"Back Door" Cheating Scandal Rocks Online Poker

AcidAUS sends us the story of an online poker cheating ring that netted an estimated $10M for its perpetrators over almost 4 years. The article spotlights the role of an Australian player who first performed the statistical analyses that demonstrated that cheating had to be going on. "In two separate cases, Michael Josem, from Chatswood, analyzed detailed hand history data from Absolute Poker and UltimateBet and uncovered that certain player accounts won money at a rate too fast to be legitimate. His findings led to an internal investigation by the parent company that owns both sites. It found rogue employees had defrauded players over three years via a security hole that allowed the cheats to see other player's secret (or hole) cards." The (Mohawk) Kahnawake Gaming Commission, which licenses the two poker companies, has released its preliminary report. MSNBC reporting from a couple of weeks back gives deep background on the scandal.

Comments

Let's comp the cheaters some room nights

[davidwr]

Illicit high rollers get free room and board for the next 5-10 years.

This is why

[bugeaterr]

I don't gamble.
I invest my money in the stock market.

Re:This is why

[gnick]

There is only one way to make money gambling: Make sure you are "the house". In the long run, only the house wins.

Actually, I cleaned up last time I was in Vegas. My buddies did too - We developed a 'system'.

1) Fill your pocket with nickels.
2) Find a nickel-slot, sit down, and drop a nickel in.
3) Wait for the cocktail-girl to walk by and spin the slot.
4) Tell the girl, "Why yes, I would enjoy a Heineken on the house."
5) Accept your beer and walk off to find another nickel-slot. (Alternatively sit at the same one, but that will require tipping if you want regular service.)

Maybe you get your nickel back and maybe you don't. Who cares? It's a full night of nickel-Heineken. A buck goes a LONG way.

Re:This is why

[AndersOSU]

Assuming, of course, that the companies you've invested in don't fold with a negative value. From that, there's no recovery.

Don't buy individual stocks

It's a legalized pyramid scheme

The economy is not a zero sum game

10-40 year investment is still a gamble

Yes it is, but as long as in the long term production is higher in the future than it is now, your (sufficiently diversified) investment will grant returns.

Re:This is why

[Hoi Polloi]

But then you find out that all the toilets have locks on them charging $10, or even worse, they are slot machines too. "Come on cherries! I need to pee!"

Re:This is why

[lgw]

There are all kinds of clever economic theories, but ultimately, there are only so many goods produced and useful services provided in the world, no matter how much money gets printed to pay for them, and the efficiency of production and service provision only increases so fast over time.

This is true. However, the increase in effeciency due to technological advancement *is* the huge driver that makes investment work. That growth is significant over time (measured in inflation-adjuested money, as that's what's interesting). European economies have grown a solid 2% a year post-WWII. The American economy has grown a terriffic 4% a year. And a bit less than that 4% gets paid to bondholders, and a bit more to (common) stockholders, so the stock market is far from a zero-sum game.

Even so, this makes it all too clear that stock market investing really is a long-term prospect: even something like a five-year plan, which is what a lot of the pros used to quote as a sensible minimum investment period, has brought little safety at all in the past 10-15 years. And how many people really have enough money that they can invest for 10+ years without wanting to spend any of it, yet still have little enough money that the return on investment matters?

Yes, it's the 30-40 year time horizon that matters. Everyone can invest on that scale: just live below your means, not above them. Accumulate wealth, not debt. It's as easy (as hard) as having a little self-discipline. If you need your money back in 5 years, it should really be in (short term, non-corporate) bonds. Shorter than that and you want to stick to FDIC-insured accounts and treasuries.

Investing so that you can retire comfortably at 55 instead of starving on social security at 65 is "just" a matter of saving a significant percentage of your take-home pay every month, to an account that you won't draw from even if your 'fridge breaks and your car's in the shop, and you get laid off. That means you have to save even more to give yourself that padding. All of which is easy (for a salaried professional) if you stop trying to impress your friends and neighbors with your purchases, realize you dont need the latest tech toys, and even (gasp) realize that maybe you should be renting, not buying a house, during the collapse of the biggest housing bubble ever.

'insider knowledge'

[B5_geek]

This cheat required somebody on the 'inside' to perpetrate. As with most casino table games, if you have somebody on the inside, cheating is easy.

This is how I cheated at various online poker sites. Me and two buddies would join a table, and have a VNC connection setup to view each others hands. two of us would play dummy hands based on whom had the best hand of the bunch. We cleaned out every table we played at.

Re:'insider knowledge'

[mvicuna]

If you played at any of the levels where the pros inhabited you'd have been identified and banned quickly.

Most of the online pro's are using tracking software and doing analysis which would have picked up on you three. Though I hardly doubt they'd have needed it, the math involved in poker is only part of being a winning player.

2+2, where most of the collaboration is done, is the /. of the poker world. A lot of Statistical anomalies are discussed and investigated there.

Show of hands if anyone knows about the DERB thread?

That's what you get in Kahnawake...

[Anonymous Coward]

For those who don't know, Kahnawake is Mohawk territory claimed by the aboriginals (aka Indians) in Canada.

The Mohawks claim to sovereignty over the land, and do not allow the provincial & national police to enter.

To avoid stirring up trouble, the Canadian government usually doesn't send police to Kahnawake, even though the Canadian government doesn't recognize the Mohawk claim to exclusive sovereignty.

Without any real police force, crime flourishes in Kahnawake. Drug smuggling, gun smuggling, people smuggling, cigarette smuggling, you name it.

Don't trust any business in Kahnawake, let alone a business attractive to crime, like gambling.

Not long ago, there was a Mohawk criminal driving at high speed (off-reserve) trying to get to the Mohawk territory before getting caught by the police chasing him. He made it on to the Mohawk territory, and the police abandoned their pursuit. Sadly, the Mohawk driver ran a stop sign and killed a Mohawk teenager.

