7 Lessons Learned from Ultimate Bet Poker 7 Years Later

Ownership structure is one of the most-underrated aspects of picking a gambling site. It’s good to know exactly who’s in charge along with any important officers. Simply knowing the ownership and/or management hierarchy doesn’t guarantee that you’re dealing with a reputable site. But it at least improve the chances.

Ultimate Bet was originally owned by a public company (discussed later). But this changed when the Unlawful Internet Gambling Enforcement Act (UIGEA) was signed in 2006. The UIGEA prevents American financial institutions from accepting transactions involving unlawful internet gambling business. Ultimate Bet’s parent company, Excapsa, didn’t feel that they could survive without the US market.

Excapsa was delisted and sold to Blast-Off Ltd. The Malta-based Blast-Off was a subsidiary of Tokwiro Enterprises. This is just one of several examples involving Ultimate Bet’s muddled ownership over the years. The site’s roots can be traced to Greg Pierson and John Karl, who founded ieLogic in the 1990s. The Portland, Oregon natives originally planned to use their software to support massive-multiplayer-online games.

However, things changed when Pierson met 1994 WSOP champ Russ Hamilton during a poker trip to Las Vegas. Hamilton convinced him that ieLogic would be more successful by jumping into the budding online poker industry. Pierson, Karl, and Hamilton became early owners of Excapsa Software. Pierson later rebranded ieLogic to Iovation, which served as Ultimate Bet’s fraud prevention service and software provider.

Norton remained largely hidden within the company until he was forced to make a public statement in 2007. He’d been dealing with a cheating scandal at Absolute Poker and finally released his identity while addressing customers. The ownership twists didn’t end here, though, because Tokwiro was sold to Blanca Games in August 2010. Blanca wasn’t a different group, but rather a shell company used to protect Tokwiro’s owners from potential lawsuits and legal issues.

Yet another revelation was that Blanca/Tokwiro was trying to hide its major shareholders through a company called Madeira Fjord. The Norwegian-listed business held $250 million of Tokwiro’s debt. In return, they received a 12% annual dividend until 2009, when the payments suddenly halted.

Some poker sites, including publicly owned 888 and Party Poker, saw the UIGEA as a death knell for their US-facing operations and quickly vacated. These businesses had a strong enough European following to where they could still stay afloat. Privately run companies like PokerStars and Full Tilt Poker felt that they could continue operating in America. The UIGEA didn’t declare online gambling illegal, and PokerStars/Full Tilt didn’t have shareholders to appease. Excapsa was somewhere in between. They were a public company that needed to leave the US market. However, doing so would’ve bankrupted them considering their reliance on US players.

It’s at this point when Pierson met with Absolute Poker’s Scott Tom in late 2006. Tom launched Absolute in 2002 with funding from his father, Phil, and help from his University of Montana fraternity brothers. Absolute Poker was a private company and not as big as UB. But the two sides were still able to work out a merger deal, whereby they’d also sell a large portion to Norton.

Tom and his step brother, Brent Beckley, headed payment processing for the CEREUS network. They worked with crooked payment processors to circumvent the UIGEA and accept deposits from American players. Their work continued until April 15, 2011, when attorneys from the Southern District of New York indicted Tom and Beckley. They were among 11 individuals who were indicted through the events of “Black Friday.”

Going back to 2006, it’s obvious that Pierson and Tom would do whatever it took to keep their money train rolling. The end result was selling a large portion of their businesses to Norton. Tom and his step brother stayed on to help circumvent the UIGEA and keep serving American customers. However, they used dodgy methods to make it happen.

A company’s main goal when going public is to raise more capital and expand. But legitimacy is a nice byproduct of being listed on a stock exchange. Earlier I discussed how Excapsa benefited from being on the London Stock Exchange. This listing provided more confidence to customers at a time when online poker was fairly new. Of course, we have enough Enron and Lehman Brothers’ episodes to show that public companies aren’t always reputable. Excapsa wasn’t far off from the corruption that these corporations displayed.

Excapsa Software went public in February 2006, helping Pierson, Hamilton, and other early investors get rich. But despite having a public listing, professional CEO, and good growth, the company was still heavily reliant on their American customers. The UIGEA popped Excapsa’s bubble and sent the company scrambling for a solution. They took the easy route by selling off to a private company that was willing to still serve Americans.

Ultimate Bet launched on March 1, 2001 under licensing from the Kahnawake Gaming Commission (KGC). The license was issued to a shell company called eWorld Holdings (yet another weird ownership quirk), rather than the software provider and parent company Excapsa. The KGC would quickly become one of the most-popular jurisdictions for US-facing gaming sites that wanted legitimacy.

The KGC was exposed during the UB Poker cheating scandal. This incident arose when high stakes players lost at an accelerated rate to specific accounts like “NioNio” and “Nopaddles.” Losing players became suspicious that somebody had a “superuser” (a.k.a. god mode) account that allowed them to see everybody’s hole cards.

These suspicions were based on logic, given that a superuser scandal occurred at Absolute Poker just months before in September 2007. Absolute refunded $1.6 million to affected players after discovering that a high-ranking consultant cheated players via the superuser handle “POTRIPPER.” The KGC levied a light $500,000 fine against Absolute with no other punishment included. This was the first major sign that the KGC wasn’t the toughest judge on licensees. It also didn’t look good when former KGC founder Joe Norton revealed himself as Absolute’s owner.

