SIXTY MINUTES COULD HAVE BEEN WORSE (Update)

5 December 2008

But the much anticipated CBS television program on Internet poker seems to have its wires crossed on the legality of poker in the USA

 

Early consensus of online poker players on the poker message boards seems to be that the widely publicised CBS "Sixty Minutes" television program Sunday did not make the industry look as bad as it could have done. Despite having rather confused perceptions on the 'illegality' of the game in the United States, and some negative statements from player "Dan Druf", the program proved to be generally accurate on the cheating scanadals at UltimateBet and Absolute Poker, most opined.

The introduction did not bode well, leading in with the comment:

"In the wild, wild west, when a poker player was caught cheating it was a capital offense, with the punishment quickly dispensed right across the card table. But today if you're caught cheating in the popular and lucrative world of Internet poker, you may get away scot-free.

"At least that seems to be what is happening in the biggest scandal in the history of online gambling. A small group of people managed to cheat players out of more than $20 million.

"And it would have gone undetected if it hadn't been for the players themselves, who used the Internet to root out the corruption. As a joint investigation by 60 Minutes and The Washington Post reveals, it raises new questions about the integrity and security of the shadowy and highly profitable industry that operates outside U.S. law."

Presenter Steve Kroft went on to trace the point at which online poker started to make the headlines; when Chris Moneymaker - the hitherto unknown internet player with the news-friendly name - won the World Series of Poker in 2003. His win inspired many more to try the online environment, which snowballed into a multi billion dollar industry with hundreds of thousands of players across the world participating.

"These people could be playing from anywhere in the world. They could be here in the United States. They could be, you know, in India. They could be in South Africa," Australian computer security expert Michael Josem told Kroft, who went on controversially to assert that "...this $18 billion industry is illegal in the U.S., but the ban is almost impossible to enforce since the Internet sites and the computers that randomly deal the cards and keep track of the bets are located offshore, beyond the jurisdiction of U.S. law enforcement." He added that there is "...almost no official regulation, enfoprcement or supervision, presumably referring to the United States exclusively.

Kroft interviewed players involved in unmasking the AB and UB cheating scandals, fleshing out the program with the details of the cheating scams that are now well known to everyone involved in the industry. Players "fleeced" by the cheaters recounted how their suspicions were aroused and how much they lost in games against the cheaters over a period of time.

David Paredes, a Harvard grad who has made enough money playing poker to pay off his law school loan and live in an expensive New York apartment, got fleeced by a player called "Nio Nio." Asked how much he lost, Paredes told Kroft, "I'm probably down somewhere in the range of $70 000 to that particular player."

Paredes says there were other players who lost higher sums. "In the range of $250 000, $90 000, $70 000, $210 000."

Serge Ravitch, another lawyer-turned-poker pro, began using a software program called "Poker Tracker" to review thousands of old hands, he told Kroft. "What I saw did not make any sense. This account was simply winning too much money for the type of game that he was playing. And he was doing it by never having the worst hand. When the other person was bluffing, he would always go all in. When the other person had some kind of made hand, he would always fold."

It was almost as if the player knew what everyone's cards were, recalls Ravitch, recounting that the Internet poker forums, chat rooms and blogs were soon buzzing with reports about suspect players. And when Absolute Poker and Ultimate Bet failed to respond to complaints, the online poker community undertook its own investigation.

The most likely explanation seemed to be that someone had access to an administrative or security account at Absolute Poker and Ultimate Bet that would permit them to see all of the cards in the game as they were being played.

"Somebody with access to a server, a computer server that would give that information to them in real time?" Kroft asked. "Yes," Ravitch replied.

"So either a really good hacker or somebody on the inside?" Kroft asked. "Exactly," Ravitch replied.

Kroft went on to detail how the player-detectives were lucky enough to obtain the hand histories of one cheater using the handle "Potripper" at Absolute Poker. It was inadvertently sent as a comprehensive Excel spreadsheet containing 65 000 lines of data detailing the games played by the cheater, and it enabled a detailed analysis by the players.

Michael Josem told Kroft that the players were able to recreate some of the hands, as the cheater would have seen them, and turn them into a video that he posted online, along with a statistical analysis of the cheater's win rate. He goes on to explain the graphic and its proof of cheating, telling Kroft: "We did the mathematical analysis to find that they were winning at about 15 standard deviations above the mean, which is approximately equivalent to winning a one-in-a-million jackpot six consecutive times. Now, this sort of stuff just doesn't happen in the real world."

But more importantly, the Excel spreadsheet also listed the user account and the IP address of the suspected cheater, which the sleuths traced to the computer modem of an Absolute Poker employee.