For the people of Kahnawake, it seems that it is more important to be the victims of aboriginal criminals than to cooperate with non-aboriginal law enforcement. Sad.

superuser

[erbbysam]

o my....story time...
The phrase of the day is "superuser"
This data was given to many professional online poker players who analyzed the data in late 2007 (see 1 year ago, 10/16/07 to be exact) when they requested the data from the online site "Absolute Poker".

Instead of the site giving them the usual data which hid the opponents cards unless they had shown them during the hand, they sent all the raw data which included the opponents hole cards, and specifically every player and spectators player number. One of the spectators was player number "363" I believe which was incredibly low (one of the first ever to register on the site).

When designing the software they must have used several "superuser" accounts to make sure that it was working correctly, so they let it see all the cards on the table. Someone inside Absolute Bet discovered(or knew they entire time) that the loophole was still open and used multiple accounts to siphon hundreds of thousands if not millions of dollars off of their high stakes users. This was used also over other websites running the same backend software.

What made this so obvious, simply put, to the high stakes players was that these players were playing perfectly over thousands of hands which isn't possible unless you know all the cards on the table.

For more reading see:
http://freakonomics.blogs.nytimes.com/2007/10/17/the-absolute-poker-cheating-scandal-blown-wide-open/
or for more poker talk:
http://archives1.twoplustwo.com/showflat.php?Cat=0&Number=12523924&page=0&fpart=1&vc=1

Re:Why do people place such a sucker bet anyway?

[Free the Cowards]

People do it for two reasons.

1) It's fun. When you plunk down $20 for you and your significant other to see a movie in a theater, you have no chance of ever getting that money back. But it's worth it to you for the entertainment. Same goes with gambling. You lose money but a lot of people enjoy it. I don't, personally, but many people do.

2) It's profitable. When playing poker, you don't have to beat the house, you just have to beat the other players. The house takes a portion of the winnings but if you can consistently beat the rest of the table then you come out ahead. It's not like other casino games in this respect. You're not playing against the house, you're just paying the house for the privilege of playing against other people. You can, and many people do, make a living playing poker.

Well, there are actually three types:

3) Idiots think they will win big.

But the point being, with reasons 1 and 2 it's possible to gamble without being irrational or stupid.

Re:*mucks his hand*

[Anonymous Coward]

Actually the morality police is what brought us here. If online gaming was regulated to be fair and run by legit casinos who had a legal liability to create a fair and secure playing field this would be unlikely to happen and if it did there would be legal recourse. Since the morality police can't bring themselves to do that people play without the safety of regulation and a legal system and when companies harm their players through negligence our outright fraud the players are just screwed.

Half of these posts

[dosun88888]

seem to be from people that know absolutely nothing about poker and ultimately nothing about how the sites make their money, so let's clear up a few things.

1. It would never be in the best interests of the company to try to allow this to happen to anyone, as the cost would be too high. If players had a hint that they were being cheated they would never play there. That $10MM figure is nothing compared to what the sites generate from rake alone. The only people who could benefit would be hired contractors who wrote the code and got paid some small amount of money to do so. To them, it would be worth the risk to try to cheat somehow, and they obviously did.

2. To the few people who seem to think that they were getting information that was already on their systems from memory that was encrypted or something, well, that's false. The "special" accounts were sent information that other players do not get sent. You only get your hole cards, and it's not until a showdown where anyone but you and a random server out there know what anyone has.

I guess that's it, aside from the extreme unlikelihood that anyone would try to cheat in this manner at a small (say 30-60 or less) game. The risk/benefit doesn't add up at those stakes.

A few random points: high stakes poker can be shady at times, and collusion in the smaller games can be defended against to some extent (by either not playing, or using the style of collusion against the colluders. At times games can appear to be collusive due to excessive raising, but the majority of the time that's just strategy.

Re:*mucks his hand*

[vux984]

This is false. It can take awhile to catch it (as is seen in the AP/UB story),...

So is it safe to play now? That's the question that needs answering. Or is there another scam going that hasn't been caught yet. You don't know.

but statistical analysis will always show if weird things are happening.

Eventually. But what good is that?

People who play seriously online use tools like Poker Tracker, Hold'em Manager, Poker Office, etc to keep track of their own play, wins/losses and whatnot.

Someone noticed something odd about the win rate of a few players. They mentioned it to someone else; who looked and found the same thing. It kept going until the evidence was so great that it couldn't be a statistical anomaly.

And 4 years later they got caught.

"A few players" should have retired their accounts, and spun up new ones every now and then.

Or after 3 years, should have just plain retired and taken their millions to another country. How sure are you this didn't happen too with other teams? Or isn't happening right now?

The real difficulty is in getting sites to admit when something shady has been going on. AP and UB denied that anything had happened for ages. Until the bad press started showing up and it became too much for them to ignore.

So not only does it take YEARS to unmask systematic cheating, but the online houses aren't cooperating to solve the issue faster. That doesn't exactly install confidence...

As I originally said, there is no way to reliably ensure cheating isn't taking place. Sure if it is taking place, one day, we'll know about it, maybe. But the smart criminals will have moved on before then... and meanwhile the new criminals will still be under the statistical radar.

Re:*mucks his hand*

[Anonymous Coward]

That's only true when you're playing games that compete against the house.

"Counting cards" occurs in Blackjack. In Blackjack, if you win, the house loses.

That's not the case in Poker - in Poker the house wins whether you win or lose. They really don't give a darn.

EXACTLY!

[BitterAndDrunk]

That's why I only shoot up with clean needles. I'll get high, and there's No Consequences.

I SAID NO CONSEQUENCES!