The already contentious lawsuit between former—and possibly future—business partners PokerStars and Atlantic Club Casino just turned nasty. The lawsuit in New Jersey state court centers on whether Atlantic Club properly terminated a contract to let PokerStars purchase the casino because PokerStars missed a key deadline tied to obtaining a gaming license. Because the parties' legal filings this week are not yet available to the general public [FN1], I cannot analyze and comment on the relative strengths and weaknesses of the opposing legal arguments. One widely reported argument raised by Atlantic Club, however, does have intriguing legal implications.
A key defense raised by Atlantic Club is that it was purportedly unaware of the most serious Black Friday-related charges against PokerStars and its then-CEO, Isai Scheinberg, until after entering into the purchase agreement. Indeed, Atlantic Club claims it was in the dark about the extent of the Back Friday charges until after PokerStars submitted its New Jersey gaming license application in March. According to Atlantic Club, "significant information emerged publicly that Plaintiffs’ principals were associated with serious criminal activities more extensive and unresolved than previously disclosed." Further, Atlantic Club claimed to have been unaware that former PokerStars executives Scheinberg and Paul Tate had been indicted on a number of federal charges related to offering online gaming illegally in the United States and disguising monetary transactions related to such illegal gaming. Perhaps most significantly, Atlantic Club contends that Scheinberg has been actively involved in the negotiations for the purchase of the casino and in PokerStars' licensing efforts, which implies PokerStars may be in violation of their settlement agreement with the Department of Justice which required Scheinberg to give up any managing role in the company.
As a litigator, my first impression was that Atlantic Club included these allegations mostly in an attempt to throw some dirt at PokerStars. As you will recall, PokerStars had raised certain claims such as breach of the duty of good faith, promissory estoppel, and unjust enrichment which are based in equity (i.e., principles of fairness). In essence, PokerStars claimed Atlantic Club was not acting fairly and in good faith in terminating the purchase agreement. However, a litigant seeking an equitable remedy is generally required to come to court with "clean hands", meaning the party has itself acted fairly and in good faith. By contrast, issues of law—such as PokerStars' claim for breach of contract—apply rules without regard for fairness (though it never hurts to dirty up an opponent even on purely legal issues). So, Atlantic Club's response bringing up PokerStars' Black Friday legal issues is an obvious attempt to undermine PokerStars' entitlement to equitable relief.
Another obvious purpose of raising the Black Friday scandal is to undermine PokerStars' credibility with the court. Given the nature of the charges in the criminal indictments and civil complaints—violations of gaming laws, bank fraud, and money laundering—Atlantic Club is painting PokerStars as an unsavory characters, folks the court should send packing. Of course, this raises interesting questions for Atlantic Club as to why they were doing business with PokerStars in the first place. The official Atlantic Club line is that they were unaware of the serious nature of the Black Friday allegations until the American Gaming Association (AGA) filed a brief in opposition to PokerStars gaming license application. This explanation is pure bovine excrement. The general public might not know about the Black Friday charges, but it was big news in the gaming industry. A gaming executive, even one at a land-based casino, would have known enough about Black Friday and PokerStars' prominent connection to the criminal and civil cases to have done some basic due diligence investigation of PokerStars before getting into bed with them on a multimillion dollar business deal that depended on gaming commission approval. Still, even if the accusations tar Atlantic Club indirectly, the more PokerStars is talking about Black Friday in court, the less likely they are to win their case on the merits.
Which brings us to my personal "neutron bomb" theory. A neutron bomb is a nuclear device much like conventional hydrogen bombs, but specifically designed so that the majority of the bomb's energy is released as neutron radiation instead of explosive energy. The purpose of a neutron bomb is to maximize lethality to people, while minimizing damage to structures. So, a neutron bomb's destructive radius is relatively small, yet it causes death by radiation to people within close proximity (~1500 meters) to the detonation point. Many of those exposed to lethal doses of radiation linger for days or weeks before dying, with no viable treatment options.
The more I think about Atlantic Club's decision to throw Black Friday mud at PokerStars, the less sense it makes if this were a simple contractual dispute. PokerStars has a legitimate shot at winning the breach of contract claim, and specific performance of the contract—requiring the parties to abide by the purchse agreement and selling the casino to PokerStars if they obtain licensing—is the most likely remedy (money damages are often viewed as inadequate if the contract involves sale of property or a similar unique transaction). If there is a real chance the parties will be ordered by the court to continue forward with the deal, then Atlantic Club's muckraking only poisons an already tense relationship for a questionable amount of litigation benefit.
Atlantic Club's focus on PokerStars' Black Friday issues makes complete sense, however, if Atlantic Club has another buyer lined up and simply wants to kill off the PokerStars' deal at any cost, even if that means making PokerStars too radioactive for a gaming license. When the American Gaming Association (AGA) raised the Black Friday issues in its brief to the New Jersey Division of Gaming Enforcement (DGE), those issues did not seem to gain much traction publicly. The Black Friday issues would have been easy for the DGE to minimize in reaching a decision on PokerStars' application for a gaming license. But now those accusations have been made publicly, in court, in a high-profile case, and include accusations that PokerStars has breached its DOJ settlement agreement to keep Scheinberg out of the operations side of PokerStars. Even worse, those accusations are not coming from potential business rivals to PokerStars, as with the AGA brief. Instead, it's the Atlantic Club, a current gaming licensee and party to the proposed sale who claims that its own business partner is unsuitable for licensing. That fact alone is going to make it much more difficult for the DGE to simply whitewash PokerStars' Black Friday issues.
Atlantic Club seems intent on leveraging Scheinberg's apparent influence over PokerStars into evidence that PokerStars is unsuitable for licensing. Of course, without a gaming license, the purchase agreement is dead, whether now or in three months after the DGE's decision on PokerStars' application. In a similar case, DGE pressured MGM Resorts to sell off its New Jersey gaming operations because of DGE concerns that MGM's partner in its Macau operations, Pansy Ho, was too closely tied to her father, Stanley Ho, who is reputed to be connected to Chinese organized crime. DGE would be open to accusations of inconsistency if it now grants a gaming license to a company like PokerStars which has as a behind-the-scenes leader a man indicted for violating United States bank fraud and money laundering laws.
Further, Atlantic Club may be injecting Scheinberg into the debate to create a basis for having Scheinberg subpoenaed to testify in the United States about his current role in PokerStars, either in the litigation with PokerStars, or before the DGE as part of the licensing process, or both. Of course, Scheinberg would almost certainly decline to appear in the United States to avoid being arrested on his outstanding Black Friday charges, but doing so would likely sink the lawsuit and the gaming license.
New Jersey is PokerStars' best and possibly last chance to obtain a gaming license in the United States. If PokerStars continues to pursue the Atlantic Club litigation, Atlantic Club will ratchet up its attacks on PokerStars' Black Friday issues, which in turn will increase the pressure on the DGE to take a hard line in the licensing process. PokerStars could easily win the TRO battle and keep the Atlantic Club purchase agreement alive, only to find that the fight has fatally poisoned its chances to obtain the gaming license it needs both to complete the Atlantic Club purchase and to pursue licensing in other states. The Atlantic Club, on the other hand, would walk away relatively unscathed, $15 million richer, with its business operations intact and ready for sale to another, higher bidder.
With Scheinberg and Black Friday, the Atlantic Club may have created itself a litigation neutron bomb. If PokerStars presses their current lawsuit, don't be surprised if their hopes for a gaming license take a significant, even fatal, hit.
UPDATED (5/17/2013; 3:52 PM): As I was editing and hitting "publish" on this post, news broke that, following today's hearing, the judge in the PokerStars-Atlantic Club Casino case lifted the TRO. This will permit Atlantic Club to move forward with a sale to another buyer. This ruling effectively ends the effort by PokerStars to buy the casino, but PokerStars could still continue to fight to recover the $15 million it has sunk into the casino to keep it operational during the term of the purchase agreement. The more intriguing question is whether the Scheinberg-Black Friday issues have already made PokerStars too radioactive for licensing in New Jersey, and effectively elsewhere in the United States.
