60 Minutes Coverage on Online Poker Scam

The reason you don’t ever hear me talk about online poker is because I don’t play it.  It’s illegal in the US and that’s enough to thwart any inkling I would have towards playing poker on the Internet.  However, I’m well aware there are oodles of people that partake in cyber games.

I’m just not into the idea of online poker.  Yes, it does tap into the potential of making money without leaving your bed, but the reverse is also true and I’m no fan of losing money.  Plus, I like the gentleman’s game aspect of poker and you don’t get that by looking at a computer screen.

Nevertheless, I was searching for today’s story on YouTube when I came across a scintillating story by 60 minutes on a huge online poker scam.  Here is the synopsis followed by the video itself if you have another 12 minutes.

Online poker is illegal in the US, but almost impossible to stop.  With Internet poker, you aren’t looking at your opponents or the dealer.  This puts you at the mercy of the security at the website you are gaming at.  One poker player first started noticing another player making continually poor decisions continually rake in the pot.  As the suspicious player noted, he was playing with a style that was sure to lose but he wasn’t losing.

This trend was noticed at AbsolutePoker.net and Absolute’s sister site UltimateBet.net.  People all over the Internet began clamoring about the impossible victories.  People were losing huge amounts of money: $70,000, $250,000, $90,000, $210,000 and so on.  In all, the cheaters walked away up an unreal $20,000,000.

Absolute Poker wasn’t taking action on the numerous complaints so poker players themselves began investigating what was going on.  One player used a poker tracker to recount hand history and was able to find a statistical anomaly in the case of a suspected cheater.  The graph revealed was amazing as the player had so defied the odds, that his the actual odds of accomplishing what had been done was winning a 1 in a million jackpot 6 times.  In other words, impossible.

It turns out the cheater had access to the hands in real time.  So when someone was bluffing, they went all-in and when they had a hand, they were folding.  Someone had access to an administrative account or hacked into the system.  It turned out to be an employee at Absolute who had cracked the software.

What outraged many is Absolute cut a deal with cheater so that if they would show how they broke the system, they wouldn’t publish their names.  This enraged the online poker community.  The problem was they couldn’t complain to US authorities.

Internet Gambling is also illegal in Canada, but Indian sites on a reservation (where it is legal) within Canada make a tremendous amount of money with the Internet gaming industry.  In fact, a lot was going down in a nondescript building which was home to the Kahnawake Gaming Commission.

After an investigation by the Commission, the mastermind was incredibly found to be Rus Hamilton, former 1994 WSOP winner, and 5 unnamed conspirators but nothing could be done because of jurisdictional issues.

You can read more on the investigation at cbsnews.com or washingtonpost.com/investigations

As for my take, if it’s illegal in the US, you shouldn’t haven’t have been playing anyway. Besides being illegal, another reason not to do it is you have no legal standing in the event something like this happened. And something like this happens. If it’s on the Internet, someone can hack into. You must realize this.

After all this, I still empathize with the players that lost money. While I’m in favor of the integrity of law and upholding it, I disagree with the ideological reasoning for the US in shutting it down. Or at least my perception of their reasoning. I think what it comes down to is the US wasn’t able to tax this money with any sufficient efficiency. However, perhaps they did have some intuition something like this would arise and they didn’t want to deal with it. Either way, all crimes are not equal.

Playing poker online is one of the more easily forgivable infractions along with speeding and other misdemeanors. (although I don’t know what a violation of the online gambling law constitutes) Put simply, there are a lot worse things. To the people that were bilked, I definitely feel bad for anyone that lost money they won’t get back.

However, now that you’re aware of the fire of online poker, you better stay away.