5050 Poker’s board of directors has decided to liquidate 5050 Poker Ltd., a subsidiary of the group. The company indicated that the LGA or the Lotteries and Gaming Authority has asked for a very high level of guaranties and in order to be able to pay back players, the company has decided to liquidate.
The statement for players and shareholders
The company released a statement online that explains its course of action to players and shareholders. 5050 Poker states that they believe liquidation will serve the best interests of players in the present circumstances. It added that the Board of Directors is pursuing the potential sale of the company so that shareholder value gets saved.
Investigations found that the cost of operations of 5050 Poker is way more than their revenue, which lead to the usage of player funds for company operations.
Microgaming and 5050 Poker
The relationship between 5050 Poker and Microgaming went bad when the former was suspended by Microgaming. The poker network is implementing a new environment, which is more player friendly by stopping winning rake back grinders.
In June, Microgaming released a statement that it has suspended 5050 Poker due to material breach of contract. The initial statement explained that gameplay will be continued once the breach is rectified in a satisfactory manner.
5050 Poker replied to this statement saying that Microgaming has altered its network rules with very short notice and also in violation of prior pretenses. As a result the players could play only at two tables as compared to 10 tables, which were available earlier. The rule affected only a handful of gaming operators and 5050 believes that is demonstrates the discriminatory steps of Microgaming to eliminate specific unwanted operators.
5050 Poker added that most of their players end up playing more than two tables and this new suspension resulted in earnings and sales of the company being negatively affected. Two other operators apart from 5050 Poker were affected by this rule.
Microgaming fined 5050 Poker for more than €150.000 during ongoing disputes, which were associated with Microgaming dropping 5050 Poker from its network. 5050 drew these funds from players’ money to pay back the poker network.
Things recently took an unexpected turn when Microgaming rebutted claims of 5050 Poker that it had paid the fine to the network. Microgaming claimed 5050 Poker participated in the ‘rake reconciliation’, which reallocated funds between the network’s operators. The complete statement that resulted in 5050 Poker being suspended said that the poker site did not pay the fines.
From the 2010 April to 2012 June, s reallocation of funds’ system called ‘Rake Reconciliation’ between operators was established. This system fixed the imbalances of poker in network ecosystem where the only valuation metric is the rake. Other networks use similar methods depending on industry standards.
The losses in 5050 Poker Ltd have accumulated over a long period of time, more than a year. The situation went undetected because false information about players’ funds and company assets has been given to the Board.