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Security The Almighty Buck The Internet

"Back Door" Cheating Scandal Rocks Online Poker 427

AcidAUS sends us the story of an online poker cheating ring that netted an estimated $10M for its perpetrators over almost 4 years. The article spotlights the role of an Australian player who first performed the statistical analyses that demonstrated that cheating had to be going on. "In two separate cases, Michael Josem, from Chatswood, analyzed detailed hand history data from Absolute Poker and UltimateBet and uncovered that certain player accounts won money at a rate too fast to be legitimate. His findings led to an internal investigation by the parent company that owns both sites. It found rogue employees had defrauded players over three years via a security hole that allowed the cheats to see other player's secret (or hole) cards." The (Mohawk) Kahnawake Gaming Commission, which licenses the two poker companies, has released its preliminary report. MSNBC reporting from a couple of weeks back gives deep background on the scandal.
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"Back Door" Cheating Scandal Rocks Online Poker

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  • by elrous0 ( 869638 ) * on Tuesday September 30, 2008 @04:08PM (#25208939)
    It's hard enough to trust casinos even when they're under the scrutiny of a licensing body as serious as the Nevada Gaming Commission, much less when they're under no scrutiny at all (or under some "commission" with no actual legislative or enforcement authority). Casino gambling in general is a sucker bet (even under strict conditions the odds always favor the house), but online gaming and other unregulated gambling is ESPECIALLY so (since you haven't the slightest assurance that you're not being cheated).

    I still don't understand why people do this. Are they really THAT desperate to place a bet, any bet? Might as well become a day-trader and play the stock market for your fix. It would be a lot more regulated than most online poker.

  • Re:This is why (Score:5, Insightful)

    by FooAtWFU ( 699187 ) on Tuesday September 30, 2008 @04:12PM (#25208993) Homepage
    And, assuming you're not going to be taking it out for another 10-40 years, it's a good, safe investment vehicle indeed. Buy stock now! (and in the future, regularly, with a fixed amount monthly, and take advantage of dollar cost averaging!)

    Whee.

  • by Xiaran ( 836924 ) on Tuesday September 30, 2008 @04:15PM (#25209031)
    In physical poker the house has no real motivation to cheat. Poker is a nice steady winner for a casino... they just take a cut of every pot. They are however motivated to have people gamble more money at poker thus increasing the pot.
  • No James deGriz (Score:4, Insightful)

    by pluther ( 647209 ) <pluther@usa.FORTRANnet minus language> on Tuesday September 30, 2008 @04:15PM (#25209033) Homepage

    They played under the same accounts over and over for four years??

    It's like they were begging to be caught.

    In the words of the Stainless Steel Rat, "Learn to graft and walk away and live to graft another day."

  • Re:This is why (Score:4, Insightful)

    by Hatta ( 162192 ) on Tuesday September 30, 2008 @04:16PM (#25209049) Journal

    You kid, but the stock market is actually worse than gambling. At least when you gamble you know what your odds are.

  • by compumike ( 454538 ) on Tuesday September 30, 2008 @04:21PM (#25209119) Homepage

    From what I gather from the articles, they didn't actually write any code that tapped into the server... it was just getting information from the client app that was residing in memory but was not displayed to the screen.

    This is just an enormous case study suggesting why strict client/server separation is essential, and that clients only get the information on a "need to know" basis.

    Isn't this a fairly standard design practice? How did this happen?

    --
    Hey code monkey... learn electronics! Powerful microcontroller kits for the digital generation. [nerdkits.com]

  • by ivan256 ( 17499 ) on Tuesday September 30, 2008 @04:24PM (#25209183)

    This is why I don't play poker online.

    Doing exactly this is so easy that you have to assume at least half the table is doing it.

    At least at a casino you have a chance of noticing a cheater.

  • by HEbGb ( 6544 ) on Tuesday September 30, 2008 @04:26PM (#25209211)

    That's so obvious, I'm stunned that anyone would play if this were possible. They don't have a way to prevent collusion, such as randomly assigning tables?