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[FN1]. Although there have been a lot of filings by both parties this week, New Jersey's state court system does not provide online access to court records, and my New Jersey legal contacts have not been able to obtain copies of documents directly from the court (likely because the judge has the file for a key hearing on PokerStars' request for a temporary restraining order later today). However, at least two journalists—John Brennan of the "Meadowlands Matters" blog for and "Diamond Flush" of the eponymous poker blog—have either been provided copies of the parties' recent filings or had access to those filings and have provided excellent, detailed summaries of the legal jujitsu. Brennan's posts summarize Atlantic Club's resistance to the TRO, reviews the timeline of key events, notes the views of a number of "big gun" experts retained to support Atlantic Club's view of a key gaming law issue, and summarizes PokerStars' reply to Atlantic Club's arguments. Diamond Flush—who confirms she has a confidential source with access to the legal proceedings—has provided substantially more detailed summaries of the Atlantic Club's resistance to the TRO and supporting affidavits, as well as PokerStars' reply to those arguments. Most intriguing, however, was Diamond Flush's reporting (which I don't recall seeing covered elsewhere) of the details of an emergency court hearing held on May 7 in which Atlantic Club attempted to have the initial TRO rescinded prior to the original hearing date of May 17. The presiding judge denied that request, which is not unusual, though the hearing is quite interesting as it helps understand how the parties and the judge are framing the issues.
May 13, 2013
PokerStars v. Atlantic Club Casino—What to Watch for in Atlantic Club's Response
As most folks in the poker world are aware, the Rational Group—parent of online poker behemoth PokerStars—has filed suit against Resorts International and other defendants with respect to a dispute over an agreement for PokerStars to purchase the Atlantic Club Casino. The purchase of the Atlantic Club was—and maybe still is—the best vehicle for PokerStars' entry into the legal U.S. online poker market. The apparent failure of the deal has been covered by former corporate attorney turned poker journalist Dave "FTrain" Behr for Flushdraw.com (Part 1 and Part 2). Behr (at Flushdraw.com) along with poker journalists DiamondFlush (at DiamondFlush.com) and Chris Grove (at QuadJacks.com) have each provided excellent analyses of the initial Complaint and accompanying Motion for Temporary Restraining Order (TRO) and supporting Brief (thanks to Grove and QuadJacks for obtaining and sharing the original pleadings).
At this point, there's not much for me to add to the excellent work noted above, mostly because to this point we—and the Court—have seen only one side of the case. However, my 18-year career has been spent mostly as a litigator specializing in defending a variety of civil lawsuits, primarily insurance, financial, and commercial in nature. As a civil defense attorney, when looking at an initial Petition or Complaint, my first instinct is to ask, "What's missing? What didn't the Plaintiff or Petitioner tell the Court?" Often what's not mentioned in the Petition or Complaint are matters that go to the heart of the dispute. With respect to the PokersStars v. Atlantic Club Casino Complaint, there are several key factual issues that need to be fleshed out in the Atlantic Club's Response due later today. Three issues in particular deserve to be put on a "watch list" for when Atlantic Club files its Response.
I. What does the Purchase Agreement state regarding the "Outside Date" and PokerStars' Obligation to Become Licensed?
The first, and most critical issue, is the exact contractual definition of "Outside Date", and the contractual significance of that date. Regrettably, the Purchase Agreement itself is not yet publicly available (though it was filed with and available to the Court). However, PokerStars makes repeated reference to various provisions of the Purchase Agreement throughout its Complaint and Brief, including quoting or even block-quoting several key provisions.
However, the Complaint and Brief cite to, paraphrase, but do not quote the relevant contractual provisions which apparently set an "Outside Date" for completion of certain aspects of the deal (referred to as Section 7.2), and also set forth the requirements for PokerStars to obtain a casino license (referred to as Section 5.5.). The failure to quote contractual terms is always a red flag to a litigator, because the precise contractual language is nearly always critical to the proper construction and interpretation of a contract.
In this particular case, the exact terms of the Purchase Agreement related to licensing and the "Outside Date" are critical because PokerStars is arguing those provisions run afoul of the following provision of the New Jersey gaming statutes:
PokerStars argues that its application was not "completed" until April 11, 2013, and thus any contractual provision for an "Outside Date" less than 120 days later (before August 9, 2013) would be void pursuant to law.
The problem with PokerStars' argument is that it is not clear whether the Purchase Agreement actually violates the statute. First, the term "Outside Date" is not defined. To violate the statute, the "Outside Date" must be a "closing or settlement date". A "closing date" is generally understood to be the date when control and ownership is transferred to the purchaser, and payment is made to the seller. A "settlement date" is generally understood to be the date payment is made for a previous transfer of goods or property. In the context of gaming control regulations connected to licensing of a previously unlicensed owner, "closing or settlement date" would appear to be the date when the purchaser takes control of the casino after receiving its license; the 120 day statutory requirement is to ensure there is sufficient time for gaming officials to consider, investigate, and make a determination as to the purchaser's suitability for licensing.
However, for those of us who have been involved in large business sales, it seems unlikely that the "closing date" is the same as a licensing date. Closing on a large business sale like this requires significant "due diligence", including transferring deeds, clearing liens, assigning contracts and accounts, and reviewing employment and labor contracts (the PokerStars Complaint and Brief take Atantic Club to task for failing to provide paperwork on several of these types of due diligence issues). The more common practice where regulatory approval is required for a transaction would be to designate a deadline for obtaining necessary approvals or licenses, and a later date for the actual closing of the transaction.
In the present case, PokerStars' obtaining licensing by a particular date might be a condition precedent for closing the deal, not the closing date itself. In other words, the "Outside Date" might refer to a deadline by which PokerStars was to be licensed to keep the deal alive, with a later formal closing date (perhaps tied to the date of licensing; e.g., "Closing shall occur within 30 days of PokerStars receiving a valid gaming license."). Or, the "Outside Date" might be a deadline on the entire deal itself; if all requirements are not met by that date, then the Purchase Agreement terminates. In such a case, the "Outside Date" would operate not as a closing date, but as the expiration date on an option to buy the casino (and it is unquestioned that the Purchase Agreement provided more than sufficient time from the date of signing in which PokerStars could have submitted a "completed application" and still had 120 days before the "Outside Date"). Similarly, there might be other deadlines in the Purchase Agreement which are not tied to licensing which PokerStars missed because of the licensing delays.
Of course, without the Purchase Agreement, we are in the dark as to what was meant by the term "Outside Date", and whether that "Outside Date" was the equivalent of a "closing or settlement date" pursuant to the relevant statute. But the Atlantic Club will need a convincing argument that the closing date statute has not been violated to avoid being found in breach of the Purchase Agreement.
II. What is the Atlantic Club's explanation for appearing to mislead PokerStars into thinking the "Outside Date" would not be enforced?
In its claims for unjust enrichment and promissory estoppel, PokerStars outlines a number of communications and actions by the Atlantic Club which PokerStars claims unfairly gave the impression that the Atlantic Club was not going to enforce the "Outside Date" and terminate the Purchase Agreement. Both of these claims are equitable in nature, based on principles of fairness where one party has misled another party to its detriment. Principles of equity generally will not operate to void valid contractual provisions; equity is not intended to save parties from bad deals, only to remedy unfair conduct.
Here, the Purchase Agreement will again be key. Often contracts have "non-waiver of default" provisions that state a party can choose not to invoke a remedy for one default without waiving the right to later pursue a remedy for a future default. Here, the Atlantic Club might argue it was cooperating with PokerStars to make the deal work until it became obvious that the closing time frame was too far removed from the original "Outside Date" and it needed to terminate the Purchase Agreement and pursue other options.
