Haley's Poker Blog

No bad beats, but still a poker blog... hence the anguish.

Monday, September 07, 2009

Just Conjecturin', Part 1

Did you ever wonder how the UltimateBet and Absolute Poker insider scandals unfolded? Those that know all the answers won't say, so it's left to the rest of us to offer conjecture. Since UB/AP/KGC/Tokwiro/whoever feel little need to publish all the gory details, I figure it falls into the "fair game" category for ongoing comment. Note that I could be full of it on some of the details, but here's the start of my best guess as to how it all unfolded. Guess = opinion. To anyone reading this who might become unhappy, spare me the silly libel threats, a separate topic to which I'll return in the weeks ahead. I countersue, baby.

If the historical accounts are correct, the insider cheating occurred first at UB, then later on over at Absolute. I figure the groundwork was laid for this to occur almost as soon as original owner Greg Pierson was on the scene, looking to become a part of the online poker industry.

Now, I don't think Pierson was in any way a part of the actual cheating itself. Pierson was the presumably well-to-do CEO of ieLogic, and he looked for a way to use his blossoming internet-security software firm's products within the equally blossoming online gaming world. Pierson also had a hankering for poker, and I'd guess that back in 2001-03, he began to make connections within the American poker scene. It was out of those contacts that UltimateBet was formed, with Pierson as one of the company's principals. Published columns from the 2004-05 timeframe cited Pierson as an UltimateBet owner, even if more recent pieces on UB eschew that sort of mention.

Anyhow, I figure Pierson was the big bucks source for UB's launch, partnered up with a handful or recognizable industry names -- Phil Hellmuth, Russ Hamilton, Annie Duke, Ted Forrest, several others. His software; their industry connections. Maybe not all of those notable players at that time, but Russ Hamilton was surely involved early on. Hamilton, of course, would prove to be the key, as he was cited as the primary inside cheater at the time the UB scandal was, at last, officially acknowledged.

The question, of course, is "Do you believe Russ Hamilton did it?" I do, Hamilton's protestations of innocence notwithstanding. But how did it originate?

Well, Hamilton's never had what one would call a squeaky clean reputation. Certainly, when the software platform was designed, there had to be some sort of testing capability to monitor hands in progress as they unfolded, to make sure that hands were played out appropriately, pots awarded to the winners, rake collected in appropriate amounts, and so on. In theory, the pro players should never had had access to such a tool, even if they knew it existed.

If one believes the reports, however, then the cheating occurred after Hamilton gained access to the software tool used for monitoring and testing live game action as it unfolded. This leads to a second question: "How did Russ Hamilton gain access to the software?"

My guess is that Hamilton got himself into some kind of financial jam in the early '00s, and went to Pierson with a cock-and-bull story about needing to check out reports of cheating going on during the games, under the pretense that only a "pro player" would be able to recognize more subtle forms of cheating. Understand that Pierson's firm, ieLogic -- later spun off and reformed to become Iovation -- claimed to be experts in Internet security, but that was a different form of Internet security, more related to credit-card fraud and such things. As to cheating in online poker (or poker in general), one can presume that Pierson would have tended to believe stories that his experienced pro-player partners told him.

Pierson bought the story, according to my interpretation of the events. Pandora's box was unlocked. At some point the cheating spread internally within UltimateBet... and I don't believe for an instant the fairy tale that Russ Hamilton was the only one involved. It's this hilarious fallacy, in fact, that prevents me from offering UB any support or giving them any business moving forward. For Russ Hamilton to have been the -only- cheat makes no sense, so quit trying to peddle that bullshit. Oh, wait, they have quit; now they just pretend it never happened, seemingly.

There are three reasonable scenarios for how the cheating spread, as spread it surely did:

1) One or more software engineers working on the UB code recognized the illicit profit potential for themselves, and also began to slice money from the games;

2) Hamilton himself recruited one or more Costa Rican workers to assist him in the cheating, as a way of expanding the total money being stolen; (Update: the disclosure in the just-published KGC report supports this hypothesis. If the sequence of events as outlined by the KGC is correct, Hamilton also recruited other players.)

3) Someone at UB caught Hamilton -- probably noticing unusual withdrawal amounts relative to the amount of play Hamilton was logging -- and decided to cut himself in for a slice of the action.

From some time in 2006, I believe, it was game on in a big way for the cheats. I'd heard whispers as far back as 2005 that something was wrong with the cash games at UB, but I played there very little, only at small stakes, and couldn't really speak to it. (Update: the start date for the cheating was moved earlier in the recent report, all the way to 2003.)

It wasn't too many months after the UB cheating began, we've learned, that a similar form of insider cheating began at Absolute Poker. Though at that time Absolute and UB had different owners, the two companies grew close in the middle part of the '00s and, according to reports, eventually shared a corporate facility in Costa Rica. It's an odd coincidence that the only two online poker firms proven to have had large-scale insider cheating scandals shared such a good relationship. The cheating at Absolute has also been assigned to a senior, high-ranking individual, that being Allen Grimard (a/k/a "A.J. Green"), even if Grimard has never been named in an official Kahnawake Gaming Commission report, unlike Hamilton.

But that's so much bullshit, too. More next time.


Blogger Bill said...

Hey Haley,

Good post. The only thing I would say is that it does not necessarily follow that during development there is a tool to see cards in real time. One could just as easily take the raw hand histories after the fact and test them. In fact, that method would be more accurate as we all know dealers and even players often misread the board so a human sitting there looking at the hands being dealt would not be a tool that had any need.

Now, of course, at the very earliest stages of writing the code the cards were probably all dealt face up so the programmer could step through the entire hand but after that portion of the code was deemed stable then there is no further need for anyone to ever see the cards face up.

Even the largest poker rooms don't monitor the hands live. If someone is suspected of cheating a sample of hand histories is collected and analyzed. Live spot checking is useless. In fact, it wasn't a single hand that gave anyone away but abnormal statistical variations that can only be assessed with a sufficiently large sample size.

So to some degree Pierson should shoulder a good deal of the blame since he ran a security company and should know better than to give someone unfiltered access. What could Russ or anyone else possibly have done in real time that they couldn't have just as well accomplished by freezing assets after examining the hands after the fact? Someone running a security company who can't answer that question obviously shouldn't be in charge of any sort of security.

7:41 AM  

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