  • by mvicuna ( 30133 ) on Tuesday September 30, 2008 @04:26PM (#25209217) Homepage

    If you played at any of the levels where the pros inhabited you'd have been identified and banned quickly.

    Most of the online pro's are using tracking software and doing analysis which would have picked up on you three. Though I hardly doubt they'd have needed it, the math involved in poker is only part of being a winning player.

    2+2, where most of the collaboration is done, is the /. of the poker world. A lot of Statistical anomalies are discussed and investigated there.

    Show of hands if anyone knows about the DERB thread?

  • by D'Sphitz ( 699604 ) on Tuesday September 30, 2008 @04:30PM (#25209279) Journal
    Thank god the moral police have arrived.
  • by Free the Cowards ( 1280296 ) on Tuesday September 30, 2008 @04:31PM (#25209301)

    People do it for two reasons.

    1) It's fun. When you plunk down $20 for you and your significant other to see a movie in a theater, you have no chance of ever getting that money back. But it's worth it to you for the entertainment. Same goes with gambling. You lose money but a lot of people enjoy it. I don't, personally, but many people do.

    2) It's profitable. When playing poker, you don't have to beat the house, you just have to beat the other players. The house takes a portion of the winnings but if you can consistently beat the rest of the table then you come out ahead. It's not like other casino games in this respect. You're not playing against the house, you're just paying the house for the privilege of playing against other people. You can, and many people do, make a living playing poker.

    Well, there are actually three types:

    3) Idiots think they will win big.

    But the point being, with reasons 1 and 2 it's possible to gamble without being irrational or stupid.

  • Re:No James deGriz (Score:3, Insightful)

    by jandrese ( 485 ) <kensama@vt.edu> on Tuesday September 30, 2008 @04:31PM (#25209303) Homepage Journal
    The article is very weird. First it goes and talks about how the people on the forum were able to track a single account making ridiculously good bets well outside of what chance would suggest is probable, then in the next paragraph it talks about how the perpetrators were creating hundreds of fake accounts and swapping them out constantly to avoid exactly that sort of analysis. The depressing thing is that the take away lesson from the article is: If you have a surefire way to cheat at poker, make sure you do it slowly enough to stay in the statistical noise and don't get too greedy. My suspicion is that this sort of cheating is far more rampant than the industry would like to admit, but most of the people who do it are smart enough to stay under the radar. Gambling online is an even surer way of losing your money than gambling at a casino.
  • by spacedrive4000 ( 1375597 ) on Tuesday September 30, 2008 @04:35PM (#25209355)
    Ron Rivest and others have built many good systems for creating secure online poker games. It's possible to deal the cards in a way that the server can't eavesdrop. Now, of course, these can't do anything about n-1 people at the table working together through outside channels. And a good algorithm can still be defeated by bugs in the client software. But the point is that there are good algorithms out there.
  • by Derek Loev ( 1050412 ) on Tuesday September 30, 2008 @04:40PM (#25209437)
    That's called collusion and although it's used from time to time, the regulars pick up on it fast and the software recognizes it even faster. What people aren't understanding about online poker is that it's not the same as "placing a bet", it's a game based on mathematical probability. Online poker players have databases full of information on themselves and their opponent. Every single decision made is either positive expected value or negative, and after a while the better players learn to recognize what situations will yield a positive result. This story has been around for a few years and the real interesting part about it is the fact that it was an online community of poker players who ended up exposing it. This scandal has been developing for quite a while now and if anybody feels like getting the whole story go to the community where it all happened [twoplustwo.com]. There's real interesting reading there and I'm surprised it has gone unnoticed on Slashdot as long as it has.
  • by fiannaFailMan ( 702447 ) on Tuesday September 30, 2008 @04:46PM (#25209529) Journal

    As my Dad often said, go into a bookie's and you'll see five windows for paying them but only one window for paying out.

  • by Free the Cowards ( 1280296 ) on Tuesday September 30, 2008 @04:51PM (#25209593)

    I don't understand. You answer your own question. The people who make money at it do guarantee that they play against people who are worse than them (on average), by virtue of becoming and staying good at the game.