The Atlantic Club will also need to answer what I view as PokerStars' strongest argument—PokerStars has paid advances of $11 million, and is potentially on the hook for an additional $4 million penalty, which is roughly equivalent to the full purchase price of the deal. Thus, termination of the Purchase Agreement essentially works a forfeiture of the entire purchase price. Generally speaking, the law frowns on forfeitures. However, if forfeiture of advance payments is a remedy spelled out in the Purchase Agreement, it likely is enforceable as a bargained-for condition of the contract.
More troubling is the allegation that the Atlantic Club demanded certain advances on construction costs associated with refurbishing the casino for PokerStars, including building out a poker room. Some of these demands for advance payments were made after the time when it appears the Atlantic Club was already considering terminating the Purchase Agreement. How the Atlantic Club responds to these complaints is also important. However, even if some of these actions by the Atlantic Club are found to be improper, the Court may nonetheless determine that the appropriate remedy is only reimbursement of specific payments made after the date the Atlantic Club determined the deal would not meet the contractual deadline. PokerStars' preferred remedies of either specific performance of the contract or reimbursement of all payments may both be rejected even if PokerStars demonstrates detrimental reliance on some of the Atlantic Club's statements and demands.
At this point, there's not much for me to add to the excellent work noted above, mostly because to this point we—and the Court—have seen only one side of the case. However, my 18-year career has been spent mostly as a litigator specializing in defending a variety of civil lawsuits, primarily insurance, financial, and commercial in nature. As a civil defense attorney, when looking at an initial Petition or Complaint, my first instinct is to ask, "What's missing? What didn't the Plaintiff or Petitioner tell the Court?" Often what's not mentioned in the Petition or Complaint are matters that go to the heart of the dispute. With respect to the PokersStars v. Atlantic Club Casino Complaint, there are several key factual issues that need to be fleshed out in the Atlantic Club's Response due later today. Three issues in particular deserve to be put on a "watch list" for when Atlantic Club files its Response.
I. What does the Purchase Agreement state regarding the "Outside Date" and PokerStars' Obligation to Become Licensed?
The first, and most critical issue, is the exact contractual definition of "Outside Date", and the contractual significance of that date. Regrettably, the Purchase Agreement itself is not yet publicly available (though it was filed with and available to the Court). However, PokerStars makes repeated reference to various provisions of the Purchase Agreement throughout its Complaint and Brief, including quoting or even block-quoting several key provisions.
However, the Complaint and Brief cite to, paraphrase, but do not quote the relevant contractual provisions which apparently set an "Outside Date" for completion of certain aspects of the deal (referred to as Section 7.2), and also set forth the requirements for PokerStars to obtain a casino license (referred to as Section 5.5.). The failure to quote contractual terms is always a red flag to a litigator, because the precise contractual language is nearly always critical to the proper construction and interpretation of a contract.
In this particular case, the exact terms of the Purchase Agreement related to licensing and the "Outside Date" are critical because PokerStars is arguing those provisions run afoul of the following provision of the New Jersey gaming statutes:
[W]henever any person contracts to transfer any property relating to an ongoing casino operation … under circumstances which require that the transferee obtain casino licensure … the contract shall not specify a closing or settlement date which is earlier than the 121st day after the submission of a completed application for licensure or qualification… Any contract provision which specifies an earlier closing or settlement date shall be void for all purposes.
PokerStars argues that its application was not "completed" until April 11, 2013, and thus any contractual provision for an "Outside Date" less than 120 days later (before August 9, 2013) would be void pursuant to law.
The problem with PokerStars' argument is that it is not clear whether the Purchase Agreement actually violates the statute. First, the term "Outside Date" is not defined. To violate the statute, the "Outside Date" must be a "closing or settlement date". A "closing date" is generally understood to be the date when control and ownership is transferred to the purchaser, and payment is made to the seller. A "settlement date" is generally understood to be the date payment is made for a previous transfer of goods or property. In the context of gaming control regulations connected to licensing of a previously unlicensed owner, "closing or settlement date" would appear to be the date when the purchaser takes control of the casino after receiving its license; the 120 day statutory requirement is to ensure there is sufficient time for gaming officials to consider, investigate, and make a determination as to the purchaser's suitability for licensing.
However, for those of us who have been involved in large business sales, it seems unlikely that the "closing date" is the same as a licensing date. Closing on a large business sale like this requires significant "due diligence", including transferring deeds, clearing liens, assigning contracts and accounts, and reviewing employment and labor contracts (the PokerStars Complaint and Brief take Atantic Club to task for failing to provide paperwork on several of these types of due diligence issues). The more common practice where regulatory approval is required for a transaction would be to designate a deadline for obtaining necessary approvals or licenses, and a later date for the actual closing of the transaction.
In the present case, PokerStars' obtaining licensing by a particular date might be a condition precedent for closing the deal, not the closing date itself. In other words, the "Outside Date" might refer to a deadline by which PokerStars was to be licensed to keep the deal alive, with a later formal closing date (perhaps tied to the date of licensing; e.g., "Closing shall occur within 30 days of PokerStars receiving a valid gaming license."). Or, the "Outside Date" might be a deadline on the entire deal itself; if all requirements are not met by that date, then the Purchase Agreement terminates. In such a case, the "Outside Date" would operate not as a closing date, but as the expiration date on an option to buy the casino (and it is unquestioned that the Purchase Agreement provided more than sufficient time from the date of signing in which PokerStars could have submitted a "completed application" and still had 120 days before the "Outside Date"). Similarly, there might be other deadlines in the Purchase Agreement which are not tied to licensing which PokerStars missed because of the licensing delays.
Of course, without the Purchase Agreement, we are in the dark as to what was meant by the term "Outside Date", and whether that "Outside Date" was the equivalent of a "closing or settlement date" pursuant to the relevant statute. But the Atlantic Club will need a convincing argument that the closing date statute has not been violated to avoid being found in breach of the Purchase Agreement.
II. What is the Atlantic Club's explanation for appearing to mislead PokerStars into thinking the "Outside Date" would not be enforced?
In its claims for unjust enrichment and promissory estoppel, PokerStars outlines a number of communications and actions by the Atlantic Club which PokerStars claims unfairly gave the impression that the Atlantic Club was not going to enforce the "Outside Date" and terminate the Purchase Agreement. Both of these claims are equitable in nature, based on principles of fairness where one party has misled another party to its detriment. Principles of equity generally will not operate to void valid contractual provisions; equity is not intended to save parties from bad deals, only to remedy unfair conduct.
Here, the Purchase Agreement will again be key. Often contracts have "non-waiver of default" provisions that state a party can choose not to invoke a remedy for one default without waiving the right to later pursue a remedy for a future default. Here, the Atlantic Club might argue it was cooperating with PokerStars to make the deal work until it became obvious that the closing time frame was too far removed from the original "Outside Date" and it needed to terminate the Purchase Agreement and pursue other options.
The Atlantic Club will also need to answer what I view as PokerStars' strongest argument—PokerStars has paid advances of $11 million, and is potentially on the hook for an additional $4 million penalty, which is roughly equivalent to the full purchase price of the deal. Thus, termination of the Purchase Agreement essentially works a forfeiture of the entire purchase price. Generally speaking, the law frowns on forfeitures. However, if forfeiture of advance payments is a remedy spelled out in the Purchase Agreement, it likely is enforceable as a bargained-for condition of the contract.