Back to the brewing UB scandal, players vigorously complained to the point where Ultimate Bet conducted a half-hearted investigation. Their results concluded that superuser cheating had occurred from March 2006 to April 2007. March 2006 is also the point at which Excapsa performed a database update, which excluded results before this point. Tokwiro, meanwhile, was dealing with the scandal’s fallout as the current owner.

The KGC dug into the matter and discovered that Hamilton (and possibly other UB employees) won an estimated $22.1 million through god mode. They also uncovered that the cheating dated back to May 2004, when Excapsa still owned the site. Tokwiro (via Blast-Off) sued Excapsa for $75 million over the cheating scandal and financial damages. Excapsa agreed on a $15 million settlement, which was put towards more player refunds.

To the KGC’s testament, they did a far better job of investigating than Ultimate Bet. The licensing jurisdiction even hired former New Jersey gaming official Frank Catania to investigate. On the other hand, the KGC only issued a $1.5 million fine to Ultimate Bet. They also allowed the poker site to continuing operating with no license suspension.

Ultimate Bet gained much of its early popularity thanks to Hamilton’s connection with famous pros. Hamilton worked these relationships to bring in star sponsored players like Phil Hellmuth, Annie Duke, Freddy Deeb, and Antonio Esfandiari. Hellmuth and Duke were the cream of the crop and were featured in many of the site’s advertisements. They in turn shilled the site as much as possible and stuck by UB after its cheating scandal. It was later revealed that they didn’t know a tremendous amount about the day-to-day operations. But Hellmuth did have a large stake in both Iovation and Ultimate Bet (even after the sale to Tokwiro).

Poker documentary maker “ElevenGrover” shared what he knew about Hellmuth’s ownership through a TwoPlusTwo post. Here are excerpts:

In November 2009, Ultimate Bet rebranded to UB.com. They also began signing new pros to Team UB. Prahlad Friedman and Joe Sebok were the most-important new additions. Each was crucial to the site’s marketing efforts to lure customers back. Sebok was cast as a standup guy who wanted to change things at the scandal-ridden UB. Friedman praised the “new management” for settling with him as the biggest superuser victim (he was repaid $1m on a stolen $3m). This was all a mirage, though, because Tokwiro was still behind UB. The company merely lied to Sebok and Friedman to use their images.

Tokwiro had been dipping into customer funds for years, including part of what they used to pay back players affected by cheating scandals. Team UB members saw their reputations tarnished. Sebok expressed deep regret for representing the site, while Friedman dropped off the map for a few years.

Many accused Sebok, Friedman, Hellmuth, Duke, and other Team UB members of looking out for their wallets, rather than customers. They were also criticized for turning a blind eye to UB’s past history. It’s difficult to guess what each sponsored player did and didn’t know. But it’s likely that every Team UB member went against their better judgement in supporting the site.

Ultimate Bet’s rebrand to UB.com was an obvious attempt to separate themselves from the company’s shady past. They lost plenty of customers after the superuser scandal in 2008. Tokwiro’s hope was that rebranding, offering generous rakeback deals, and sponsoring popular pros would turn things around.

By early 2011, CEREUS had already seen a large traffic decrease. Black Friday was the final nail in the coffin. Lesson learned: don’t trust a shady gambling site just because they’ve rebranded. It’s likely the same people running the company and trying desperately to recruit more future victims.

Following Black Friday, the poker community shamed those who deposited on and lost their money at UB. The cheating incident and shell company ownership made it seem obvious that UB was sketchy.

But the site still had some qualities that attracted players before their shutdown. These aspects included:

• 30% rakeback deal (or more for higher VIPs).
• Soft player base (most serious players stayed away).
• Rebranding & new management ploy.
• Sponsored pros shilling the site.
• Third-biggest player base in the world.

These factors convinced players to deposit onto UB despite the warning signs. But anybody who stayed too long eventually had trouble making withdrawals.

Black Friday eventually made it impossible to cash out, because CEREUS could no longer keep their ruse going. It was clear that the company was at the point of no return. Those who looked past the shills and rakeback deals saw this moment coming long before April 15, 2011. Players who ignored the warning signs, however, lost their money as a result.

UB Poker’s existence came to a close at the beginning of December 2011, when players reported the site being offline. Many customers had already given up hope on their withdrawal requests by then. This seemed like a fitting end for such a crooked poker operation. But a couple of interesting developments have come about in more-recent years.

First, tapes released by Travis Maker shined new light on the UB cheating scandal. Maker, Hamilton’s former righthand man, released the tapes to protect his reputation from being smeared. The private recordings feature Pierson, Hamilton, and their lawyers discussing how to deal with the scandal.

Pierson is heard devising a cover-up story along with how they could get away with only refunding players “$5 million.” The second development included the US Department of Justice issuing surprise refunds to former customers in 2017.

The DoJ refunded former CEREUS players over $38 million. This amount is around $0.75 on the dollar from what former CEREUS players lost. These refunds provide a somewhat happy ending to those who were robbed. Nevertheless, it’s still important to keep the lessons of Ultimate Bet in mind. After all, there’s usually no large refund waiting in the wings after a gaming site rips everybody off.