In a case that illustrates the perils of online betting, a leading Internet poker site said Friday that a hacker exploited a security flaw to gain an insurmountable edge in high-stakes, no-limit Texas holdem tournaments — the ability to see his opponents’ hole cards.

The cheater, whose illegitimate winnings were estimated at between $400,000 and $700,000 by one victim, was an employee of AbsolutePoker.com who hacked the system to show that it could be done, said a spokesman for the company, who spoke with msnbc.com on condition of anonymity.

“This is literally a geek trying to prove to senior management that they were wrong and he took it too far,” he said.

The Costa Rica-based company, which is controlled by a parent company owned by members of the Kahnawake Mohawk tribe in Canada, issued a statement later in the day acknowledging the breach and promising to refund all money, including interest, to players who were victims of the scheme. It also promised a “comprehensive statement … providing more details of the findings” would be issued soon…

Site owned by Canadian Mohawks
Absolute Poker  states on its Web site that it is owned by Tokwiro Enterprises Enrg., located in Kahnawake Mohawk territory nine miles south of Montreal, Quebec. Tokwiro is described as a Mohawk owned and controlled sole proprietorship. The site also is licensed and ostensibly regulated by the tribe’s Kahnawake Gaming Commission, though it is not clear what level of scrutiny the commission applies to its licensees.

Many poker players interviewed for this article expressed concern that the incident would be another “black eye” for online poker, which has surged in popularity in recent years despite attempts by the U.S. government and many states to prevent Americans from playing over the Internet.  Most indicated they would prefer that the sites were licensed and regulated by the United States, but said they consider most of the leading offshore sites to be fair and secure.

“I think that the reasons this got handled the way that it has, with a happy ending, is because the overwhelming majority of people in the industry … want things to be run in a fair and honest way,” said Small of Pocketfives.com. “…  There is a perception that a lot of people in the industry are thieves, but that’s not the case for the most part. When something like this happens, the rest of the people, as soon as they catch wind of it band together and look for ways to pool information and bring people down who have done harm to them.”

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Recovered from the Poker Players Alliance archive index. This is the archived item as preserved.