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How much due diligence is expected of an online poker network?
The failure of the Purple Lounge online poker room and casino, leaving players unpaid and generating widespread criticism of its Malta LGA licensing jurisdiction, was linked to another company over the weekend.
In an article on the recent Nevada licensing approval obtained by International Game Technology, the information website Pokerfuse noted that the Purple Lounge issue had not been broached, despite the failed operation being part of the Entraction Poker Network at the time of that network's acquisition by IGT.
IGT representatives discussed the Entraction acquisition with the Nevada Gaming Control Board, pointing out that the due diligence checks prior to the purchase had not uncovered its pre-UIGEA American activity, which was in any case less than one percent of the company's business.
Once discovered, the activity had been immediately halted, the company claimed, adding that it was liaising with the Department of Justice to ascertain if any penalties would be imposed. A range of countries had also been banned from Entraction as IGT brought it into compliance with international laws.
Pokerfuse reports that board chairman Mark Lipparelli applauded IGT for bringing its newly acquired asset into compliance.
“The board will look favorably on anyone who follows IGT’s lead,” Lipparelli reportedly observed.
But there was apparently no mention of Media Corp's Purple Lounge, which had switched to Entraction from the MIcrogaming Poker Network in January 2012.
"Unmentioned in the hearing was the recent demise of Purple Lounge, a poker room on the Entraction poker network that failed to refund its players’ deposits after “historic operational and financial failings” forced the company into liquidation," Pokerfuse notes.
"In January 2012, Purple Lounge moved from Microgaming Network to Entraction. Apparently no financial discrepancies were discovered as a part of this migration, yet just months later the poker room was closed [with Media Corp claiming it had 'loaned' the company over GBP 900,000- ed.] and, after a month with little communication, its owner Media Corp began liquidation proceedings.
"Like all skins on Entraction, Purple Lounge was licensed under the Malta LGA which requires players’ funds to be held in segregated accounts. Despite this, Media Corp has indicated that [the] loss of player funds is “expected.”

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