    Of course an average player can't make money at it. (Unless they have a skill for finding tables filled with really crappy players, anyway.) That's why it's not the average players who do it for a living.

    Obviously the people who fall into categories 1 and 3 must put in more money than the people who fall into category 2 take out, but that no more disproves the existence of category 2 than the fact that customers put more money into a store than the workers take out disproves the existence of the workers.

  • by vux984 ( 928602 ) on Tuesday September 30, 2008 @04:51PM (#25209601)

    So why should the poker business not exist?

    Online poker for real money shouldn't exist because its virtually impossible to ensure systematic cheating isn't taking place.

  • by Cajun Hell ( 725246 ) on Tuesday September 30, 2008 @04:58PM (#25209705) Homepage Journal

    But it's worth it to you for the entertainment. Same goes with gambling. You lose money but a lot of people enjoy it.

    How can they enjoy it, when they know the trend must result in loss?

    Oh, and: how dare they enjoy it?! I don't enjoy it, so they shouldn't either.

    BTW, they're having sex the wrong way too. And they listen to crappy music. The "beer" they drink sucks. They run the wrong OS on their personal computer, and the wrong text editor too.

    Something has to be done about these people.

  • Re:This is why (Score:5, Insightful)

    by AndersOSU ( 873247 ) on Tuesday September 30, 2008 @05:00PM (#25209731)

    Assuming, of course, that the companies you've invested in don't fold with a negative value. From that, there's no recovery.

    Don't buy individual stocks

    It's a legalized pyramid scheme

    The economy is not a zero sum game

    10-40 year investment is still a gamble

    Yes it is, but as long as in the long term production is higher in the future than it is now, your (sufficiently diversified) investment will grant returns.

  • by a whoabot ( 706122 ) on Tuesday September 30, 2008 @05:00PM (#25209733)

    I might lose 25 dollars a month playing poker for 10 hours of entertainment, because I'm not that good, but still I only play 5 dollar games that aren't winner-takes all. My neighbour rents 5 movies a month for 10 hours of entertainment, spending 25 dollars. He's the good guy and I'm the bad guy why exactly?

  • by iho ( 160453 ) on Tuesday September 30, 2008 @05:04PM (#25209795)

    It may all be true but it's not like poker works. As many pointed out, in poker you play against the other players, not the house. The house has a fixed rake which is actually pretty low in online games.

    I don't consider myself a pro player and i don't intend to make a fortune playing online poker but in the last 4 months i have been playing my $50 investment turned into $200. I can't make a living with that but it sure beats playing WoW and losing $15 per month.

    The trick is to never overplay your bankroll. I didn't make $150 with one lucky gamble on a $50 game. I made it by playing about 300 games. I lost some, sometimes 2 weeks in a row but in the long run good play will net you money.

    Never play money that what you can't afford to lose. It's as simple as that.

  • Re:This is why (Score:2, Insightful)

    by DeathMagnetic ( 1365763 ) on Tuesday September 30, 2008 @05:09PM (#25209887)

    Unless you have some system to guarantee that your opponents will lose...

    Umm yeah, it's called being a more skillful player. The variance in skill level of poker players is easily large enough for a significant percentage of them to win enough to overcome the house's cut. Of course the house is always the biggest winner, and the average player will be a loser, but it's naive to say that only the house wins.

  • by Anonymous Coward on Tuesday September 30, 2008 @05:14PM (#25209967)

    Actually the morality police is what brought us here. If online gaming was regulated to be fair and run by legit casinos who had a legal liability to create a fair and secure playing field this would be unlikely to happen and if it did there would be legal recourse. Since the morality police can't bring themselves to do that people play without the safety of regulation and a legal system and when companies harm their players through negligence our outright fraud the players are just screwed.

  • by dosun88888 ( 265953 ) on Tuesday September 30, 2008 @05:17PM (#25210005)

    seem to be from people that know absolutely nothing about poker and ultimately nothing about how the sites make their money, so let's clear up a few things.

