KGC Fines Absolute Poker $500,000 for Security Breach

The Kahnawake Gaming Commission of Canada fined Absolute Poker $500,000 for the way it handled the online poker cheating scandal that rocked the online poker world last fall. The KGC found that cheating did occur at the site for approximately six weeks starting Aug. 14, 2007, and that Absolute Poker attempted to cover it up.

The KGC released several startling details about the cheating scandal and undressed Absolute Poker for not reporting that cheating had occurred on the site to the KGC as soon as Absolute Poker knew cheating had occurred. The KGC also discovered that Absolute Poker tried to cover up the cheating scandal by deleting certain gaming logs and records and that the site failed to report the security breach within 24 hours of its discovery.

Those acts violate several portions of the KGC’s “Rules Concerning Internet Gaming.” In fact, of the four rules that the KGC determined Absolute Poker broke in the wake of this cheating scandal, three of them are in place to ensure that protocol is followed and that records are kept to ensure the integrity of the game.

On top of the $500,000 fine, Absolute Poker is subject to random audits of logs and records for the next two years. The company has to pay for these audits and the KGC requires Absolute Poker to deposit a yet undermined amount of money in a bank account to pay for these audits.

The KGC found no evidence that the activities of the seven users who perpetuated this scam acted to benefit the company. It also found that Absolute Poker took appropriate actions after the cheating was discovered to prevent its system from again becoming compromised and in reimbursing the players who were affected by the scandal.

During the six weeks that cheating occurred on the site, people playing under seven different usernames wreaked havoc on Absolute Poker’s players because they had an unfair advantage: They knew what the other players were holding.

Through a flaw in the way that hand histories were recorded, a “super user” with ties to Absolute Poker was able to see what everyone at the table was holding while the hand was in play. He would then pass on this information to his cohorts. But it didn’t take long for the cheaters to get sloppy and start making near-impossible calls during big-money tournaments. Players became suspicious and found evidence of collusion within the hard histories that were requested. Once pressed, the company and the KGC acted.

The KGC also determined that although at least one of the cheaters was associated with Absolute Poker, they were not part of the Board of Directors or of “principal ownership.” The KGC requires Absolute Poker to cut its ties with the unnamed players and associates.

Online gaming consultation company Gaming Associates was hired by the KGC to conduct the investigation on Oct. 17. The report came out Friday, Feb. 11, and can be found here. (Note: PDF file. Right-click and "Save As" to save the file to your desktop.)