How Online Gamblers Unmasked Cheaters

60 Minutes/Washington Post Joint Investigation Questions Honesty, Security Of Gambling Sites

(CBS)  This story was first published on Nov. 30, 2008. It was updated on June 25, 2009.

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's what seems to be happening in the biggest scandal in the history of online gambling.

As 60 Minutes correspondent Steve Kroft first reported last November, 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 revealed, it raises new questions about the integrity and security of the shadowy and highly profitable industry that operates outside U.S. law.

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WashingtonPost.com: Click here to learn more about online gambling.

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If you had to pick the moment that the poker boom began, it was probably the day an unknown accountant named Chris Moneymaker won $2.5 million at the 2003 World Series of Poker.

Suddenly every amateur with a hat, sunglasses and a stack of chips saw themselves as the next big money maker. Nearly 7,000 competed in last year's tournament for $180 million in prize money. But the fever has spread far beyond Las Vegas.

It is the richest sporting competition in the world. And yet all this pales in comparison to the half million people who are playing on the Internet right now in the unregulated world of online poker.

As we learned in a tutorial, all you have to do to play is log on to the Web, click your way to an online gambling site, open an account with your credit card, choose your game and pull up a seat at a virtual table.

"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 tells Kroft.

We should tell you 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.

And unlike land-based casinos, there is almost no official regulation, enforcement or supervision. But it hasn't stopped thousands of mostly young men from making this their livelihood. Todd Witteles, a former computer scientist-turned-poker pro, says you no longer have to go to Vegas to find a high stakes game.

"You could do it from your own living room," he says. "You don't have to get dressed. You don't have to anything. It's right there on your computer."

Witteles says online poker is much different - faster, more aggressive and less personal.

"You're not lookin' at somebody sittin' across the table. You're just playing the cards that tumble out of the computer," Kroft remarks.

"Not only are you not looking at your opponents, you're not looking at the cards being dealt, you're not looking at who's dealing them to you. So, you don't know if the whole thing is legitimate, even if all the players sitting with you are just as legitimate as you are. Maybe the whole game isn't," Witteles says.

And as Witteles found out, it wasn't, at least on a popular Internet site called "Absolute Poker." His suspicions were first aroused in a high stakes game of Texas Hold 'Em, against what he thought was an incompetent, and lucky, amateur using the screen name "Grey Cat."

"This Grey Cat person was new. And at first, he seemed like a live one. He seemed terrible," Witteles remembers. "He seemed to play crazy. It seemed like he was giving his money away. Except the only thing was, he wasn't losing. He was playing in a style that was sure to lose, but he was killing the game day after day."

While Witteles was losing $15,000 to the apparent novice, other high stakes players began to notice improbable and endless winning streaks on Absolute Poker's sister site, "Ultimate Bet."

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 tells 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."

[downsteamjim]

Who would have thought there could be anything hokey about an Indian tribe with no casino experience, operating out of a shopping mall in Costa Rica?

[shanev137]

The two sites operate out of a shopping mall in Costa Rica and run their games on computer servers housed on an Indian reservation outside of Montreal.

---------


Most of all the poker sites out there are scams / fixed games.

[paofamily]

Cheating? Naaaaaaaaaaaah.....really? Suckers play.

[snowfreeze-2009]

Wow. Seeing as how absolutepoker.com and ultimatebet.com is the same "company" (i.e. fraudulent front for total scammers) I''m not surprised. Besides, just look at their UNSATISFACTORY rating by the BBB.org.

Sponsored by Phil Helmuth, the mutt of all poker.

[omnibus66]

If you''re stupid enough to bet online and lose, whether someone cheated you or not, most people would say you got what you deserved.

P.T. Barnum was right.

[pokerfish1]

18 Billion dollar industry would equate to what? About 2-3 Billion in tax revenue/yr if it were regulated and taxed by the US Government? If it were regulated by the Government the industry would probably grow to over 100 Billion/year, once players would have more faith that it is safe to play.