The company, which is headquartered in a shopping mall in Costa Rica, was finally forced to acknowledge that a former employee had cracked their software code and cheated online players by looking at their cards, "Sixty Minutes" reported. And what really made the victims angry was that Absolute Poker cut a deal with the cheater to protect his identity, in exchange for a full confession of how he did it, Kroft commented.

This gave the program the opportunity to introduce and describe the Kahnawake Gaming Commission on the Mohawk reservation a short drive from Montreal in Canada. As the licensing and hosting jurisdiction, the Commission was the best hope of redress for the cheated players.

Grand Chief Mike Delisle was interviewed and emphasised that his tribe were not Canadians, but members of the Haudenosaunee Five Nation Confederacy with sovereign rights in their 35 000 acre reservation. "We're Mohawk Kahnawake people. We're not Canadian," Delisle asserted in explaining why his tribe is involved in online gambling as a lucrative income stream for the community.

Kroft says the tribe now registers and services more than 60 percent of the world's Internet gaming activity from a highly protected but nondescript building that used to be a mattress factory. 60 Minutes drove by the former factory with The Washington Post's Gil Gaul, who worked on the story with 60 Minutes, in the program.

The operation is overseen by the Kahnawake Gaming Commission, whose three commissioners meet in secret, 60 Minutes reveals. The commission is independent of tribal leaders, including Chief Delisle, and its investigation of Absolute Poker and Ultimate Bet is alleged in the program to have been neither transparent nor particularly aggressive.

This is the cue for the program to mention the owner of AB and UB parent group Tokwiro Enterprises, Joe Tokwiro Norton He is described as "...a former grand chief of the Kahnawakes, who helped establish the gaming commission that cleared him of any wrongdoing in the scandal."

In an interview with present chief Delisle, Kroft recalls the $2 million in fines levied on the two poker sites by the KGC as a consequence of the cheating scandals, but notes that they remain in operation.

"Here you had a gaming commission. It was originally set up by Joe Norton. And his two companies come before the board and they get a slap on the wrist," Kroft remarked to Delisle.

"Well, I don't think it's a slap on the wrist," Delisle replied. "We are comfortable in saying that through the gaming commission, they have done the investigation, saying that he didn't have a part in the cheating scandal."

Asked why the commission didn't suspend Norton's license, Delisle says, "Well, they were afraid that if that happened and the rug was pulled out from under them, so to speak, that the players wouldn't be paid."

Regrettably, neither the KGC nor Norton would participate in the 60 Minutes program, although it reveals that in a statement the two bodies claimed they were victimised by insiders and former employees and accepted blame for overlooking the security problems with the software.

The only clarity in the investigation was provided by Frank Catania, a former director of New Jersey's Gaming Enforcement Division, who was hired by the tribe to look into the cheating that the players themselves helped expose.

Catania was emphatic in crediting the players with uncovering the scandals: "We owe it to the players themselves for finding this out," he said. Catania found that the scam at Ultimate Bet went on for four years, and says the mastermind appears to have been a former giant in the world of poker.

Asked if he knows who did the cheating, Catania said, "Well, the one name has already been released by the Kahnawake Gaming Commission. That's a fellow by the name of Russ Hamilton."

Hamilton is described as a former poker champion. In 1994, he won $1 million and his weight in silver for winning the main event at the World Series of Poker.

According to the gaming commission, Hamilton and five still unnamed conspirators used multiple screen names and accounts to cheat online players out of more than $20 million, Catania told Kroft. And so far they seem to be getting away with it, Kroft concludes. "Because of jurisdictional issues, no criminal charges have been filed, and no one even seems to be conducting a criminal investigation," he commented to Chief Delisle.

"We're willing to work in collaboration with anyone who wants to bring these people to justice," Delisle responded.

"In this case, you have somebody who you know was cheating. It's like the person's gotten away with it," Kroft probed.

"I believe that anyone else, named or not, will be brought to justice," Delisle says. "If they can be found. That's really the defining factor."

However, 60 Minutes claims it had no trouble locating Hamilton at his home in a security gated golf community in Vegas. The producers left a message for the former champ, but the call was not returned, and that seems to have been the program's sole attempt to interview the only man so far named in the scandals..

It was disappointing that 60 Minutes did not pursue Hamilton with more vigour, having allegedly spent 4 months investigating the issue in collaboration with the Washington Post. And the lack of criminal action against Hamilton and the claimed five other - still unidentified - accomplices remains a source of dissatisfaction and distrust in the player community despite the claims that protection was given in return for information that enabled the company to discover how the cheating took place and who was responsible.

The refusal to be interviewed in the program by Norton and the KGC has also evoked some negative comment in the poker forums.

Finally the ommission of important recent developments in the cheating story has also been noted - some days before the 60 Minutes program was screened, Excapsa the former owner and software provider for AB and UB settled with Tokwiro associate Blast Off Limited to the tune of $15 million. Excapsa is in process of liquidation.