a dispute away from a collapse. Tusk, Eurolinx, Bet Holdem, and 24Poker were all under scrutiny for rakeback deals that MG felt were illegal and all went broke and never repaid players. It seems 5050 falls under this too. This is concerning and shows just how poorly this network is being managed if skins can just fall into bankruptcy when such a dispute arises.

As for the clearinghouse, I had friends that won money the night before Eurolinx closed. Where do you think that money went? The poker community assumed MG took it to cover their royalties owed and MG has never denied this.