[skillgamer]

This article and the first statement in the accompanying video asserts that online poker is illegal in the U.S. This is factually incorrect -- U.S. law only makes sports betting illegal, not games of skill for money. Poker is in the class of multiplayer, strategic skill games (bridge, backgammon, etc., and U.S.-based businesses let you play these games for money online) and is distinct from gambles like sports betting and roulette; there is no logical basis for including poker as "gambling". At worst, online poker is in a grey area legally, in that it is clearly not covered by any specific laws, but that existing laws could be loosely interpreted to cause trouble for a domestic company that offered online poker; the "overseas" nature of the online poker business is purely economic. It may be difficult for the average person to understand the subtleties of U.S. online gambling law, which is why I would have trusted a news program as reputable as this one to present a clearer picture of the facts. Saying that online poker is illegal is 100% wrong, and airing this story will contribute significantly to the widespread public misunderstanding of the game of poker and its legality.

[kevin_c5]

As "skillgamer" points out, your assertion that online gambling is illegal, is not correct. Katherine Hanaway (US Atty for the DOJ) admitted as much in a Judiciary Hearing Nov.4, 2007 but the caveat is
complicated. Basically, you can play but you can''t "run the business from the US". The injury to
the US is self-wrought.

More to the point, however, is that the poker players themselves, discovered the cheaters and outed them without the help of the government. We poker players are willing to live with that addage, "let the buyer beware". One always has the choice to go down the block to another store so to speak but we players encourage regulation. You should do the same and not pander to the crowd seeking to legislate morality, especially when you can''t get your facts straight.

[snowfreeze-2009]

Oh shut up. You can''t tell me that LUCK (absolutely NOTHING to do with "SKILL") has absolutely NOTHING to do with any hand of poker. I play poker, but have NEVER felt that "Skill" had much more than maybe 5% to do with win/lose. Maybe that''s because me and my friends are so "Experienced" in it. But Experience or not, an un-skilled newb can potentially beat any of us on their first night, making this a game of LUCK. Put your crack and weed away morons. And, last time I checked, each online monetary wager is a misdemeanor. So please people, don''t foolishly listen to the two morons between my posts. Thanks. :)

[snowfreeze-2009]

Let me rephrase that:
"Skillgamer" (hahahahahahahahaha) and Kevin_C5.
lol!
Thanks.

[snowfreeze-2009]

FURTHERMORE, how can "SKILL" have ANYTHING to do with it when a loser can cheat and not get caught? This is ONE cheater that got caught.

As the old adage goes, for every one caught, there are a dozen+ that never will be.

I, for one, do NOT subscribe to "buyer beware" so speak for yourself.

I''d rather have LUCK any day over "skill" (experience). You can only bluff so many times before you are called and lose EVERYTHING to a newb or otherwise on an all-in so quit being so RETARDED.

Thanks.

[ryan1219-2009]

To say that there is 5% skill involved in poker and the rest is luck is not only false but ignorant. Time after time, I would get my money in the pot, both hands would be shown (as there are when there is an all in during touranment play) the odds would be clearly in my favor, sometimes as much as 95% to win, and the longshot would hit. Anybody who not only plays, but has study the gtame of poker, would realize that playing the odds and the player has much more to do with skill then luck. I always believed that one of two things were true: People were able to find a way to know what the cards were going to be before they were shown or the online companies set it up to build pots for higher rakes and speed up tournaments for more profit. The cheating doesn''t surprise me at all and they should suffer some consequence.

[snowfreezsux]

snowfreeze stated: "Experience or not, an un-skilled newb can potentially beat any of us on their first night, making this a game of LUCK"

You are the reason we play the game, fish.

[papaw_stars]

Firstly the fact 60 Minutes begins their story with a sentence that is incorrect, "this 18 billion a year industry is illegal in the US" is very disheartening. Come on 60 Minutes, do some fact checking. That is a MAJOR error that makes your reporting not seem objective.


Secondly, to the people commenting saying that poker is a game of luck, do you also go to Wall Street and tell all the day traders that the stock market is a game of luck? Poker and the stock market are very similar: luck is a part of it, there are swings, but a smart player in the game wins money over the long haul. The fact that sometimes bad players win, is in itself an admittance that there are good players and bad players, therefore it is a game of skill.

