The PPA has recently come out with a statement which indicates their dissatisfaction with the Kahnawake Gaming Commission’s (KGC) handling of the Absolute and Ultimate Bet cheating scandals. In a nutshell the PPA thinks the investigations need more transparency.
The KGC has been in CYA mode and issued the following press release.
Kahnawá:ke Gaming Commission (the “KGC”) has been continuously regulating online gaming for over 9 years – longer than most, if not all, other jurisdictions. During that period of time, the KGC has proven to be a world leader with regulations and methodologies that have established a regulatory environment in which online gaming can be conducted fairly and securely. The KGC’s success as a regulator is evidenced by the fact that a significant percentage of the online gaming industry has chosen to locate and operate within Kahnawá:ke. Given the length of time that it has regulated this new industry and the significant number of licensees under its control, the KGC’s record has been exemplary.
As commentators have correctly noted, even the most well regulated industries are not immune from abuse. Examples can be found in the banking, securities and land-based gaming industries. The fact that the online gaming industry is new and is technologically driven creates additional regulatory challenges. Throughout its history, the KGC has met these challenges and its regulations have been emulated in a number of other jurisdictions around the world.
Over the past several months, it was discovered that individuals within two of the KGC’s licensees – Absolute Poker and Ultimate Bet – had created and carried out a scheme to cheat players. In both cases, the improper conduct of these individuals was brought to the attention of the licensees, and the KGC, by affected players. The KGC acknowledges the diligence and sophistication displayed by these players and the role they played in bringing these matters to light.
The first case involved Absolute Poker. After a thorough investigation carried out by the KGC and its agents, Gaming Associates, the KGC rendered its decision in this matter on January 11, 2008. This decision concluded that the cheating that took place was not initiated, nor did it benefit, Absolute Poker as a corporate entity, or its directors or principal ownership. The decision imposed a number of sanctions and conditions on Absolute Poker, including twenty-four specific directions for changes to its management and systems. The KGC was provided evidence that all players affected by the cheating that took place were fully reimbursed for their losses.
Shortly after its decision was rendered in the Absolute Poker matter, the KGC first became aware of similar allegations of cheating involving individuals within Absolute Poker’s sister company: Ultimate Bet.
Over the past several months, the KGC has been closely involved in an in-depth investigation of the Ultimate Bet cheating allegations. Significant efforts have been expended to identify and correct the flaws in Ultimate Bet’s system that permitted the cheating to take place; to identify the individuals that were responsible for the cheating and to ensure that all affected players were fully reimbursed. Unfortunately, the KGC’s actions were not well communicated to the poker industry or public at large, creating an incorrect perception that the KGC was ‘doing nothing’.
The KGC’s investigation into the Ultimate Bet matter has yielded a number of key findings which, within the next several days, will enable the KGC to issue its decision on the appropriate steps to be taken.
It should be stressed that the KGC’s primary concern throughout both matters was to ensure that affected players were fully reimbursed and that corrective measures were implemented to prevent against any further incidents of cheating. Both of these objectives have been accomplished – as evidenced by the fact that the recent concerns that have been raised about the Absolute Poker and Ultimate Bet matters are not being driven by affected players.
Murray Marshall
Senior Advisor
Kahnawá:ke Gaming Commission
Now the difficult thing is that KGC is in a tough situation here. Everybody would like to see the book thrown at Absolute and UB but, in reality, they did not perpetuate the fraud. But if we take our cue from other regulated industries we see that KGC is doing very little in the way of actual enforcement.
Let’s say Howard Stern goes on the air and uses a banned word and it isn’t bleeped out. His employer could face large fines. There’s an assumption in regulated industries that the corporation being regulated has systems in place to prevent banned activities from happening. In some cases the systems could be training and education. In other cases it might require an internal audit or compliance department.
The bottom line is that the KGC’s one and only function as an organization is to ensure that its licensees are providing fair gaming to customers. One cannot look at both the Ultimate Bet and the Absolute cheating scandals and say with a straight face that those types of flagrant cheating shouldn’t have set off some red flags.
In Vegas, everybody’s gotta watch everybody else. Since the players are looking to beat the casino, the dealers are watching the players. The box men are watching the dealers. The floor men are watching the box men. The pit bosses are watching the floor men. The shift bosses are watching the pit bosses. The casino manager is watching the shift bosses. I’m watching the casino manager. And the eye-in-the-sky is watching us all. – Ace Rothstein, Casino
If a poker room does not have systems in place to catch people winning too much or even losing too much then they are simply not taking providing a fair game to the other players seriously. And that being the case, again, KGC is required to take some sort of action greater than the current slap on the wrist.
At both online poker rooms I’ve worked at there has been a department (and in some cases more than one department) devoted to that sort of thing. They pour over reports and look for things that seem suspicious. If they find anything that red flags a player then they begin an investigation. There is absolutely no way that a competent fraud and security department shouldn’t have seen some of these things.
And therein lies the public’s frustration with KGC, Absolute, and Ultimate Bet. Whoever is in charge of security at Absolute and UB should be very publically fired. Then they need to hire a highly respected security expert to come in and implement an aggressive internal auditing capability. That’s what would convince people that KGC, Absolute, and UB are serious about preventing this from happening again.
Yet, nobody has been sacked. No names of cheaters have been released even though they specifically say it was a former consultant for the company (in the case of Absolute). Thus, there exists no transparency.
It’s obviously outrageous that these things could have occurred in the first place but there is simply no excuse for Absolute’s repeated denials of cheating. Any half competent poker player could have looked at those hand histories and concluded something very fishy was going on. Why then in both cases has Absolute and Ultimate Bet grudgingly admitted these wrongdoings only when overwhelming evidence has been made public?
If for no other reason, KGC should take severe and public punitive actions against both companies. It’s not enough to correct the problem after the fact. KGC needs to send a very clear message that if a poker room tries to cover up fraud on their system they will be punished.
Did you see that Ultimate Bet and Absolute combined their back ends? New Absolute Poker, now with twice the super users. – A friend who I’ll allow to remain anonymous
Is there a regulatory agency that oversees online casinos? If not, there needs to be something set up to make sure nothing like that happens again.