4 Online Gambling Scandals

Learn about four major scandals in the world of online gambling. What came out of them and how can you avoid getting involved in future scandals?

Online gambling had a major explosion in the early 2000s, with new sites seemingly popping up every week to offer interested players new opportunities. Some of these online casinos were great and have lived to continue on today, while others have folded or been taken down by scandals.

Here, we dig into four major scandals in the world of online gambling. Learn what came out of them and how you can try to avoid being collateral damage in any future such incidents yourself.

Online Poker’s Black Friday

We’ve talked elsewhere about the Unlawful Internet Gambling Enforcement Act of 2006. While it didn’t directly prohibit online poker in the U.S., the UIGEA did ban American-based businesses from transferring money to and from gambling sites — businesses like banks.

This led to a lot of gambling websites pulling completely out of the U.S. market, but offshore sites PokerStars, Full Tilt Poker, and Absolute Poker along with UltimateBet (both owned by Blanca Gaming of Antigua at the time of this scandal) were still allowing Americans to play, deposit money, and even cash out.

On Friday, April 15, 2011, federal authorities unsealed their indictment against those companies, which were the most popular sites in the world of online poker. The charges alleged that they had used fraudulent methods to circumvent the UIGEA and trick banks into processing their payments. What ensued quickly became a firestorm for online poker players in the U.S.

That morning, the news of the indictment started spreading. Just an hour and a half later, PokerStars blocked all U.S. players from their real-money games. Six hours after that, Full Tilt Poker also blocked American players. Planned alliances with companies like Wynn Resorts immediately dissolved.

Over the next couple of days, ESPN removed all PokerStars advertising from their site, and major challenges like the FTP Onyx Cup and PokerStars.net Million Dollar Challenge were canceled.

Five days after the news dropped, PokerStars and Full Tilt Poker both reached an agreement with the Department of Justice to let them regain use of their dot-com sites to be able to distribute players’ funds. Meanwhile, not even one month after the indictment, Blanca Gaming announced that it was filing for bankruptcy. Less than a week later, they also reached an agreement with the DOJ to return funds held by third-party processors.

The drama continued, however. From June to August of 2011, Full Tilt Poker went completely dark, worldwide. Players started a class-action lawsuit against FTP demanding their funds. Then, in September, the DOJ added further allegations against FTP, saying that they were a global Ponzi scheme — and that they owed $390 million to players across the globe, including $150 million to American players. They had only about $60 million on hand in their accounts.

At least one brand came out of this situation with their reputation intact. Five years after the initial indictment, PokerStars was able to return to America through the launch of PokerStars NJ, thanks to the state having made online gambling legal in 2013. The launch was a huge success, with over 1,000 players logging in on opening day.

Absolute Poker Peeked at Players’ Cards

Stunningly, the UIGEA issue isn’t the only time that Absolute Poker made the news. First off, Absolute Poker was already on dodgy ground because of their license status — namely, that they didn’t officially have one like the reputable online casinos do. The company was based in Costa Rica, where they could operate without an official gaming license and there is no regulatory body overseeing online casino operators. Gambling websites in the country can apply for Kahnawake Gaming Commission licenses from the Mohawk Tribe in Quebec, however.

In 2007, four years before the UIGEA indictments, members started taking to online forums to accuse the company of cheating, saying that some suspicious results of a specific account led them to believe that the account could see other players’ hole cards. A user named Potripper won the weekly $1,000 tournament by folding at all the right times as if he could see everyone else’s cards.

The KGC investigated, and Absolute Poker turned over tournament histories, including every player’s hole cards and the IP addresses of everyone who played. It turns out that multiple “superuser” accounts existed to cheat like this, and they all tied back to Scott Tom, one of the company’s founders.

After some initial denials of any such master accounts, the company did finally admit that cheating had occurred. However, they said that it had only occurred for a short period of time, despite evidence that cheating had been occurring on the site since their launch in 2003. Absolute Poker paid back only a handful of players, totaling about $5 million.

