Why Trusts For Segregated Gambling Accounts are Important

Full Tilt, Purple Lounge and 5050 Poker are but recent examples of what happens when operators dip into player funds The recent publication of Nevada's rigorous requirements regarding the use of trust funds to segregate online poker player deposits and accounts from operator funds has highlighted once again the importance of this player-safety measure, and with the recent debacles at Full Tilt, Purple Lounge and 5050 Poker still fresh in the memory the US state's insistence on strict compliance will be widely applauded.

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Regulation is only as good as the diligence with which it is enforced, as the regulators in the above three player disasters have so lamentably demonstrated by relying on operator reportage to ensure that requirements are met.

Nevada appears to have long taken that on board, imposing an oversight regime that is perhaps even stricter than that applied to land gambling operators in the Silver State. Online poker operators in Nevada will be required to ring-fence player funds in separate trusts, from which the operator is specifically excluded in terms of ownership, title or interest.

Those trusts will be audited by an independent monitoring system, creating a situation in which player funds are totally segregated from the operational finances of the poker room and are therefore shielded from any temptation that an operator with a cash flow problem – however temporary – may be experiencing.

If an operator does not comply, and dips into player funds the consequences could be serious and even criminal; almost certainly it would be the end of any license that may have been awarded. From a poker player perspective the other big advantage of trusts kicks in if an operator goes belly-up, a not infrequent event as recent failures have shown.

Because the funds held in trust are entirely separate from the company's assets and ownership, players can be paid in full, obviating the prolonged angst, uncertainties and financial losses that have been so apparent in recent failures, and saving players from having to take their place in a queue of creditors.

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