    1. It would never be in the best interests of the company to try to allow this to happen to anyone, as the cost would be too high. If players had a hint that they were being cheated they would never play there. That $10MM figure is nothing compared to what the sites generate from rake alone. The only people who could benefit would be hired contractors who wrote the code and got paid some small amount of money to do so. To them, it would be worth the risk to try to cheat somehow, and they obviously did.

    2. To the few people who seem to think that they were getting information that was already on their systems from memory that was encrypted or something, well, that's false. The "special" accounts were sent information that other players do not get sent. You only get your hole cards, and it's not until a showdown where anyone but you and a random server out there know what anyone has.

    I guess that's it, aside from the extreme unlikelihood that anyone would try to cheat in this manner at a small (say 30-60 or less) game. The risk/benefit doesn't add up at those stakes.

    A few random points: high stakes poker can be shady at times, and collusion in the smaller games can be defended against to some extent (by either not playing, or using the style of collusion against the colluders. At times games can appear to be collusive due to excessive raising, but the majority of the time that's just strategy.

  • Re:This is why (Score:5, Insightful)

    by Xtifr ( 1323 ) on Tuesday September 30, 2008 @05:20PM (#25210059) Homepage

    That's pretty rude. Not to the casinos (I could care less about them), but to the poor, hardworking "cocktail girls". I do more-or-less the same thing when I'm in Vegas, but I make a point to tip the waitrons well. This means: they'll happily keep bringing the drinks; they'll carefully not notice how few nickels you're putting in the slots (as long as you keep up a minimal pretense); and you're still getting drinks at bargain-basement prices.

    "Do what you wanna--do what you will;
    Just don't mess up your neighbor's thrill--
    and when you pay the bill, kindly leave a little tip
    to help the next poor sucker on his one-way trip."
                        -- Frank Zappa, "The Meek Shall Inherit Nothing"

  • I love proverbs... (Score:2, Insightful)

    by ElboRuum ( 946542 ) on Tuesday September 30, 2008 @05:20PM (#25210071)

    A fool and his money are soon parted... give that fool a computer and his money will part with greater efficiency and speed.

  • by suggsjc ( 726146 ) on Tuesday September 30, 2008 @05:27PM (#25210175) Homepage

    If organized teams have ripped off Casinos in Vegas (the MIT blackjack team comes to mind) then surely online casinos get hit all the time and don't know.

    You are missing the point. In poker games where players are not competing directly against the house but against other players and the house just charges a small percentage of the overall pot as a fee to play their game, they aren't actually stealing money from the house but the other players seated at the table. So, while the sites want to assure you that there are not any "back doors" they actually don't lose money directly from them, only indirectly if they end up losing aggregate business as a result of people not gambling due to mistrust.

  • Re:This is why (Score:1, Insightful)

    by Anonymous Coward on Tuesday September 30, 2008 @05:30PM (#25210219)

    This is not true. Companies make money, or at least hopefully the ones you are buying are. This increases the value of the company, so people would like to buy an ownership stake in a company so that they will either receive dividends or the value of the company, and hence their shares, will increase.

    Shareholders are not on the line for a company's debts- shares can not go below zero dollars. I don't think you have a firm grasp on what the stock market's function is, I suggest for your own good that you learn- it is not a casino, it is a way for a company to raise capital. I recommend "A Random Walk Down Wall Street" which explains the purpose and function of the stock market very clearly.

  • by SpiderClan ( 1195655 ) on Tuesday September 30, 2008 @05:32PM (#25210265) Journal

    Have you ever played poker? With the right people, poker is fun. A movie costs 10$ and lasts 1.5 hours, and may or may not be fun. I can play a 5$ poker game with friends that lasts twice that long, is more entertaining than most movies and that allows for actual interaction between people, rather than staring at a screen. I could blow 50$ or more at the bar, or I could play poker all night for 20$ and not wake up smelling of smoke and beer.

    Playing poker because you think it will make you rich is probably retarded, playing at a casino is certainly reckless if you aren't an elite player, but playing poker doesn't in and of itself indicate naivety or stupidity. It's just a different form of entertainment and is reasonably priced as long as you're reasonable about it.