More troubling is the allegation that the Atlantic Club demanded certain advances on construction costs associated with refurbishing the casino for PokerStars, including building out a poker room. Some of these demands for advance payments were made after the time when it appears the Atlantic Club was already considering terminating the Purchase Agreement. How the Atlantic Club responds to these complaints is also important. However, even if some of these actions by the Atlantic Club are found to be improper, the Court may nonetheless determine that the appropriate remedy is only reimbursement of specific payments made after the date the Atlantic Club determined the deal would not meet the contractual deadline. PokerStars' preferred remedies of either specific performance of the contract or reimbursement of all payments may both be rejected even if PokerStars demonstrates detrimental reliance on some of the Atlantic Club's statements and demands.
III. Spot the malpractice.
Assuming that the major issues are whether the "Outside Date" complies with New Jersey law, and whether the Purchase Agreement provides for forfeiture of advance payments if PokerStars did not obtain a gaming license, the obvious question will be "What lawyer dropped the ball?" These issues are so legally obvious, so critical to the business deal, and of such a major financial magnitude that the attorneys drafting the Purchase Agreement and giving the parties advice on how to proceed pursuant to that contract have to be sweating profusely about how to explain any potential loss in Court to their respective clients.
Get your popcorn. This lawsuit promises to be legal Bloodsport.
Assuming that the major issues are whether the "Outside Date" complies with New Jersey law, and whether the Purchase Agreement provides for forfeiture of advance payments if PokerStars did not obtain a gaming license, the obvious question will be "What lawyer dropped the ball?" These issues are so legally obvious, so critical to the business deal, and of such a major financial magnitude that the attorneys drafting the Purchase Agreement and giving the parties advice on how to proceed pursuant to that contract have to be sweating profusely about how to explain any potential loss in Court to their respective clients.
Get your popcorn. This lawsuit promises to be legal Bloodsport.
May 11, 2013
Annie Duke: Ultimate Shill, Penultimate Cheat?
UPDATED with Annie Duke Comments
As the Ultimate Bet scandal recordings continue to stir up the poker community, one intriguing, polarizing name has popped to the surface—Annie Duke. As mentioned in my prior post on the Ultimate Bet recordings, on the main three-hour recording, Russ Hamilton calmly states, ""Annie Duke used it [God-mode cheating software] on a fifteen minute delay quite a few times." On a second, somewhat shorter recording also released yesterday, poker media guru Kevin "Kevmath" Mathers reports that Hamilton stated Duke used the God-mode cheating software on a five minute delay. Certainly Duke has been accused of improperly looking at opponents' hole cards in live play (albeit by her nemesis, Daniel Negreanu), but this accusation of online cheating was completely new.
Creating further intrigue is a post by TwoPlusTwo member "dougmanct" (who has "Centurion" status at the site) which casts doubt on whether the "God-mode" cheating software could operate on a time delay:
The official Kahnawake Gaming Commission (KGC) report regarding the Ultimate Bet cheating scandal likewise seems to suggest that the "God-mode" cheating software only operated on a real-time basis:
Based on the information available, it seems unlikely Annie Duke ever used the "God-mode" cheating software as alleged by Hamilton. First, because Hamilton knew he was recording these conversations, any of his statements on the tape that are not damaging to Hamilton himself ("admissions against interest" in legalese) must be viewed with some skepticism. Second, unless Hamilton and Duke were in on the scam together, it seems unlikely Hamilton would give Duke access to one of the only two "AuditMonster" accounts that could support real-time cheating, nor that he would risk letting her know of the scam. Third, there is no evidence to date of Duke displaying any of the hallmarks of this type of scam: improbable cash game results, large player-to-player transfers, or large cashouts.
One other possible way to reconcile the real-time operation of the "AuditMonster2" account and Hamilton's comments about Duke using it on a time delay would be to surmise that there was a similar program used to monitor play in near-real-time for legitimate audit and security purposes. If such a program existed, an unscrupulous player might use it to gain access to hole card information to which they were not otherwise entitled, which undoubtedly would give them an improper edge over their opponents, and would be the type of cheating that should disqualify a player from online poker sites, much like multi-accounting, ghosting, chip dumping, and collusion have disqualified other players. If Duke did use such software to gain an improper advantage, she certainly deserves to be banned from poker. At this point, however, we have only the word of an admitted thief and scam artist as evidence of Duke's cheating. Without some kind of independent corroborating evidence, Hamilton's accusation, while scandalous, is still merely innuendo.
UPDATE (5/11/2013: 8:15 CDT): A screenshot of Annie Duke's Twitter responses to the hole card viewing accusations was posted on TwoPlusTwo. Essentially, Duke claims she only had access to hole cards while doing broadcasts of a limited number of online tournaments. While this would be a legitimate use of such a technology, it doesn't square with Hamilton's statements which implied Duke used the God-Mode software during her own play. Also, if Duke knew God-Mode software was available even for such limited purposes, why did she seem to pass it off in interviews and testimony (see below) as an improper "breach" of the software by a rogue employee? Much like Hamilton's comments, Duke's comments are obviously self-serving and should be viewed skeptically absent corroborating evidence.
UPDATE (5/14/2013; 8:47 AM CDT): Martin "Short-Stacked Shamus" Harris has posted at Fushdraw.com an excellent analysis of two significant areas of concern with Duke's statements. First. the real-time viewing of hole cards by poker commentators was not commonplace until recently. Second, Duke's boyfriend (who had little poker experience) won an Ultimate Bet tournament—and $266,000—while Duke provided commentary. As with most things connected with Ultimate Bet, there are a lot of implausible stories and statements, but they are difficult to either corroborate or debunk.
UPDATE (5/18/2013; 10:42 PM CDT): Annie Duke has released a lengthy statement denying any involvement in the Ultimate Bet scandal, and further asserting she has never used or been made aware of any "God mode" or other software that would allow her to see player hole cards in real-time or on a delay. Duke's statement was accompanied by brief statements by John Vorhaus (Duke's co-commentator on Ultimate Bet tournament broadcasts) and Joanne Primm (UB Pro Relations Manager and tournament broadcast organizer) who corroborate key points of Duke's statement. Again, we have no independent evidence to corroborate or debunk Duke's claims, but Duke certainly deserves the benefit of the doubt when her accuser is an admitted thief, liar, and scam artist like Russ Hamilton.
A more troubling issue for Annie Duke does arise from the recent Ultimate Bet recordings. It is unquestionable that Ultimate Bet management was looking to cover up the scandal as quickly and quietly as possible, and with the least cost. The problem is, this crisis management strategy required Ultimate Bet's management not only to lie to its customers, but also to attempt to find a way to minimize the amount it refunded to those of its customers who were victims of the cheating scam. Enter Annie Duke, Ultimate Bet sponsored pro and public spokesperson.
Following the scandal, and mere months after Ultimate Bet executives were conspiring with Russ Hamilton to control the public narrative and minimize their financial exposure, Annie Duke gave an interview in which she asserted that "new management" had handled the situation fairly:
Also, as you may recall, back in July 2010, Duke testified before Congress on behalf of the Poker Players' Alliance (PPA) in support of the then-pending online poker bill (HR2267) sponsored by then-Representative Barney Frank. Duke's written testimony, which she also read into the record, whitewashed the scandal, asserting that the "God mode" cheating scam was the work of one person (Russ Hamilton), and that "new management" had refunded all stolen money to the victims of the scam:
In response to follow up questions from the committee members, Annie Duke repeated her claim that UltimateBet's new management had fully refunded the players who were victims of the "God mode" cheating scam. Below is video and a transcript of Annie Duke's sworn testimony in response to a question from Rep. Bachus (Rep. Bachus's question begins at the 3:23 mark, with Annie Duke's response beginning around the 3:51 mark):
Based on the recent Ultimate Bet recordings, it seems safe to say that Ultimate Bet's management neither "self-regulated" nor "behaved in an honest way". Simply listening to the ten-minute segment of one of the meetings shows Ultimate Bet management conspiring to concoct a plausible cover story, complete with Travis Makar and/or an unnamed rogue former employee as a possible fall guy, to sell to the KGC and the public. They even had the chutzpah to suggest perhaps Russ Hamilton himself should be painted as a victim of the scam. Further, rather than attempting to determine and repay actual losses for all cheating victims (which probably exceed the $22 million paid and are effectively impossible to calculate), Ultimate Bet management was intent on refunding as little money as possible, including asking the primary figure in the scam to think of ways to convince victims to waive their claims. Based on John Mehaffey's summary of other parts of the recordings, Ultimate Bet's management clearly was focused on minimizing its liability, even if doing so came at the expense of the victims.