If I were to offer you coin flips at $100 a pop with a coin weighted to land heads 55% of the time (for the sake of the argument lets say you can confirm the validity of this), for as many flips as you want and you can have heads, you would take this wager right? Even though you MIGHT be down after 100 flips, 500 flips, heck even 1000 flips. Well, being a knowledgeable poker player is much like this. Sometimes you lose those flips, but the weighted coin affords you a positive expectation in the long run -- which, through patience and discipline, eventually becomes realized.

[radonjic66]

Playing online poker is NOT illegal in the US. What a incredibly huge fundamental error in your story. Do your homework 60 Minutes! That you can actually make such a simple error in your story reflects very poorly on the research and fact-checking abilities of the staff that worked on this piece.

Here''s a tip for the Producer: read the UIGEA.

[betadecay-2009]

I hope the report does not include the incorrect information regarding the legality of poker. I also hope that the pros of regulation are discussed in the piece. Regulation would mean the U.S. would get to tax a very large sum of those 18 billion dollars, it would create desperately needed jobs, and it would bring supervision to the smaller sites like Absolute/UB.

[ceriuswtf]

As well all know, poker sites make a massive amount of money from the rake. All players are aware of this. The site can run a 100% straight up operation and make millions effortlessly.

This is the incentive for these sites to keep their games on the level and provide transparency about their company. To say most of these sites are fixed is with out merit and if this was the case, the players would know about this and act accordingly. Hence the AP/UB scandal.

I''m unsure how it could be ''rigged'' other than the way AP/UB arranged their scandal with the super user account.

Thanks for your generalization and keep up the great work shanev137. I''d love to hear you elaborate on this.

For a news company that spent four months research a story, at least you could have gotten your basic facts straight. Poker is legal in both Canada and the US. If you take a look at the UIGEA, in the US it is illegal for banks to process credit card transactions from gambling companies. It is really a shame that you are going to broadcast this to a nation with such a poorly researched and wrongly negative view of online poker. I had high hopes for this interview that it would help shame the companies at fault and make the industry safer as a whole. Shame on you, CBS.

[donnybd]

What a lame article. Where, When but what about HOW.

[mecsd]

If gambling is involved then someone will always try to cheat especially when large amounts of money are involved. Like the Tran organization, that scam is in the courts in California now. They make this scam and the M.I.T. group looks small; it will probably be another year before the Tran scam is revealed to the public just like this one.
Although I believe the facts are already documented in a book called The Rush.

[kmm2008]

While it is true that federal law does not explicitly make online poker illegal, it is misleading to say that online gambling is not illegal in the United States. Many states have laws making the participation in a poker game illegal when someone is making money off of the game without being a player.

The laws vary state by state, so online poker IS illegal in some states. Making a blanket statement either way shows a lack of research and/or knowledge.

[pfpadmin]

Does you story inform the public that AP refunded all players funds that were cheated? Does you story break anything new on this story? It was over 1 year ago is this really news or are you trying to scare the public?

Do you mention The Kahnawake Gaming Commission of Canada fined Absolute Poker $500,000 for the way it handled the online poker cheating scandal that rocked the online poker world last fall (Aug. 14, 2007)?

You are a little late and a lot dishonest.

[pfpadmin]

KMM2008 you say While it is true that federal law does not explicitly make online poker illegal, it is misleading to say that online gambling is not illegal in the United States. Many states have laws making the participation in a poker game illegal when someone is making money off of the game without being a player.

The laws vary state by state, so online poker IS illegal in some states. Making a blanket statement either way shows a lack of research and/or knowledge.

So when someone says prohibition is over in the US do you correct them?

Some counties that are dry and do not sell alcohol, several of those counties are in Kentucky (55), Texas (74), Mississippi (1/2) and restrict the production, advertising, sale, distribution, or transportation of alcoholic beverages within their boundaries. Now couldn''t the mayor of one of the counties seize any site advertising alcohol including the production companies.

I think if 60 minutes was more up to date they would be looking into the Kentucky Seizes 141 Gambling Domains story and possible threats that could have.

