In his latest book ´Straight Flush´, Ben Mezrich, one of the coolest authors around, wrote about the story of the six frat brothers who founded Absolute Poker in their basement. It is the story of a band of frat brothers who came very close to reaping a billion dollars from their wild online poker enterprise however it all came crashing down and their lives took a very dramatic turn.
Ben Mezrich seems to have a thing for these kind of subjects. In his books, he tends to choose stories of reckless young men who make or lose a fortune by seizing a risky opportunity that no one else has seen. His last books “The Accidental Billionaires” and “Bringing Down the House” also focused on Ivy League types, namely like Marc Zuckerberg, who make some audacious, if not criminal, moves. The movies “The Social Network” and “21” were based on these two books.
It weren´t all Ivy League types in “Straight Flush” though, some of these kids came from a very poor background. Scott Tom, who started it all, describes himself as “100% trailer park”. “One of them sold a cow to buy his first car,” Mezrich says. “That’s where they came from.”
They all finally made their way to to the University of Montana in Missoula and came together in a fraternity called Sigma Alpha Epsilon.
It all started when one night Tom sneaked his frat brothers through the back door of a bar in Missoula and into a professional game of Texas Hold ’Em. Tom was winning at the table that night but what really fascinated him was how house rake worked. It was a sure bet, no gambling, no flipping, no risk, just pure profit. That was probably when he noticed that he was at the wrong end of the deal and decided to do something about it.
Tom´s mother was poor and abusive however his father was an investment banker Seattle. A clean check from Tom´s father and the recent graduates, including Garin Gustafson and Shane Blackford, were already down in a suburban basement building their new enterprise. Just like Mark Zuckerberg and his buddies in Palo Alto.
Unlike Zuckerberg, Tom Scott and his frat brothers didn´t know much about computers. In fact only a few of them owned computers. “It was pretty ballsy.” Says Mezrich. They overcame that situation by outsourcing the software development to consultants in Korea, and they eventually brought in more SAE bros, Oscar Hilt Tatum IV, Peter Borovich and Brent Beckley, Tom’s stepbrother.
At that time, Tom noticed that no one really knew what was actually illegal in online gambling, including the government so they decided to relocate the newly named company, Absolute Poker, to San Jose, Costa Rica thinking they were now outside the reach of U.S. law.
Their timing couldn´t be better. Poker was suddenly more popular than ever. It was on TV. It was on campuses across the nation. It was everywhere. And the poker enterprise of these 6 frat brothers took off like crazy. Life was good. A mansion on Costa Rica hills, Colombian girlfriends, sex and drugs. The value of their company was almost $30 million. It didn´t last long though.
In 2006, they decided to go public with Absolute Poker. Their company was 3 years old and just in a few days, it was going to go public in an IPO valued at a billion dollars. They were only days away from being the new Zuckerberg. Everything changed in a blink of an eye. US Law about online gaming has changed and most of the major online poker sites pulled out of U.S. operations. For Tom Scott, It wasn´t easy to leave just like that. And he didn´t. But that meant that instead of dealing with reputable banks to process client transactions, the team turned to doing business in the shadows with shady outfits.
This obviously had its consequences. They were afraid of their shady business partners. Tom started carrying a gun. He never moved around the town without his armed bodyguards and bulletproof car.
In 2011, the Department of Justice seized Absolute Poker site. Tom and Beckley were indicted by the U.S. Attorney’s Office of the Southern District of New York. Beckley surrendered and ended up with a 14-month prison sentence while Tom is still hiding in Antigua, living in a gilded cage. The others eventually got on with their lives. “I just don’t know how much money they managed to get away with, whether it’s millions or tens of millions,” Mezrich says. “I think Scott [Tom] has a lot of money.”
Mezrich loves to investigate and write about stories like this one. “It’s a very American story,” he says. “College kids who decide they are going to take risks, change the world and get rich.”