If Annie Duke was unaware of the scope and nature of the cheating scam and Ultimate Bet management's response to it, then she quite likely believed that new management was cleaning house and taking care of the victims. But—and this is a critical caveat—it is extremely troubling that Duke's testimony emphasizes Ultimate Bet's "rogue operator" story, pinning all the blame on Russ Hamilton acting alone when Ultimate Bet's management had worked with Hamilton to concoct that precise official cover story. It's also quite rich for Duke to bemoan the fact Hamilton would never be prosecuted, considering Ultimate Bet executives had tried (unsuccessfully) to work with Hamilton to concoct a story that would let him avoid taking responsibility with the KGC. Perhaps Duke was naive and Ultimate Bet's management convinced Duke their official story was correct. Perhaps Duke was suspicious but didn't want to bite the hand that fed her. Perhaps Duke knew the story wasn't entirely accurate, but viewed it as public relations spin. Without more evidence, we simply cannot draw any conclusions.
Regardless of what Annie knew and when, she certainly earned her keep as an official Ultimate Bet shill. Ultimate Bet not only weathered the scandal, it was strong enough financially to merge with Absolute Poker into the Cereus network, which was then sold to Blanca Games in August 2010, probably putting some money in the pockets of the executives who saw nothing wrong with working with Russ Hamilton to minimize the recovery for Hamilton's victims. Duke stayed on board with Ultimate Bet until she jumped ship in December 2010, just a few months ahead of the demise and liquidation of the company in the wake of Black Friday. Annie Duke's loyalty to Ultimate Bet and her excellent sense of timing make her one of only a few poker pros—along with Phil Hellmuth and Russ Hamilton—who can say they made big money at Ultimate Bet.
Creating further intrigue is a post by TwoPlusTwo member "dougmanct" (who has "Centurion" status at the site) which casts doubt on whether the "God-mode" cheating software could operate on a time delay:
"Just want to point out, as the researcher who collected UB client software and decompiled/examined it at great length to understand the specific cheating mechanism, I can tell you it never appeared to function on a "time delay"; i.e. revealing hole card data only after a certain period of time had elapsed. The cheat code appeared to reveal opponent's hole cards in real time as a hand was being played. I suppose one could have recorded a table using the cheat client and made the recording available to someone on a delay, but that seems like quite a bit of effort and at the very least, someone doing so would be quite aware the ability to cheat existed and chose not to come forward/be complicit in keeping the cheat ability secret for their own gain."
The official Kahnawake Gaming Commission (KGC) report regarding the Ultimate Bet cheating scandal likewise seems to suggest that the "God-mode" cheating software only operated on a real-time basis:
INITIAL INVESTIGATION
….
After several weeks of Commission investigation of the source code, a method was detected by which specific users could gain access to “hole” card data in real time. Once the cheating method was identified, the Commission’s agents confirmed through the audit process that:
1. The illicit software allowed only two accounts—AuditMonster1 and AuditMonster2—to access hole card information;
2. These two accounts were able to access hole cards via the normal poker client;
3. The “stealth observer” function was located in the normal code base where the normal card messages were sent to the poker client; and
4. The illicit software was disabled on UB servers on February 2, 2008.
The Commission also confirmed that when Tokwiro acquired UB, it was only provided with source code history dating back to November 29, 2005. The source code history of the Ultimate Bet poker software showed that the illicit code was not modified after November 29, 2005. Attempts to obtain source code historical records from prior to November 29, 2005 from the original developers were unsuccessful.
ANATOMY OF THE CHEATING
The following is an overview of the methodologies used to perpetrate the cheating incidences, based on the information the Commission obtained during the course of its investigations:
....
3. To perpetrate the cheating, one or more individuals logged into the UB client software using an account that accessed the illicit software. The name of the account was “AuditMonster2.” An additional account (“AuditMonster1”) had the same privileges, but there is no evidence this account was ever used;
4. The “AuditMonster2” account was used to view hole cards, but was never used to play in a game. Rather, the responsible individual(s) gathered hole card information using this account, and then employed a variety of other accounts to use the hole card information to cheat other players in actual money games; and
5. The user names of the player accounts maintained by the responsible individual(s)—see the list below—were changed repeatedly over the course of the cheating scheme in an apparent attempt to avoid detection.
Based on the information available, it seems unlikely Annie Duke ever used the "God-mode" cheating software as alleged by Hamilton. First, because Hamilton knew he was recording these conversations, any of his statements on the tape that are not damaging to Hamilton himself ("admissions against interest" in legalese) must be viewed with some skepticism. Second, unless Hamilton and Duke were in on the scam together, it seems unlikely Hamilton would give Duke access to one of the only two "AuditMonster" accounts that could support real-time cheating, nor that he would risk letting her know of the scam. Third, there is no evidence to date of Duke displaying any of the hallmarks of this type of scam: improbable cash game results, large player-to-player transfers, or large cashouts.
One other possible way to reconcile the real-time operation of the "AuditMonster2" account and Hamilton's comments about Duke using it on a time delay would be to surmise that there was a similar program used to monitor play in near-real-time for legitimate audit and security purposes. If such a program existed, an unscrupulous player might use it to gain access to hole card information to which they were not otherwise entitled, which undoubtedly would give them an improper edge over their opponents, and would be the type of cheating that should disqualify a player from online poker sites, much like multi-accounting, ghosting, chip dumping, and collusion have disqualified other players. If Duke did use such software to gain an improper advantage, she certainly deserves to be banned from poker. At this point, however, we have only the word of an admitted thief and scam artist as evidence of Duke's cheating. Without some kind of independent corroborating evidence, Hamilton's accusation, while scandalous, is still merely innuendo.
UPDATE (5/11/2013: 8:15 CDT): A screenshot of Annie Duke's Twitter responses to the hole card viewing accusations was posted on TwoPlusTwo. Essentially, Duke claims she only had access to hole cards while doing broadcasts of a limited number of online tournaments. While this would be a legitimate use of such a technology, it doesn't square with Hamilton's statements which implied Duke used the God-Mode software during her own play. Also, if Duke knew God-Mode software was available even for such limited purposes, why did she seem to pass it off in interviews and testimony (see below) as an improper "breach" of the software by a rogue employee? Much like Hamilton's comments, Duke's comments are obviously self-serving and should be viewed skeptically absent corroborating evidence.
UPDATE (5/14/2013; 8:47 AM CDT): Martin "Short-Stacked Shamus" Harris has posted at Fushdraw.com an excellent analysis of two significant areas of concern with Duke's statements. First. the real-time viewing of hole cards by poker commentators was not commonplace until recently. Second, Duke's boyfriend (who had little poker experience) won an Ultimate Bet tournament—and $266,000—while Duke provided commentary. As with most things connected with Ultimate Bet, there are a lot of implausible stories and statements, but they are difficult to either corroborate or debunk.
UPDATE (5/18/2013; 10:42 PM CDT): Annie Duke has released a lengthy statement denying any involvement in the Ultimate Bet scandal, and further asserting she has never used or been made aware of any "God mode" or other software that would allow her to see player hole cards in real-time or on a delay. Duke's statement was accompanied by brief statements by John Vorhaus (Duke's co-commentator on Ultimate Bet tournament broadcasts) and Joanne Primm (UB Pro Relations Manager and tournament broadcast organizer) who corroborate key points of Duke's statement. Again, we have no independent evidence to corroborate or debunk Duke's claims, but Duke certainly deserves the benefit of the doubt when her accuser is an admitted thief, liar, and scam artist like Russ Hamilton.