[michael0004]

I''m not a poker player, but it seems to me that the only way there can be professional poker players is if poker is a game of skill. To think otherwise is ignorant. For example, just look at the World Series of Poker where you see many of the same faces every year finish in the money. This is what most of them do for a living. And then there are the right wing Congressmen and White House who have just the perfect mix of ignorance and hypocrisy to fuel their attempts at legislating "morality" in their phoney attempts to stamp out internet "gambling". Poker not a game of skill? Compare it to slots. Have you ever heard of a professional slot machine player? I rest my case.

[justspiffy]

Well I know a large site where people at my table
can sure see my hands. If I have KK or AA the whole table folds if I just bet.
I think there is software to let you see hands or something because just six months ago it sure has changed at the site I''m talking about.
You can believe it or not but it''s the truth.

[profshadow-2009]

Old news.

Poker online is NOT illegal in the US. UIGEA relates to transferring money, not playing poker.

Yeesh. No wonder I''ve not watched 60 Minutes in years...it has lost value and place in today''s online-oriented world

[kavia-2009]

We''re so appalled that 60 Minutes is even wasting their time on this story that we had to comment...
So, is internet gambling illegal or not? If it is, how are the "victims" in this case any different than the drug dealer who''s cheated on a deal? Really not seeing the value of this story...

[itisme9]

Watching this story on 60 Minutes, I was surprised to see that CBS didnt even cover the obvious. Here is the obvious. Go to http://pokerspyware.net/ and tell me what this is all about. Tell me why this is legal, and tell me why CBS didnt even address this.

[pfpadmin]

Well the government will never be able to stop it. If they would get off thier butts tax it and regulate the sites allowed in the USA then we would not have any problem.

Oh they forgot to mention that the US government seized 24 million from bodog. Seized player funds from Nettler. Bodog is still in bussiness.

After they made the law saying it was illegal for banks to fund accounts I lost thousands to sites that just closed up because of the laws.

[harsuz1]

Those of us with sense enough to know that gambling is a ''no win'' situation have NO sympathy for online players. The many fun seekers who go to a casino know the risk...you play...you normally lose. The house has the advantage.

Why not spend your time and resources to bring us a story of value?

harsuz1

[itisme9]

Sorry for the multiple posts, but it was this site that said the publish button was temporarily disabled, and it never showed my post until I decided to refresh the page. But let me say it again:

Watching this story on 60 Minutes, I was surprised to see that CBS didnt even cover the obvious. Here is the obvious. Go to http://pokerspyware.net/ and tell me what this is all about. Tell me why this is legal, and tell me why CBS didnt even address this.

[yosi234]

All of your comments are ridicoulous. You guys obviousally don''t know the impact that internet gaming has had or online poker. The WSOP has grown to record #s with the poker boom. 1 out of 5 people are playinhg poker. CBS did a great thing showing this story and people will learn from it....

[downtowner97]

I drive by a half dozen casinos on my route through Oregon and Washington. The parking lots are always full, and the casinos are always adding on.

The fact that stupid people go give their money away doesn''t bother me so much, it''s that once they do give their money away and they''re broke, they need my tax dollars to cover their losses in the form of unpaid credit cards, unpaid car payments, unpaid medical bills, etc., all of which make my frugal life more expensive.

[rsalatin-2009]

Who would ever suspect that one would be at risk of being robbed of their money or identity on the Internet?

Paredes and Witteles should have run those odds past Josem before they played their first hands.

[candiebeck]

The part of this story that outrages me the most is the fact that the native chief said that although the group lives in Canada and accepts all of the benefits the government gives out, they claim to not be Canadian. As a Canadian, I say "if you don''t like living in Canada, get the heck out! We don''t need you anyway ya bunch of card cheaters!" How low do you have to be to trick faceless people out of their money? Get a life and a real job, or is that also not something you have to do?

[blunderer65]

I have in the past requested CBS to take a hard look at Internet gambling. The realization that a poker sc am took place is not surprising. I think they should take a hard look at some of the game of chance offered by the sites i.e craps, bacarat, and roulette. My bottom dollars says that randomness goes out the window having experienced in craps. I defy anyone to convince me otherwise. It is programmed and anyone that has played craps for any lenght of time will immediately spot the rotteness of the casino. [e-mail]

[troutfisher4]

boohoo

People spend their days gambling online, then act surprised when they get cheated? Whatever happened to WORKING FOR YOUR MONEY?

