Poker site cheating plot a high-stakes whodunit

$85 million claim filed against Canadian software firm with murky pedigree

Allegations that a long-running cheating scheme bilked players on a leading Internet poker site have triggered an $85 million claim against a Canadian company whose employees allegedly manipulated the cyberspace card room’s software so that they could see their opponents’ hole cards, msnbc.com has learned.

The alleged subterfuge on UltimateBet.com — one of the 10 top poker sites — is the biggest known case of fraud targeting an Internet gambling site and its customers, according to the company that owns the site. It is similar to a case of cheating that occurred last year on UltimateBet’s sister site, AbsolutePoker.com, but this time the thieves ran the scheme for far longer — at least from January 2005 to January 2008, it said.

Word of the $85 million U.S. claim ($80 million Canadian) — the first indication of the scope of the alleged cheating — filed by Blast-Off Ltd. of Malta emerged this week when msnbc.com contacted a court-appointed liquidator overseeing the voluntary dismemberment of Excapsa Software Inc. of Toronto, which formerly owned and licensed the poker software to UltimateBet and other gambling sites.

“We’re taking it seriously and are in contact with the stakeholders with a goal of settling the claim,” said the liquidator, Sheldon Krakower, president of XMT Liquidations Inc. “… It’s a very touchy situation. We’re just trying to get everything done.”

Krakower said the amount of the claim did not directly correlate with the amount believed to have been stolen from UltimateBet players, but he declined to provide additional details. He said he was hopeful that the parties were nearing a settlement.

The unprecedented claim is just the latest twist in a slowly unfolding whodunit that began more than nine months ago when poker players posted comments about suspicious play on UltimateBet in an Internet poker forum. It’s a mystery steeped in international intrigue and featuring a cast of characters that includes some of the world’s most famous poker players, the former grand chief of a Canadian Mohawk community and executives of a secretive Oregon Internet security company.

The company that claims ownership of UltimateBet — Tokwiro Enterprises, headquartered in the Kahnawake Mohawk Territory in southern Canada — has issued some refunds and promised to repay any players who lost money once an outside investigation is completed. But many players who haven’t received credits remain fearful they will never see a dime.

‘Who's going to make them pay?’
“I know I’m not going to get my money,” one dejected player, Daniel Cardoso of Utah, told msnbc.com. Cardoso believes he lost several thousand dollars through the alleged scheme but has not been able to obtain records from UltimateBet to verify that. “I know there are thousands of people who aren’t going to get reimbursed.”

Adding to the sense of mistrust is the fact that Tokwiro Enterprises apparently is owned by Joseph Norton, the former grand chief of the Kahnawake Mohawks, who helped establish the territory as North America’s only bastion of Internet gambling.

“Who’s going to make them pay?” asked Nat Arem, a professional poker player and blogger who helped unravel the alleged cheating rings at UltimateBet and Absolute Poker, referring to the shield of sovereignty that allowed the Kahnawake to authorize Internet gambling in the first place. “What court is this going to end up in?”

Though playing poker online is considered illegal by the U.S. and Canadian governments, millions of players in both nations routinely risk their cash on the virtual version of the popular card game, ignoring the fact that many of the Web sites are unregulated or loosely regulated and are based in jurisdictions where a player would likely have no legal recourse in the event of wrongdoing.


Ethan Miller / Getty Images file
Annie Duke is one of many high-profile poker players who appear in UltimateBet.com television commercials.
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UltimateBet is a popular destination for these players, largely because of its television advertisements featuring famous players such as Phil Hellmuth, the winningest player in the history of the World Series of Poker, with 11 victories, and Annie Duke, arguably the best-known female poker pro. UltimateBet and other poker sites are able to advertise on television by promoting free “play for fun” sites instead of their cash games, which are just a few clicks away.

As was the case in the Absolute Poker scandal last year, the UltimateBet case was uncovered by the players rather than Tokwiro Enterprises or the Kahnawake Gaming Commission, the agency charged with regulating online gambling from the Kahnawake territory, just south of Montreal across the St. Lawrence River.

Players aired suspicions in January
Suspicious players wrote in a Jan. 8 post on the Two Plus Two online poker forum that they had noticed that certain players in the highest-stakes games on UltimateBet were playing extremely unusual strategies and winning at an unbelievably high rate. (Click here to read a synopsis of the early posts.)

Two of the players — known by the screen names “trambopoline” and “dlpnyc21” — reviewed their hand histories and found that one account in particular, using the screen name “NioNio,” was making a killing, having banked an astonishing $300,000 profit in just 3,000 hands. They turned to the MyPokerIntel.com Web site, which tracks high-stakes online tournaments, where many thousands of dollars can change hands, and found that NioNio had won in 13 of the 14 sessions recorded there, cashing out with approximately $135,000.

When that information was posted, Michael Josem, a mathematics-minded Australian poker player, charted NioNio’s results in comparison to the results of 870 “normal” accounts with at least 2,500 hands recorded by poker-tracking software. The result, seen at left, showed that NioNio’s win rate was 10 standard deviations above the mean, or less likely than “winning a one-in-a-million lottery on four consecutive days," Josem said.

As the players continued to dig, they concluded that NioNio was at the center of a web of accounts that were able to change user names with ease, making it harder for victims to detect the cheating.

“They would get a regular player, one of the accounts would play them, then that account would leave and the other account would come play them,” said one poker player who helped uncover the cheating, speaking on condition of anonymity. “… They were careful to only play each player a few times, and then they went and created new account names."

Tokwiro said it was alerted to the accusations by UltimateBet players on Jan. 12 and immediately launched its own investigation.

MSNBC

News Added: 18 September, 2008

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