* * * * *
A more troubling issue for Annie Duke does arise from the recent Ultimate Bet recordings. It is unquestionable that Ultimate Bet management was looking to cover up the scandal as quickly and quietly as possible, and with the least cost. The problem is, this crisis management strategy required Ultimate Bet's management not only to lie to its customers, but also to attempt to find a way to minimize the amount it refunded to those of its customers who were victims of the cheating scam. Enter Annie Duke, Ultimate Bet sponsored pro and public spokesperson.
Following the scandal, and mere months after Ultimate Bet executives were conspiring with Russ Hamilton to control the public narrative and minimize their financial exposure, Annie Duke gave an interview in which she asserted that "new management" had handled the situation fairly:
"Everybody's horrified that it happened - including me. I just want to get that out of the way. There are no excuses for what happened. It's ugly, it's ridiculous and it's incredibly upsetting. With that being said, I think there's a large portion of people out there who got their money back which I think is amazing. I had one player call me up who's an old time player playing for a really long time and who said to me, "Annie in all the years that I've been playing and all the times that I've been cheated this is the first time I've ever gotten my money back." I think that there's recognizing there are things that have happened. This was not the site cheating anybody, this was individuals cheating people. It's really horrible that it happened but the site did good by it and made sure that everybody go their money back and let's move on because the site is secure."
~Annie Duke, Dec. 25, 2008 in a Gambling 911 interview
Also, as you may recall, back in July 2010, Duke testified before Congress on behalf of the Poker Players' Alliance (PPA) in support of the then-pending online poker bill (HR2267) sponsored by then-Representative Barney Frank. Duke's written testimony, which she also read into the record, whitewashed the scandal, asserting that the "God mode" cheating scam was the work of one person (Russ Hamilton), and that "new management" had refunded all stolen money to the victims of the scam:
"For me, the most critical component of regulation is player protections. As some of you know, I play at a site called Ultimate Bet. Under previous management, an associate of the website developed a breach in the software that allowed for players to be cheated out of a great deal of money. I agreed to continue to endorse the site only after I was sure that new management had addressed the problems, took voluntary steps to refund the cheated players and ensured tighter control over their site security. Nonetheless, an important benefit of regulation would be to ensure, through source code-based testing and outcome-based testing, that the games are fair and those players cannot be defrauded by the sites and that players cannot cheat others at the table. Further, under a U.S. regulated system players would have legal recourse should they feel they are harmed and regulators would be able to penalize licensed companies that breach the regulatory standards. Today, the best non-U.S. licensing regimes already do this, but, U.S. players deserve the protections and assurances of their own government."
In response to follow up questions from the committee members, Annie Duke repeated her claim that UltimateBet's new management had fully refunded the players who were victims of the "God mode" cheating scam. Below is video and a transcript of Annie Duke's sworn testimony in response to a question from Rep. Bachus (Rep. Bachus's question begins at the 3:23 mark, with Annie Duke's response beginning around the 3:51 mark):
“I’m affiliated with UltimateBet.net, which is a free play site. But they do offer games on .com, yes. … It was $22 million. The site self-regulated and refunded all the money to its customers. I would prefer to have something like HR2267 [the Barney Frank online poker bill] so that the government could oversee that regulation. I think that the customers of that site were lucky that they were playing on a site under new management that behaved in an honest way and refunded them. But the individual—and it was one individual—that perpetrated the crime and breached the software has not been prosecuted because, unfortunately, there is no jurisdiction to do so.”
Based on the recent Ultimate Bet recordings, it seems safe to say that Ultimate Bet's management neither "self-regulated" nor "behaved in an honest way". Simply listening to the ten-minute segment of one of the meetings shows Ultimate Bet management conspiring to concoct a plausible cover story, complete with Travis Makar and/or an unnamed rogue former employee as a possible fall guy, to sell to the KGC and the public. They even had the chutzpah to suggest perhaps Russ Hamilton himself should be painted as a victim of the scam. Further, rather than attempting to determine and repay actual losses for all cheating victims (which probably exceed the $22 million paid and are effectively impossible to calculate), Ultimate Bet management was intent on refunding as little money as possible, including asking the primary figure in the scam to think of ways to convince victims to waive their claims. Based on John Mehaffey's summary of other parts of the recordings, Ultimate Bet's management clearly was focused on minimizing its liability, even if doing so came at the expense of the victims.
If Annie Duke was unaware of the scope and nature of the cheating scam and Ultimate Bet management's response to it, then she quite likely believed that new management was cleaning house and taking care of the victims. But—and this is a critical caveat—it is extremely troubling that Duke's testimony emphasizes Ultimate Bet's "rogue operator" story, pinning all the blame on Russ Hamilton acting alone when Ultimate Bet's management had worked with Hamilton to concoct that precise official cover story. It's also quite rich for Duke to bemoan the fact Hamilton would never be prosecuted, considering Ultimate Bet executives had tried (unsuccessfully) to work with Hamilton to concoct a story that would let him avoid taking responsibility with the KGC. Perhaps Duke was naive and Ultimate Bet's management convinced Duke their official story was correct. Perhaps Duke was suspicious but didn't want to bite the hand that fed her. Perhaps Duke knew the story wasn't entirely accurate, but viewed it as public relations spin. Without more evidence, we simply cannot draw any conclusions.
Regardless of what Annie knew and when, she certainly earned her keep as an official Ultimate Bet shill. Ultimate Bet not only weathered the scandal, it was strong enough financially to merge with Absolute Poker into the Cereus network, which was then sold to Blanca Games in August 2010, probably putting some money in the pockets of the executives who saw nothing wrong with working with Russ Hamilton to minimize the recovery for Hamilton's victims. Duke stayed on board with Ultimate Bet until she jumped ship in December 2010, just a few months ahead of the demise and liquidation of the company in the wake of Black Friday. Annie Duke's loyalty to Ultimate Bet and her excellent sense of timing make her one of only a few poker pros—along with Phil Hellmuth and Russ Hamilton—who can say they made big money at Ultimate Bet.
Poker's Watergate Moment
"I did take this money and I'm not trying to make it right, Dan, so we gotta get that out of the way right away, real quick."
~Russ Hamilton to then Ultimate Bet legal counsel Dan Friedberg, Early 2008
Last night, Travis Makar, a former associate of disgraced poker pro Russ Hamilton, released a large number of files related to the Ultimate Bet cheating scandal. Over the past five years, significant information has come to light regarding the scandal, much of it involving internal Ultimate Bet records, emails, and other documents. That evidence—much of which was analyzed extensively by Haley Hintze, Nat Arem, and other dedicated folks in the poker community—painted a compelling story that Hamilton and likely others at Ultimate Bet had used a software program that permitted a player to see his opponent's hole cards in real time, allowing them to play perfectly. This so-called "God mode program" was used to steal more than $22 million from high-stakes Ultimate Bet players, though the actual amount stolen was almost certainly north of that admitted amount.
Until last night, despite the official determination by regulators that Russ Hamilton was the primary figure in the cheating scandal, the evidence available actually suggested that the scandal was wider than just Hamilton, that other high-level executives and big-name players at Ultimate Bet had known of the "God mode" cheating and profited from it, either using the program directly or profiting indirectly from collusion, chip dumping, or assisting in hiding the money trail. But all of that evidence was circumstantial, allowing a surprising number of suckers and apologists in the poker community to maintain that the scandal couldn't possibly have infected the management of Ultimate Bet. After all, why would an online poker site that could generate millions of dollars in rake take the risk of cheating and stealing from its own customers?