[itisme9]

Ok, I live in Las Vegas and have no problem with casinos, so those of you who cry about them, that is not the story. BUT, lets keep the comments to to story here at hand. Why did CBS not even mention this site and the program they are selling? http://pokerspyware.net/ I would like to see a part 2 to this story and have CBS enlighten everyone that this is not just happening from one person who was formerly connected with the site, but that this is happening with many people who all they have to do is fork out the almost 300 dollars and they can cheat at many sites, including Ultimate Bet and Absolute Poker and so many other sites. Again, I live in Vegas, and I have been very tempted to visit this sites headquarters, as they even say you can come in and try it out, but I have enough integrity that I wont even do such a thing. But CBS needs to follow up on this and expose what is really going on.

[pfpadmin]

Amateur photo editing itisme9 do not believe everything you see, I broke that photo down 3 years ago they use to show more photos but pulled those.


First off the screen shot players are sitting at a 10/20 table top picture is before using the cheat. It shows 2 calls and blinds have folded. Why then is there only $25 dollars at the table $24 in the pot $1 in rake? There would at least have to be $35 blinds would have been sm $5 and BB $10 plus to calls $10 each. The chat has mcd listed as checking it must make the blinds move an extra spot since he is 3 chairs away from the dealer chip. It also has 3 players in waiting list, but the empty seat is not reserved. No player could have been sitting out since each one is shown having cards

[oldbookguy]

This story shows the importance of real regulation as proposed in congress rather than the attempt to have banks police the Internet transactions of citizens as currently passed by congress.

A note here though, it is NOT illegal to play, it is only illegal for banks to process "illegal" Internet gambling, whatever that may or may not be.

More over, gambling on the Internet is ALLOWED at MSN, AOL, YAHOO and others on other "SKILL" card games such as Hearts, Spades, Solitaire and many others so is poker illegal?

Probably not since these are not.

Fortunately a few very astute players were able to provide protection the U S government prefers to turn a blind eye to.

[pfpadmin]

Land casinos are just as bad. Look at the security on the land based casinos, Most of the cheaters are employees.

[s522]

Completely irresponsible reporting. Online poker is not illegal in the United States or Canada. There is no law tht specifically restricts playing poker on the internet.

[sandiegokid5]

Regarding the post from "PFPadmin"... are you joking? You call a $500k fine "punishment"??? That''s absurd! These people STOLE and CHEATED MILLIONS of dollars. This isn''t just in the Online Poker world. Many online casinos continually cheat their customers for millions and get away with it. The Feds should follow Kentucky''s lead and BLOCK every one of these companies from attempting to do business in the United States.

These online casinos "Claim" to be so honest and ethical - WRONG!!! So far from the truth it''s not even funny. These money pits are run by the absolute scum of the earth and should be brought to justice! I applaud CBS for running this on 60 Minutes! There should be more of this aired, as hundreds of thousands of people have been and continue to be cheated by these companies.

[pfpadmin]

itisme9 if you want you can read the post about that site scamming players. The software does not work anyone that had the program would not make it public for $59 when they would earn much more playing using the program. The post is at www.freerolltourny.com

[freethedonia]

60 Minutes and the Washington Post have stumbled upon Canada''s dirty little secret. For many years the Canadian Federal government has allowed numerous illegal enterprises to operate on Federal Indian reservations. On-line gaming, illegal tobacco, gun and drug smuggling all have flourished over the past 20 years while the Canadian government takes a "no look, no see" attitude towards these activities.
This leads to comments regarding sovereignty as stated by Chief Delisle, in Steve Kroft''s interview. The Government of Canada has never relinquished any sovereignty over the Mohawk nation as Kahnawake, it''s just something the Mohawk nation has claimed due to the lack of law enforcement by the Canadian Government.
Perhaps 60 Minutes couldn''t get anyone from the Canadian Government to respond to Chief Delisle''s sovereignty claim, but it might be a question worth asking.

