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Poker News | Gambling and the Law

Online Poker Scandals, According to 60 Minutes and Washington Post

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Sunday, November 30th, brought the much-anticipated and somewhat feared 60 Minutes episode on CBS about the online poker industry. The 20-minute piece narrated by correspondent Steve Kroft focused on the Absolute Poker and UltimateBet cheating scandals that plagued the poker community for well over a year. The show has aired, the related articles have been published in the Washington Post, and the results remain to be seen.

It was the 60 Minutes piece that many feared most, as it had the potential to make the entire online poker industry look crooked and untrustworthy, to portray Absolute Poker and UltimateBet as a place for rampant cheating, and to completely ignore the need for regulation to ensure the safety of the millions of Americans who play online regardless of the laws or lack of regulation. To a degree, that did turn out to be what the CBS show broadcast.

The Washington Post article by Gilbert Gaul, however, was much more even-handed and detailed. Understandably, the televised piece must be sensational to a point and has limited time to tell the story, whereas the multi-part article on the Washington Post’s website has much more space to be thorough.

Regarding the 60 Minutes television show, the introduction made it sound sinister: “It raises new questions about the integrity and security of the shadowy and highly profitable industry that operates outside U.S. law.” O-o-o-h!

After a few words about the poker boom beginning with Chris Moneymaker’s 2003 WSOP victory and the ease of playing poker online, Kroft as the narrator stated, “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 regulation, enforcement or supervision.”

The point that online gaming is illegal in the U.S. walks a fine line, as it is technically not illegal. The funding of online poker through U.S. financial institutions was made illegal through the UIGEA, but it is not illegal to use offshore bank accounts to transfer funds and play with those funds. While there are some states in America that specifically outlaw online poker, the United States as a whole has not. And to say that there is no enforcement or supervision is an overstatement, as places like the Kahnawake Gaming Commission that holds the licenses and servers for the majority of the world’s gaming sites does have a regulatory body.

The show goes on to introduce several online poker players, like Todd Witteles, who describe how the Absolute Poker scandal began. But that is where the narration becomes convoluted when it tries to also discuss the UltimateBet scandal, as there seems to be little notation that the two sites are owned by the same company but hosted entirely different scandals with different perpetrators.

In the first portion of the segment, Kroft explains, “But what really made the victims angry was that Absolute Poker cut a deal with the cheater to protect his identity, in exchange for a full confession of how he did it.” But later, when discussing the UltimateBet scandal with investigator Frank Catania, the name of Russ Hamilton is brought up. While there is a distinction between the two scandals, it was fuzzy and unclear to the average viewer that the scandals were separate. While this writer admittedly has no sympathy for Hamilton or anyone who perpetrated the scandals, it was unfair to make it seem as if Hamilton was the suspect in both scandals. Clarification of the difference between the perpetrators would have been more accurate reporting.

It is never mentioned that Absolute Poker and UltimateBet heightened security on the sites, closed the superuser gaps, and ultimately transferred their sites to a new server to enhance the safety of its customers going forward. Again, as no friend to either site nor the way they handled the situations, it is still important to point out that they have breached the security gaps and are monitoring the sites for cheating like never before. Leaving that note completely out of the 60 Minutes program is, again, omitting facts that are crucial to understanding the entire story.

And the segment ended on a particularly ominous note, with Witteles saying - likely as a small part of his lengthy interview, most of which did not make it to air - “But the scary thing is there may be other accounts out there like this, maybe even on other sites that are not being done with the same sort of recklessness. And maybe this has been going on, on more than just Absolute Poker and UltimateBet. Maybe it’s going on in several other places…” The only thing missing from the end of the story was the insertion of crime story music. Da-da-duuum!

Understood that the story was sensationalized for the television audience, this writer believes that several integral parts of the story remained untold and left the viewers believing that online poker is a shady, sinister industry with possibly rampant cheating taking place.

The Washington Post articles, on the other hand, were a bit fairer in the reporting. Though still using words like shadowy to describe the world of online poker, Gaul goes into a great amount of detail in the article entitled “Players Gamble on Honesty, Security of Internet Betting” about both scandals and takes care to differentiate between the two. And in several instances, he quotes from statements sent to him in lieu of actual interviews with Tokwiro Enterprises officials to allow their voice to be heard.

The second article by Gaul, “Prohibition vs. Regulation Debated As U.S. Bettors Use Foreign Sites,” contains a great deal of information about the bigger picture regarding online gaming. “Even as bettors around the world gamble millions of dollars online, confusion reigns about the legal status of those bets and the companies that handle them,” he wrote. And that, much more accurately than sensational terms, sums up the problem.

Gaul attempts to get to the heart of the online gaming debate as it stands in the United States, and through interviews with John Pappas of the Poker Players Alliance and some of the members of Congress with interests on both sides of the issue, the article appropriately discussed the political, economic, and personal issues involved in legalization and regulation issues.

In addition to the lengthy aforementioned two-part article, Gaul added a supplemental piece on the Washington Post’s website entitled “The Mohawk Connection” to give more detail about the Kahnawake Gaming Commission, former Grand Chief Joe Norton , and where they fit into the entire online poker industry. The information is somewhat limited in scope, however, as Norton “declined to be interviewed and has provided few financial details about his internet poker sites.”

Gaul’s reporting for the Washington Post contains a detailed, chronological, and factual account of the Absolute Poker and UltimateBet scandals, as well as the larger issues that come into play. While the 60 Minutes piece seemed to confuse matters, a read of the written reports gives a much more accurate description of it all.

While most people in the poker community can tell fact from sensational journalism in the 60 Minutes piece, it is the millions of people who know little to nothing about the industry whose opinions might be swayed by the television show. Hopefully, most will see the need for regulation despite its obvious omission from Kroft on 60 Minutes, but it remains to be seen how public opinion may or may not have been swayed by the show.

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