In SMH this arvo:
Detective work by an Australian online poker player has uncovered a $US10 million cheating scandal at two major poker websites and triggered a $US75 million legal claim.
In two separate cases, Michael Josem, from Chatswood, analysed 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.
Now the owners of the sites have filed a $US75 million claim against the makers of the software that powers them, claiming they were unaware of the security holes when they purchased the sites in 2006, MSNBC reported this month.
Official investigators - brought in following Josem's revelations - have named one of the world's most successful poker players, Russ Hamilton, as the main perpetrator of the fraud.
Suspicions of unfair play at Absolute Poker were first raised late last year. Josem plotted the win rate of several thousand players against the suspicious accounts and found the cheats won money at a rate that was 100 times faster than a good player could reasonably win.
The cheating accounts played every hand as if they knew every card that the other players had and folded hands at just the right time.
The findings led to an investigation by the Kahnawake Gaming Commission, which licenses several hundred online casinos and poker rooms. It found Absolute Poker attempted to cover up the cheating by deleting gaming logs and records and fined it $US500,000.
Absolute Poker repaid those who had lost money but refused to release the cheater's identity because a private settlement was reached.
A few months later, Josem and players from the Two Plus Two online poker forum used the same methods to uncover almost identical cheating occurring at Absolute Poker's sister site, UltimateBet. One player account, NioNio, netted a profit of $300,000 in just 3000 hands and won 13 of the 14 sessions recorded on the MyPokerIntel.com website, which tracks high stakes online tournaments.
"The chances of a player winning at those rates is approximately equal to winning a one-in-a-million lottery on six consecutive occasions," said Josem.
"In poker, a contest of limited information, if you know what cards your opponent has, you'll never lose - and this is precisely what happened."
The cheats passed their fraudulent winnings between multiple user accounts in an attempt to avoid detection.
The Kahnawake Gaming Commission today released the initial findings of an audit it is conducting into UltimateBet.
It named World Series of Poker winner Russ Hamilton, previously associated with Ultimate Bet's affiliate program, as the main perpetrator. Commission spokesman Chuck Barnett said the names of others involved would come out when the final report was released in November.
The commission ordered UltimateBet to begin refunding all players adversely affected by the cheating scheme and remove any staff connected with the scheme by November 3.
The site has also been fined $US1.5 million and will have its licence revoked if it does not comply with any of the sanctions.
An Australian company, Gaming Associates, conducted the official investigations on both UltimateBet and Absolute Poker for the commission. Its principal consultant, Alan Pedley, refused to discuss the specifics of the findings as he was bound by a non-disclosure agreement.
As a result of his detective work Josem has been employed by the leading online poker site, PokerStars, to work on its security team.
He said other sites weren't vulnerable to the same cheats because they used different software and had more credible operators.
"Just as not all insurance companies behave the same way as HIH, and not all politicians are the same as Brian Burke, not all poker companies are the same as UltimateBet and Absolute Poker," Josem said.
"The employees of the leading online poker operators simply don't have the feature or ability to view hole cards of players during a hand and they don't have this ability because of a security decision that was made when their software was first written many years ago."
Josem said people could still be confident about playing on online poker sites because, if something untoward happened, it could easily be caught by statistical analysis, precisely as happened in this situation.
"Every online poker hand is recorded electronically and can be analysed after the fact. Just as the third umpire video replay can be used to enforce the rules in cricket, third-party analysis can be used to enforce the rules of poker."