How Absolute Poker Became a Monolith and Then Collapsed
Absloute Poker in Meltdown
Absolute Poker was the ultimate success story and rode high off of online poker only to suffer meltdown when Congress changed the rules of the game.
The story of the rise and fall of the US Poker monolith Absolute Poker shows just how tough it is to make it in the cut throat world of online gaming. The brainchild of 4 college undergrads; Absolute Poker was founded at the start of the internet Poker boom. The students were all college roommates who regularly played poker before simply deciding to set up their own online poker business.
The 4 friends were Scott Tom and Garin Gustafson (the poker experts) Shane Blackford and Oscar Hilt Tatum IV who had access to money and investors. With the responsibilities shared between them they got to word and spent roughly $21 million getting the company off the ground. Unfortunately once the company was well and truly underway Congress made internet poker illegal in 2006 ensuring the beginning of Absolute’s problems.
While other poker companies were able to divest from the United States and find their clients elsewhere, Absolute Poker issued a press release stating that they would continue to service the needs of players in the USA. While this had been happening Absolute Poker had become much more than 4 friends running a website. There were directors involved as well as shareholders, all of whom were very worried about their investment in online poker.
The shareholders wanted to insulate themselves from the ‘illegal’ online poker while still maintaining their hold over the profits. The founders, now owning around 20% of the online gaming giant they had founded attempted this in a number of ways. First the poker business was sold for $1 million to Tokwiro Enterprises, owned by Joseph Tokwiro Norton, former grand chief of the Mohawk Council of Kahnawake in Canada. This well respected figure in the world of gambling was able to represent the group’s interests and ensure they had a voice where it mattered but the relationship was soured when the 2007 and 2008 cheating scandals broke at Absolute Poker and Ultimate Bet.
After that the company was beset by allegations of fraud and an attempt to discover where all of the profits to this mighty business empire were ultimately ending up. Share holder’s calls for information grew louder and louder as trust within and without the company collapsed. In early April 2011 it seemed as though Absolute had a reasonable chance of getting themselves back on track, plans had been made to change the company’s European infrastructure and rebuild. That was when disaster struck and the US government swooped down on online poker.
Absolute Poker along with rivals Full Tilt Poker and Poker Stars were shut down in the United States, bank accounts have been frozen and Scott Tom is under indictment on a lengthy list of crimes. The other 3 founders now live outside of the United States unsure as to when they will be able to return without facing the risk of arrest. The US government has made an example of Absolute Poker and the message has been heard in the industry loud and clear.