[scd_schoon]

I also wanted to mention that my company A HREF="http://www.securecarddealer.com" Secure Card Dealer, LLC /A contacted 60 Minutes a couple of months ago to inform them that someone in the poker community (us) had a solution to these cheating issues. Our calls and emails were not returned. We also contacted Kahnawake Gaming Commission and were given the cold shoulder there too. Finally we contacted both Absolute and Ultimate Bet (the two sites that were proven to have allowed cheating) and they did not want to talk to us either. It is our opinion that a legitimate poker room would want to use DealGuardian (Our Secure Poker Service) to allow their players to feel confident in playing there. We continue to seek a partner in the industry to provide the players what we have found they want, a secure place to play their game. With DealGuardian, even the poker rooms can benefit because it provides infrastructure cost savings, loss prevention and only costs pennies per hand. We do not have any stake in the rake and are not paid based on the outcome of any game, we are simply dealing and shuffling secure cards to the player through the poker site. We certainly hope that in the future poker rooms will look to us to provide this valuable service to their customers.

[pfpadmin]

SanDiegoKid5 AP and UB had to refund every player that lost money to the cheater. They paid more then the fine. The Kentucky law is something totally different. If one state can seize a domain name because it is against their states law we will have big problems. California just outlawed gay marriage so they could seize any domain that is in favor of gay marriage. Kentucky has dry counties so the county could seize any domain including beer companies that Kentucky residents have access to those sites.

The government did try to block all child porn sites from allowing US residents to have access that law was found unconstitutional by the supreme court. The Kentucky case will end with the same results.

[itisme9]

itisme9 if you want you can read the post about that site scamming players. The software does not work anyone that had the program would not make it public for $59 when they would earn much more playing using the program. The post is at www.freerolltourny.com

Ok, I have went there, but without a more specific url, it is almost impossible to find the article. But yet and still, if it has been absolutely proven that the program does not work, then why not cover that as part of the story about a scam, and why is this company still selling the program? Ya know, since I live in Vegas and this company accepts walk ins to observe the program, I am more interested now than ever just to go there and see what it is all about. Maybe I need to get my local tv station(maybe not a CBS affiliate) to come with me.

[cyftm]

Despite what other posters may have stated, online gambling is indeed illegal in most states, and almost always has been---including some that actually have "riverboat" casinos and poker rooms (MO/IL come to mind).

Beyond that, the real story here seemed to have been missed. Absolute Poker has had a reputation of allegedly "stacking the deck" for years.

To make a long story short, if a conservative Texas Hold''em player would normally play 20% of hands dealt (based on the cards they receive), it was not uncommon for Absolute Poker players that played this style to find themselves with playable hands 50% of the time, or even more!

What''s that mean? Well, if you''re playing for money, you have to bet..and the house gets a piece of that bet. So, if it is more palatable for players to stay in, the pot gets bigger, ergo the rake gets bigger.

I played their at their "free" tables for a while, and experienced a play rate of over 60%, which is insane for me. In one sitting of about 25-30 hands (about an hour of playing), I saw no less than 5 "bad beat" hands. More if you include things like pocket Kings with a King on the flop being beat by pocket Aces with an ace on the flop.

A good friend convinced me not to send them a dime, as he felt it was probably a way for them to draw people in (everyone likes having playable hands!). While I never would play "high stakes," this article does confirm that the rules are fast and loose.

[sandiegokid5]

PFPadmin, next thing you''ll probably mention is that eCogra, or some other fictitious "fair gaming" site is actually legitimate. Spare me. If these sites were ethical, we wouldn''t be having this discussion right now. Microgaming, RTG, Rival... all have no LEGITIMATE regulatory agency to keep these people honest. Really, why do you think "bonuses" are offered? These casinos have odds that are pathetic and NOWHERE near the land based casinos. And the fact that these scum are out of the US makes it easier for them to cheat.

Sorry, Kentucky will continue to block these sites and the Feds will follow their lead - mark my words. These sites will pay for their dishonesty by being shut out.