  • Re:This is why (Score:3, Insightful)

    by Tawnos ( 1030370 ) on Tuesday September 30, 2008 @05:38PM (#25210369)

    You make the same mistake that many do: the stock market is not about growth. Long-term, the value in the stock market comes from dividends paid, not growth. Else, the stock market would simply be a game of hot potato where the last person holding the stock loses.

    Tech stocks often don't give dividends while they're in the growth phase, as the price is expected to increase and the profits that would otherwise be dividends are needed for funding company growth. However, these stocks must eventually produce dividends, else they have no real value.

    Personally, I'm still waiting for Cisco to admit to itself it's no longer a growth-based tech company and to start paying dividends.

  • by timster ( 32400 ) on Tuesday September 30, 2008 @05:39PM (#25210383)

    Dude, seriously, have you ever even heard of poker? You don't seem to know much about the game.

  • by daveime ( 1253762 ) on Tuesday September 30, 2008 @05:42PM (#25210431)

    Yes, except those legal casinos with their legal liability are the same ones who will tell you "you are no longer welcome here", if you start winning too much, or card counting, or employing some other system to bend the odds in your favour.

    Online casinos can't scrutinize the players in the same way, and can barely tell the difference between a real player and a bot.

    I'm not saying what they did was in any way correct, but please don't compare them with the "fair, unbiased people of Las Vegas" - they both want to bleed you dry as quickly as possible.

  • by vux984 ( 928602 ) on Tuesday September 30, 2008 @06:02PM (#25210695)

    This is false. It can take awhile to catch it (as is seen in the AP/UB story),...

    So is it safe to play now? That's the question that needs answering. Or is there another scam going that hasn't been caught yet. You don't know.

    but statistical analysis will always show if weird things are happening.

    Eventually. But what good is that?

    People who play seriously online use tools like Poker Tracker, Hold'em Manager, Poker Office, etc to keep track of their own play, wins/losses and whatnot.

    Someone noticed something odd about the win rate of a few players. They mentioned it to someone else; who looked and found the same thing. It kept going until the evidence was so great that it couldn't be a statistical anomaly.

    And 4 years later they got caught.

    "A few players" should have retired their accounts, and spun up new ones every now and then.

    Or after 3 years, should have just plain retired and taken their millions to another country. How sure are you this didn't happen too with other teams? Or isn't happening right now?

    The real difficulty is in getting sites to admit when something shady has been going on. AP and UB denied that anything had happened for ages. Until the bad press started showing up and it became too much for them to ignore.

    So not only does it take YEARS to unmask systematic cheating, but the online houses aren't cooperating to solve the issue faster. That doesn't exactly install confidence...

    As I originally said, there is no way to reliably ensure cheating isn't taking place. Sure if it is taking place, one day, we'll know about it, maybe. But the smart criminals will have moved on before then... and meanwhile the new criminals will still be under the statistical radar.

  • by Anonymous Coward on Tuesday September 30, 2008 @06:10PM (#25210783)

    That's only true when you're playing games that compete against the house.

    "Counting cards" occurs in Blackjack. In Blackjack, if you win, the house loses.

    That's not the case in Poker - in Poker the house wins whether you win or lose. They really don't give a darn.

  • by uniquename72 ( 1169497 ) on Tuesday September 30, 2008 @06:10PM (#25210787)

    Online poker for real money shouldn't exist because its virtually impossible to ensure systematic cheating isn't taking place.

    So what? Then people don't have to play it. Why limit what consenting adults want to do in their free time?

    Hell, let's just ban the internet, since it's "virtually impossible" to keep it from being used to steal music and distribute kiddy porn.

  • by PopeRatzo ( 965947 ) * on Tuesday September 30, 2008 @06:15PM (#25210837) Journal

    So is it safe to play now?

    It was never "safe" to gamble online. That's the whole point.

    Gambling online is not unlike shooting heroin with dirty needles. You'll get high, but eventually something bad is going to happen.

  • Re:This is why (Score:3, Insightful)

    by AndersOSU ( 873247 ) on Tuesday September 30, 2008 @06:39PM (#25211123)

    what of it?

    Are you predicting the end of economic growth? If so we've got more serious problems to worry about than the Dow.