Ladies and gentlemen of the jury, I present to you Prosecution Exhibit A, a ten-minute portion of a three-hour audio recording of a meeting between Russ Hamilton and several Ultimate Bet executives. This meeting occurred during early 2008,* after the original hand histories had been released and the cheating detected by the poker community. The point of the meeting is to concoct a damage control strategy.
John Mehaffey at LegalPokerSites has prepared an excellent detailed summary of key points from the full three-hour meeting. Some notable moments in this ten-minute part of the meeting include:
- Beginning: Immediate discussion of fact that information about the God Mode account has gone public, and the need to create plausible (but apparently false) story to explain and minimize the cheating.
- 2:55—Russ Hamilton: "Annie Duke used it [God mode software] on a 15 minute delay quite a few times."
- 3:10—UB Executive asks Russ to identify cheated pros who he could "explain it away" to prevent a claim being made.
- 4:00—Discussion of limiting exposure to $5 million, including any fine to the Kahnawake Gaming Commission (KGC).
- 5:07—Russ Hamilton: "I did take this money and I'm not trying to make it right, Dan [Freidberg, Ultimate Bet legal counsel], so we gotta get that out of the way right away, real quick."
- 6:30—Russ Hamilton claims he spread his ill-gotten gains to high stakes players: "Freddy Deeb got the most cash." (NOTE: This is not to say those who got money knew about the cheating. This might have been staking, or a method of indirect cashing out to hide the cheating paper trail.)
- 8:20—Russ Hamilton justifies his fraud by claiming he used it to pump up UB: "I spent a lot of this money on [UB promotions]."
- 8:30 to end—UB exec suggests some of Russ Hamilton's cheating was "sanctioned" by management to help UB survive a financially difficult period.
- 9:00 to end—UB exec suggest shifting blame/liability for fraud to Excapsa is "my current goal".
In a courtroom, a standard instruction judges give to juries is that direct and circumstantial evidence can be given equal weight. But as a trial attorney, I know better. Direct evidence like an audio or video recording of the people involved in a crime is pure gold. Nothing beats an admission straight from a criminal's or witness's own mouth.
Ever since the original Watergate scandal back in the mid-1970s, the media attempts to analogize every new political scandal back to Watergate. But with the release of this new Ultimate Bet audio recording, the analogy is rather apt. In Watergate, the initial crime—a break-in at the Democratic Party headquarters—was a plot involving only a few key Nixon campaign staffers. But once the break-in was discovered, the cover-up efforts spread to more senior White House staffers, and eventually to the President himself. Initially, the investigation involved statements and testimony from individuals with circumstantial knowledge of key events, and a variety of circumstantial documents laying out a "money trail". White House staff denied or disputed all allegations of misconduct, and delayed or obstructed the investigation at every turn. But the scandal escalated when it was discovered that audio tapes of White House meeting existed. Once those tapes were released, there could be no further plausible deniability of the involvement of many senior White House staffers, as well as the President himself.
Just like in Watergate, the release of this Ultimate Bet audio recording (and another recording from a few months later) is a game-changer. It is no longer possible for the apologists to defend Russ Hamilton or any of Ultimate Bet's senior management who were at this meeting, or who are implicated by this recording. It is now crystal clear that Ultimate Bet's management was facing a financial crisis in the wake of the scandal, and thus never had any interest in coming clean about the scandal or in identifying and repaying customers who had been cheated. Instead, the entire focus of management was to perform public relations damage control and to minimize exposure for fines or customer claims. If that meant fabricating stories, shifting blame, or outright denial, so be it.
Of course, this scandal is now more than five years old. Ultimate Bet doesn't even exist anymore, a victim of Black Friday and shady player account practices. Much of this new evidence will simply confirm what has already been pieced together from other sources. It is unlikely that any criminal charges will ever be brought against Hamilton or the Ultimate Bet executives complicit in the cheating or the cover-up. Regrettably, this new evidence probably has surfaced far too late to assist any of the cheating scandal victims in recovering their money. But having an accurate historical record of the details of the cheating and the cover-up may well be useful in helping iGaming regulators detect and prevent future cheating. And, to the extent any of the involved individuals remain part of the gaming industry, they can and should be asked to explain themselves to gaming regulators. Frankly, given this audio recording, Hamilton and the others at the meeting should be permanently barred from the gaming industry, and attorney Daniel Friedberg should also be disbarred anywhere he is licensed to practice law.
Unfortunately, this new evidence may well have one additional Watergate-esque effect: staining the online poker industry's reputation. Certainly the Absolute Poker and Ultimate Bet superuser scandals have been common knowledge within the poker community. In fact, these scandals were the subject of a 60 Minutes report discussing the "Wild West" of cheating on poorly regulated online poker sites. But the new Ultimate Bet audio recording adds a piece of the puzzle that makes the scandal more real to those folks who are potential casual poker players who haven't paid much attention to the scandals to date (or might even be too young to have heard of them). Certainly these new revelations come at an awkward moment in online poker legalization efforts, as legislatures wrestle with a variety of customer protection concerns. Ultimately, this new information probably won't prevent online poker legalization by itself, but it will give poker opponents fresh ammunition. But, if this new information leads to tougher online poker regulations and stricter security oversight, then poker players will be better for having this sordid mess finally put to rest.
Sunlight truly is the best disinfectant.
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* UPDATE (5/12/2013; 3:45 PM CDT): The original version of this post incorrectly placed the audio recording in "late 2008" based on other writers' ambiguous references to "Winter 2008". However, given the discussion in the recording of creating a cover story that did not implicate Russ Hamilton and discussions as to the ongoing internal investigation into the accounts used in the "AuditMonster" cheating scheme, the timing of the meeting in the recording must have been sometime after the cheating was discovered in January or early February of 2008, and certainly before the preliminary KGC report of September 29, 2008 which identified Russ Hamilton as the primary (or sole) cheater. Further, the Ultimate Bet internal investigation report was provided to the KGC in late July, 2008, so discussion of the official story to provide to the KGC would have occurred prior to that report.
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In the days ahead, follow Haley Hintze (Twitter, blog, and FlushDraw.com), TwoPlusTwo, Chris Grove, and Kevmath for updated information on the scandal, along with the usual excellent poker news sites like FlushDraw, LegalPokerSites, OnlinePokerReport, and PokerFuse.
April 15, 2013
Why I Race—A Runner Responds to The Boston Marathon Tragedy
Today's tragic news of the bombing of the finish line of the Boston Marathon hit me hard. Obviously all Americans are stunned and saddened by yet another terrorist attack at home (even if we don't know right now who perpetrated this atrocity or why). But this attack was like a sucker punch to my psyche because I am a runner, and the Boston Marathon is the quintessential road race, the ultimate running challenge for which merely qualifying to participate is a badge of honor.
The Boston Marathon is not just the ultimate road race, it is also the ultimate expression of the paradox of running. Running is inherently an individual pursuit, a solo sport. Runners generally train alone, spending hours with nothing but their thoughts as they trip off miles in the early morning or twilight hours. Running provides personal records (PRs) as a goal, rather than the team victories offered by softball or basketball leagues. Runners finish their workouts with Powerade and yogurt, while golfers finish their rounds with beers and cigars.
I run for a lot of reasons. I run for my health. I run to stay fit. I run to relax. I run to get lost in my thoughts. I run to enjoy the weather and the great outdoors. I run to exercise and bond with my happy and manic dog.
Yet while running is a lone wolf pursuit, racing is a gathering of the wolf pack. There is nothing quite like the experience of a road race, joining together with hundreds or thousands of fellow runners and even greater numbers of volunteers and spectators to run, still as an individual, but also as a member of a community that shares your love of running.