Ultimate Bet’s First Spokesman Cheated

Before Black Friday and even before it merged with Absolute Poker, Ultimate Bet was also involved in a massive cheating scandal — and also involving a superuser. Whoever had control of the account could see the hole cards of every other player at the table.

WSOP pro Russ Hamilton and some of his friends had impossibly high win rates, and other players started to suspect cheating. Huge money transfers occurred between Hamilton and his friends over several years, making it all appear pretty obvious. This is all especially damning because Hamilton was instrumental in Ultimate Bet’s software being used for online gambling in the first place and had spread the word amongst the professional poker circuit before the website’s launch. So of course players have long suspected that this had been going on for a while.

Ultimate Bet admits that cheating occurred between 2005 to 2007, but players also suspect that this started happening as early as 2003. The company tried to pay out only $5 million, but the backlash was brutal. They eventually paid out $20 million, but the funds came from player deposits rather than from Hamilton or the other cheaters.

Live-Streamer Accused of Cheating

Mike Postle has been a regular player in the online streams for Stone Gambling Hall in California. He’s known for being an aggressive player with an erratic and high-variance style, and he has garnered some devoted fans, including fellow player Veronica Brill.

Brill also acts as a commentator for the Stones Live regular broadcasts, which are very carefully organized. Their online poker games are streamed over Twitch on a half-hour delay so that viewers can’t relay information to players during the hands. The audience gets to see the players’ face-down hole cards thanks to RFID sensors in the cards and on the table.

During one broadcast in 2019, which she was also watching on a half-hour delay, Brill was floored at Postle’s uncanny knowledge of when exactly to fold on a nearly $1,400 pot. “It’s like he knows,” she said. “It just doesn’t make sense. … It’s weird.”

This began a wild investigation into Postle, by Stones Gambling Hall and online sleuths. Stones couldn’t find any evidence of Postle cheating, but Brill wasn’t convinced. She reached out to Joe Ingram, a poker YouTuber and podcaster. He has studied nearly countless hours of Stones Live archived streams to look into the Postle affair.

Meanwhile, players on the poker forum TwoPlusTwo started doing some deep dives, too. They have looked for bulges in his clothing, scrutinized how he holds his phone, and even tried to unearth anything from his personal life that could be relevant.

The result? Postle still proclaims himself as innocent, while some online poker players aren’t so sure. Ingram hasn’t come out and called Postle a cheater, though he has said some of his hands were “suspect.” Other pros like Scott Seiver are absolute believers that Postle has cheated.

Of course, the truly tricky part is this: If Postle had cheated, how did he even do it? In tournaments like these that are streamed online, very few people actually have access to the hole cards in real time. If the accusations were true, then there would have to be an inside man involved at Stones Gambling Hall. Stones still upholds that their streams are secure, so there’s really no definitive conclusion on this one. Either you believe Stones and Postle, or you believe the people who are convinced that Postle must have a mole within the company.

How To Protect Yourself From Other Online Gambling Scandals

No one wants to get themselves ensnared in scandals like these — having your account frozen, watching someone else cheat and get away with it, or even being accused of cheating yourself. The best way to protect yourself is with diligence and education.

You should definitely read reviews of any online casinos you’re thinking of joining, but you should also look at where they’ve gotten their gaming licenses from. Some online casinos have gotten their licenses from other countries, which isn’t always a bad thing! But you should be aware that some jurisdictions have higher standards for regulations and player protections. These include Anitigua and Barbuda, Belgium, Denmark, Gibraltar, the United Kingdom, and others.

Online casinos in New Jersey are always licensed by the New Jersey Casino Control Commission, one of the most rigorous licensing bodies in the United States. So if you live within the state and want to gamble at a New Jersey online casino, your money and your time are quite safe.

Don’t let scandals like these scare you off of online gambling — just be sure to keep abreast of your state’s laws and make sure you’re picking a well-regulated online casino.