    If if and when we run against a boundary condition it's not going to matter whether you've invested in gold, stocks, or stuffed your mattress with cash.

  • by vux984 ( 928602 ) on Tuesday September 30, 2008 @07:04PM (#25211377)

    Why limit what consenting adults want to do in their free time?

    Really? Did anyone consent to be cheated?

    Hell, let's just ban the internet, since it's "virtually impossible" to keep it from being used to steal music and distribute kiddy porn.

    False analogy and you know it.

  • by immcintosh ( 1089551 ) <<slashdot> <at> <ianmcintosh.org>> on Tuesday September 30, 2008 @07:16PM (#25211525) Homepage
    Keep in mind this is poker being played here. Are there casinos where poker is played against the house? Because if it's just the visitors playing each other as is usual for the game, the house's only real concern is precisely that the games stay as perfectly "on the level" as possible.
  • by ZERO1ZERO ( 948669 ) on Tuesday September 30, 2008 @08:07PM (#25212109)
    ugh pointless? Just set up a second PC for communication and 'film' the screen of the main PC. Hell, just sit in the same location as your buddy.
  • Re:This is why (Score:3, Insightful)

    by Eivind ( 15695 ) <eivindorama@gmail.com> on Wednesday October 01, 2008 @03:14AM (#25215101) Homepage

    Anything is a gamble.

    Putting the money in your mattress guarantees you'll lose value at the rate of inflation. (several percent a year, over 40 years you'd be lucky to have a third of the value kept...

    Buying GOLD for the money risks that goldprices fall, or don't keep up with inflation.

    Putting them in the BANK risks that the bank goes bankrupt (assuming you've got more cash than the guarantees cover), or that inflation and taxes will eat any gains. Or that the dollar falls so your value is reduced.

    So yes. Buying stock is a gamble. If the economy as a whole is weaker in 40 years than it is today, then it's likely you'll get less value out 40 years from now than you put in today. True.

    The economy has been growing steadily for the last few hundred years though. There's been setbacks, true. But none lasting even close to 40 years. 5 Years ? Hell yes. 10 ? Perhaps on a very few occasions, but extremely rare. 40 ? Not once.

    Past performance is no guarantee for future performance, true. But it's as good a guess as you're going to get.

    Also, you're forgetting about dividends. I've got stock that I've owned for a decade that are worth the same today as they where when I bougth them. And that still has been more profitable than bank over the same period.

  • Re:This is why (Score:3, Insightful)

    by Anonymous Brave Guy ( 457657 ) on Wednesday October 01, 2008 @07:49AM (#25216531)

    Thinking "I'll put my money in the stock market now then in five years, I'll cash it out" is plain wrong. Gradually you need to move away from stocks into bonds.

    I'm not going to get into financial advice; I suspect that we would agree a lot, but this isn't really the forum for that discussion. Regardless, the way the tax system is set up in my country, and the advice that was routinely given by numerous financial advisers until quite recently, both encouraged people to take a stocks-and-shares view even for medium-term investments, and effectively imposed significant penalties on those looking for safer or alternative investment opportunities — or just keeping their money in a bank account, for that matter.

  • Re:This is why (Score:2, Insightful)

    by networkconsultant ( 1224452 ) on Wednesday October 01, 2008 @01:29PM (#25221463)
    Actually, if you follow the markets wisley: 1. you'll learn how to leverage options and futures properly. 2. you'll buy your home at the height of a recession 3. you'll never invest emotionally 4. you'll never put all your eggs in one basket. 5. you'll retire at 40 on a salary that would be akin to a small countries GDP. All investment involves risk, the inherent risk to reward ratio is what drives people to stock's, bonds, T-bills, options, futures, money markets and other commodities. Markets are cyclical, this is a bad part of the cycle when things are overvalued and we'll hit a huge correction and some banks may go bankrupt (with mitigating factors including the banks willingness to risk the fed's money). And that's fine. Oddley enough the markets are like poker, except there's 4 billion people sitting at the table and they are all jostling for position; that and every time i play hand with a prop-trader I get fleeced, they play both the table and the game.

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