Over the better part of two decades, I have run dozens of road races for a myriad of reasons. In my youth, I was competitive and raced to beat my friends, to compete in my age class, and to set PRs. More recently, after several years away from road races, I was lured back by the opportunity to share an experience with friends, and an excuse to visit places I had never seen. And in the past year, I have come to appreciate a rather spiritual element of racing, where pushing yourself as an individual can lead to a special bonding with friends.
In the wake of the Boston tragedy today, I have no special insights to offer, no easy solutions to sell, no political position to push. My gut is twisted in knots by news of dead and injured children, by photos of maimed and bleeding runners and spectators. To many Americans, today's events may be just another attack by terrorists or a delusional sociopath. But today's bombings hit me hard; even though I don't know any of the victims, I feel as if I knew them because of the special bond between runners and those who support them at road races. Those hurt by the bombs in Boston were the family and friends of some of us runners, which makes them the family and friends of all of us runners everywhere. The only way I know how to explain this feeling is to explain why I race.
I race for my friends who are on the verge of qualifying for Boston.
I race for my friends for whom just crossing the finish line is a victory.
I race for the young girl with the rainbow covered sign that says, "Go Mom! Run Fast! I Love You!"
I race for the little boy in his favorite athletic jersey high-fiving strangers while he waits to see his Daddy run past.
I race for the old couple holding hands in their lawn chairs as we zip past their home.
I race for neighborhood groups schlepping Gatorade and raking up cups.
I race for the ladies with the funny signs that say, "Run like a bear is chasing you!" or "Those shorts make your ass look fast."
I race for the local bands covering classic rock songs at every mile marker.
I race for the amateur DJ spinning tunes out of a minivan parked at the bottom of the Big Hill.
I race for the spectators cheering for hours for complete strangers, even the slow, balding, and pudgy old guys like me.
I race for the gals in the rainbow tutus, the dude in the banana suit, and all the running Elvises.
I race for the high school kids, the mothers pushing strollers, and the old men who all pass me in the last three miles.
I race for my boyfriend and dog who magically appear every couple of miles to yell or bark my name.
I race for my friends who sit for ages just to pop up and pace me for encouragement after a rough hill.
I race for that last half mile kick past cheering throngs of people who don't know me but want me to finish strong.
I race for the folks who hand out the medals, the water, the yogurt, and the beer in recognition of a successful run.
I race for the police officers who take a day off to direct traffic, and for the EMTs and doctors in the volunteer medical tents.
I race for my friends at the finish line who high five me and buy me pancakes and beer despite my being a sweaty mess.
I race because runners aren't meant to run alone.
I race because I'm part of the pack.
I'm registered to run half-marathons the next two weekends at the Marion Rotary Marathon for Shoes and at the Drake Relays / Hy-Vee Road Races. As planned, I'll be running to enjoy Iowa's spring weather, to compete against myself and the field, and to celebrate an accomplishment with my friends.
After today, I'll also be running in honor of those innocents who died or were injured in the Boston attacks. I don't believe in any simplistic "Run or the terrorists win" pablum. I just feel that the best way to honor today's victims—and heroes—is to keep the Great Race alive. To high five cheering kids. To do a little dance when a DJ pumps up the volume along the course. To give a thumbs up to random spectators with a funny sign or a local band belting out an upbeat tune. To spare a breath for a "Thank you, sir/ma'am" for the police officer holding traffic at a crossroad. To respond to neighborhood volunteers' calls of "Gatorade!" or "Water!" with a sincere "Bud Light?!?"
To simply keep the pack together to race another day.
The Boston Marathon is not just the ultimate road race, it is also the ultimate expression of the paradox of running. Running is inherently an individual pursuit, a solo sport. Runners generally train alone, spending hours with nothing but their thoughts as they trip off miles in the early morning or twilight hours. Running provides personal records (PRs) as a goal, rather than the team victories offered by softball or basketball leagues. Runners finish their workouts with Powerade and yogurt, while golfers finish their rounds with beers and cigars.
I run for a lot of reasons. I run for my health. I run to stay fit. I run to relax. I run to get lost in my thoughts. I run to enjoy the weather and the great outdoors. I run to exercise and bond with my happy and manic dog.
Yet while running is a lone wolf pursuit, racing is a gathering of the wolf pack. There is nothing quite like the experience of a road race, joining together with hundreds or thousands of fellow runners and even greater numbers of volunteers and spectators to run, still as an individual, but also as a member of a community that shares your love of running.
Over the better part of two decades, I have run dozens of road races for a myriad of reasons. In my youth, I was competitive and raced to beat my friends, to compete in my age class, and to set PRs. More recently, after several years away from road races, I was lured back by the opportunity to share an experience with friends, and an excuse to visit places I had never seen. And in the past year, I have come to appreciate a rather spiritual element of racing, where pushing yourself as an individual can lead to a special bonding with friends.
In the wake of the Boston tragedy today, I have no special insights to offer, no easy solutions to sell, no political position to push. My gut is twisted in knots by news of dead and injured children, by photos of maimed and bleeding runners and spectators. To many Americans, today's events may be just another attack by terrorists or a delusional sociopath. But today's bombings hit me hard; even though I don't know any of the victims, I feel as if I knew them because of the special bond between runners and those who support them at road races. Those hurt by the bombs in Boston were the family and friends of some of us runners, which makes them the family and friends of all of us runners everywhere. The only way I know how to explain this feeling is to explain why I race.
* * * * *
I race for my friends who are on the verge of qualifying for Boston.
I race for my friends for whom just crossing the finish line is a victory.
I race for the young girl with the rainbow covered sign that says, "Go Mom! Run Fast! I Love You!"
I race for the little boy in his favorite athletic jersey high-fiving strangers while he waits to see his Daddy run past.
I race for the old couple holding hands in their lawn chairs as we zip past their home.
I race for neighborhood groups schlepping Gatorade and raking up cups.
I race for the ladies with the funny signs that say, "Run like a bear is chasing you!" or "Those shorts make your ass look fast."
I race for the local bands covering classic rock songs at every mile marker.
I race for the amateur DJ spinning tunes out of a minivan parked at the bottom of the Big Hill.
I race for the spectators cheering for hours for complete strangers, even the slow, balding, and pudgy old guys like me.
I race for the gals in the rainbow tutus, the dude in the banana suit, and all the running Elvises.
I race for the high school kids, the mothers pushing strollers, and the old men who all pass me in the last three miles.
I race for my boyfriend and dog who magically appear every couple of miles to yell or bark my name.
I race for my friends who sit for ages just to pop up and pace me for encouragement after a rough hill.
I race for that last half mile kick past cheering throngs of people who don't know me but want me to finish strong.
I race for the folks who hand out the medals, the water, the yogurt, and the beer in recognition of a successful run.
I race for the police officers who take a day off to direct traffic, and for the EMTs and doctors in the volunteer medical tents.
I race for my friends at the finish line who high five me and buy me pancakes and beer despite my being a sweaty mess.
I race because runners aren't meant to run alone.
I race because I'm part of the pack.
* * * * *
I'm registered to run half-marathons the next two weekends at the Marion Rotary Marathon for Shoes and at the Drake Relays / Hy-Vee Road Races. As planned, I'll be running to enjoy Iowa's spring weather, to compete against myself and the field, and to celebrate an accomplishment with my friends.
After today, I'll also be running in honor of those innocents who died or were injured in the Boston attacks. I don't believe in any simplistic "Run or the terrorists win" pablum. I just feel that the best way to honor today's victims—and heroes—is to keep the Great Race alive. To high five cheering kids. To do a little dance when a DJ pumps up the volume along the course. To give a thumbs up to random spectators with a funny sign or a local band belting out an upbeat tune. To spare a breath for a "Thank you, sir/ma'am" for the police officer holding traffic at a crossroad. To respond to neighborhood volunteers' calls of "Gatorade!" or "Water!" with a sincere "Bud Light?!?"
To simply keep the pack together to race another day.
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