Kahnawake Gaming Commission Announces Apparent Dissolution Of CEREUS Network

In a simple statement released on Thursday, the Kahnawake Gaming Commission announced what appears to be the dissolution of the CEREUS Network, and its sites Absolute Poker and UB.com, to settle ongoing litigation against the company.

The statement, which was released by the KGC, discussed the ongoing ramifications of the Southern District of New York’s pending legal actions against not only the CEREUS Network sites but also PokerStars and Full Tilt Poker that has become known as “Black Friday.” In the statement, the KGC states, “(We) have been in close and regular discussions with its licensee, Blanca Games, Inc., operating as Absolute Poker and UB.com, to facilitate the reimbursement of both U. S. and non-U. S. players.”

These discussions, which the KGC states have been going on “over the past several weeks,” have apparently led to the point of the dissolution of the CEREUS Network. “We were advised of a potential solution prepared by Blanca and its representatives, establishing a process to liquidate Blanca’s assets and distribute proceeds to players,” the KGC statement continued. “We understand that this process has been presented to SDNY for consideration and approval.”

Although the KGC doesn’t elaborate on the status of these current negotiations, the statement concludes by saying, “The Commission’s foremost concern in this matter has been, and remains, the reimbursement of both U. S. and non-U. S. players as quickly and completely as possible. To avoid further prejudice to affected players, the Commission has demanded that all parties complete their discussions and implement a reimbursement solution without further delay.”

What assets that Blanca Games could sell are at question. There is the software that the two online poker rooms use for their operations (and the method of linking the two operations), a database of players that could be potentially used for a current or new online poker operation and/or other potential offerings that could draw interest from buyers. It is thought that these portions of the company could draw in anywhere from $10 million to as much as $125 million if offered for sale.

The high end of that estimate would help Blanca Games escape the financial liabilities that are owed to former players on the two CEREUS Network sites, but not what the U. S. Department of Justice is looking for. It is estimated that the players are owed somewhere in the neighborhood of $50 million. The April 15 indictment against the CEREUS Network is seeking $500 million in penalties, far less than what the other two indicted operations, PokerStars ($1.5 billion) and Full Tilt Poker ($1 billion), have listed in penalties.

If the KGC statement is true, it would bring to an end the payment of former CEREUS Network players, at the minimum. It also would unfortunately end the operations of one of the stalwarts of the online poker industry.

Prior to 2007, Absolute Poker and UB.com (then known as Ultimate Bet) were two of the top online poker operations in the game. The “Superuser Scandal” – in which owners of the company used manipulated software to be able to see their opponents’ hole cards – then broke at Absolute Poker, with a similar software manipulation at Ultimate Bet being found out around the same time as the Absolute Poker situation. Although millions of dollars in restitution to affected players were paid out by both companies (to the tune of approximately $25 million), the two sites – even after joining forces under the CEREUS Network banner – were unable to return to their previous levels of success.

The proposed liquidation of the CEREUS Network still has several hurdles to leap. First is the approval of the deal by the U. S. government; secondly, finding a potential buyer for the company’s offerings could be a difficult endeavor. Although the repayment of players and an end to the legal wrangling would be an excellent turn of events after the “Black Friday” indictments, it would come at the cost of one of the online poker industries more storied – albeit troubled – operations.