Where Does the Money Go?

I wonder where poker sites put the money that is deposited with them. They get to keep the rake, right, which is their profit. But what about all the customers' accounts? I doubt they hide it under a mattress. They must invest it or at least put it in interest-bearing accounts (or they spend it!). It should never be hard to get your money back out again if the poker sites are playing on the up and up (who's going to bail them out if they're not -- think U.S. Banks).

Realistically, it's quite a risk for all of us to have money on deposit. It could vanish at any time and there's nothing we could do about it, but we accept these risks, and most poker sites have a huge incentive not to steal our money.

Yes, in the business world of anything you invest in isn't it a risk? But isn't it a risk in the investments world such as the stock exchange, bank bonds etc? Granted I might see a percentage of interest with the banks.

I don't keep thousands in the pokersites..do you? I've also been an online member for 4yrs and have never had a problem with the sites to withdraw my winnings..have you?

BTW you should never invest in a pokersite that is not established!!

Sure the money is invested but money that you put in a bank is invested elsewhere by the bank as well. So long as the investing is well diversified and the company solidly run there shouldn't be too much of a risk of the company going busto.

Right, but at least it is somewhat protected by the government against bad investments. Not so with poker sites. I'm just saying . . . they have to put it somewhere, so mistakes can happen. I'd be nervous to keep too much in my account (not that that is a problem for me yet ).

Well, that is the protential problem, spending customer's deposits on overhead and other expenses, or investing it and losing it. We as players are not investing in a poker site, we are just letting them hold our money so we can play. They should only be paying their bills out of the rake they take. The rake is theirs, the deposits are not. But since they are not regulated, you never know what may happen. I feel pretty safe with the big two (for U.S.), but beyond that, some sites seem to be pretty tough (or at least slow) to withdraw from, certainly more so than depositing.

In the stock market, sure, your investments may lose value, but you wouldn't expect your brokerage to be spending your money on themselves or their business expenses without some government protection of your funds.

I think our U.S. leaders should get it together and accept online poker -- legalize it, regulate it, and collect taxes from it. That would make everyone happy, except maybe some of the poker sites, although it would open the market up to others that are afraid to do business with the U.S. now.

I trust the poker sites more than most banks.

Maybe so, but the banks are insured.

I don't think that helped most of the people who lost a fortune the last year.

http://www.pokerstars.com/poker/real-money

http://www.fulltiltpoker.com/security.php

Yes, these are the two I don't think anyone would have a problem with. How much further you go down the line, I'm not sure.

Who lost a fortune by putting their money in a bank? I don't think it was a bank that these people had their money in -- some banks did fail, but I didn't hear of anyone losing their deposits. The FDIC had to step in and come up with the insurance to pay the depositors. Maybe some of them didn't get all their money back, but I didn't hear that. Did that happen that you are aware of?

It happened to a lot of people here in germany.

They wanted to invest their savings and asked their bank managers for a safe way of doing so.
They were persuaded to invest in Lehmann certificates - (I never considered them to be safe but what do I know...) and lost it all.
In germany there is something similar like the FDIC called BAFIN.
They guarantee an insured amount of 20K € for each account, the rest is gone.
The tax-payers in germany will have to shoulder 112-400 billion € over the next years to save our financial system - to whose benefit ?

I didn't want to steer this thread into another direction - sorry if I did.

Banks lost a lot of money for dutch people who invested in an Icelandic bank (think IceSave). Most poker rooms keep there clients money in a separate bank account and do not use it to spend on costs and such. I know for a fact full tilt and pokerstars do. They do get interest on your money tho, i think they will use the interest for costs, but im not sure...