KGC's response to the Ultimate Bet cheating scandal.
This is the offical response as issued by the KGC:
Kahnawá:ke Gaming Commission
Mohawk Territory of Kahnawá:ke
July 23, 2008
Kahnawá:ke Gaming Commission (the "KGC") has been continuously regulating online gaming for over 9 years – longer than most, if not all, other jurisdictions. During that period of time, the KGC has proven to be a world leader with regulations and methodologies that have established a regulatory environment in which online gaming can be conducted fairly and securely. The KGC's success as a regulator is evidenced by the fact that a significant percentage of the online gaming industry has chosen to locate and operate within Kahnawá:ke. Given the length of time that it has regulated this new industry and the significant number of licensees under its control, the KGC's record has been exemplary.
As commentators have correctly noted, even the most well regulated industries are not immune from abuse. Examples can be found in the banking, securities and land-based gaming industries. The fact that the online gaming industry is new and is technologically driven creates additional regulatory challenges. Throughout its history, the KGC has met these challenges and its regulations have been emulated in a number of other jurisdictions around the world.
Over the past several months, it was discovered that individuals within two of the KGC's licensees – Absolute Poker and Ultimate Bet – had created and carried out a scheme to cheat players. In both cases, the improper conduct of these individuals was brought to the attention of the licensees, and the KGC, by affected players. The KGC acknowledges the diligence and sophistication displayed by these players and the role they played in bringing these matters to light.
The first case involved Absolute Poker. After a thorough investigation carried out by the KGC and its agents, Gaming Associates, the KGC rendered its decision in this matter on January 11, 2008. This decision concluded that the cheating that took place was not initiated, nor did it benefit, Absolute Poker as a corporate entity, or its directors or principal ownership. The decision imposed a number of sanctions and conditions on Absolute Poker, including twenty-four specific directions for changes to its management and systems. The KGC was provided evidence that all players affected by the cheating that took place were fully reimbursed for their losses.
Shortly after its decision was rendered in the Absolute Poker matter, the KGC first became aware of similar allegations of cheating involving individuals within Absolute Poker's sister company: Ultimate Bet.
Over the past several months, the KGC has been closely involved in an in-depth investigation of the Ultimate Bet cheating allegations. Significant efforts have been expended to identify and correct the flaws in Ultimate Bet's system that permitted the cheating to take place; to identify the individuals that were responsible for the cheating and to ensure that all affected players were fully reimbursed. Unfortunately, the KGC's actions were not well communicated to the poker industry or public at large, creating an incorrect perception that the KGC was 'doing nothing'.
The KGC's investigation into the Ultimate Bet matter has yielded a number of key findings which, within the next several days, will enable the KGC to issue its decision on the appropriate steps to be taken.
It should be stressed that the KGC's primary concern throughout both matters was to ensure that affected players were fully reimbursed and that corrective measures were implemented to prevent against any further incidents of cheating. Both of these objectives have been accomplished – as evidenced by the fact that the recent concerns that have been raised about the Absolute Poker and Ultimate Bet matters are not being driven by affected players.
Kahnawá:ke Gaming Commission
This statement was originally issued to Cardplayer.com but has since been posted in other media so there are no infringement issues by posting it here. To understand why questions are being asked about this situation it might be useful to know a few background facts.
I’ve summarised this to a manageable length and kept to generalities rather than detail (registered company locations, registered numbers, precise dates and names etc.) although I’m happy to provide precise details if you want them.
Since October 2006 Joseph Tokwiro Norton has owned 100% of Tokwiro Enterprises ENRG which in turn owns a 100% interest in both Absolute Poker and Ultimate Bet. He was Grand Chief of the Mohawk Nation of Kahnawake until retiring from his tenure in 2004.
In April 1996 while in office, he was instrumental in setting up The Kahnawake Gaming Law which allowed both Internet and live casino gaming within the Kahnawake territory. By association he was also active in setting up the Kahnawake Gaming Commission (KGC). In 1999, with a partner, he started Mohawk Internet Technologies Inc.(MIT) and subsequently became its CEO and member of its board of trustees. MIT’s primary function is a provider of ISP’s (many for online gaming operations) from Kahnawake territory. He sits on the board of directors of TeKnoWave (a non-profit IT corporation) and is the founder and CEO of Turtle Technologies Inc. TeKnoWave is a sister company of Turtle.
Here’s where it starts to get complicated.
The management of Absolute Poker/Ultimatebet has been sub-contracted to a number of off-shore companies of which the current one is Blast Off Ltd. another shell company registered in Malta. This company is the umbrella operation for a number of other companies but at the end of the day all roads lead back to Absolute Poker/Ultimatebet. Blast Off Ltd. then purchased another company; Excapsa Software Inc., which in turn owned a number of other online gaming companies which then brought Absolute Poker/Ultimatebet under its wing. In other words it’s very, very difficult to actually pin anything down with these guys but even though the trail is complex it is traceable.
But it doesn’t end there. The original owners of Absolute Poker/AB are still connected to the company (through both Blast Off and Excapsa) even though on the surface all links have been severed. There is convincing evidence that bonuses, retainers, dividends and commissions are still paid to “consultants”. These consultants include members of the original investment team and company management.
If this company were required to go through a due diligence process by a regulator it would look like an extended family tree.
However, the original AP problems arose in 2007 when two “employees” were caught cheating with a “superuser” account allowing them to see other players hole cards. These employees were executive members of the original management team but still working as consultants for the company from offices in Costa Rica.
There is also evidence to suggest there were more people involved in such illegal activities at the company and it wasn’t confined to these two individuals. No one can be sure how much was stolen from players as no one can be entirely sure how long it went on prior to discovery (possibly up to two years) but a figure of $5million could easily be justified.
AP’s first response was to deny it, then lie about it, then try to cover it up and finally acknowledge only part of it with their reputation left in tatters.
The KGC’s eventual response was to fine them $500,000 and issue a warning against their future conduct. This is less than half of Joe Norton’s annual salary.
So, everything was put to bed even though it was entirely unacceptable.
Sadly not, the same company did the same thing again via Ultimate Bet less than twelve months later.
Once more it was not Tokwiro Enterprises Inc. that alerted the authorities but the same ilk of diligent individuals who uncovered the first instance. And Ultimatebet’s response? Exactly the same as the previous one.
Any regulator of substance would immediately suspend this operator’s licence but how can that happen when the company owner is also responsible for the servers, maintenance and IT services for the reservation where they operate?
Simply put…they can’t.
Why not?, because to one degree or another Joe Norton controls the companies that own the servers, maintenance contracts and IT contractors.
The KGC’s own guidelines stipulate that there should be no conflict of interest with regard to online operators. It’s nothing short of farcical they don’t consider this to be a conflict. How much more do they need?
How on earth did the governing body, accountants, auditors, security team, management or owners fail to see what was happening? It’s hard to believe they didn’t.
This time the KGC need to show they’re serious in their efforts and conform to their own guidelines. There have already been those who suggest that anything less than revoking the licence of Tokwiro Enterprises Inc. and removing them from the KGC’s list of approved companies will prove them to be completely ineffectual.
It's going to be intersting to see what they'll do.
If you still want names, dates and reference points to confirm any of this I’ll post what I can without getting Cardschat into any difficult legal waters so I might have to be quite selective. I also don’t want to turn it into something the length of a novel which could easily happen considering the sheer volume of information there is.