Tokwiro Statement on Cheating Scandals

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Tokwiro Enterprises ENRG (“Tokwiro”) is fully committed to the safety and security of its customers and to transparency in its communications. We deeply regret that Tokwiro and its customers were victimized by cheating episodes on the Tokwiro sites Absolute Poker and UltimateBet. Tokwiro and its regulatory agency, the Kahnawake Gaming Commission (“the KGC”), have vigorously investigated both incidents, and Tokwiro has taken stringent measures to ensure that such a thing can never happen again. This note describes what happened, what Tokwiro did about it, and why our customers can now feel confident playing on Tokwiro sites.

In September 2007, Tokwiro received allegations of cheating on its online poker site Absolute Poker. In January 2008, similar allegations were made regarding play on UltimateBet. After thoroughly investigating both situations, Tokwiro Enterprises, its regulator the Kahnawake Gaming Commission, and third-party analysts Gaming Associates concluded that cheating in fact had occurred, and that in each case it had involved the ability of a perpetrator to view opponents’ hole cards, an enormous and unfair advantage in a poker game.

While there are superficial similarities between the Absolute Poker and UltimateBet cheating scandals, it is also important to mention the differences between the two cheating scandals. Both involved cheaters' ability to view hole cards; both, unfortunately, involved companies presently owned by Tokwiro. Both involved perpetrators who were associated with the previous ownership (although only in the case of AP did the perpetrator continue to be associated with the company after Tokwiro acquired it). There, however, the similarities end. The perpetrators in the UB and AP cases are different individuals. They were not working in concert. They exploited different holes in software security (which makes sense, since AP and UB, which originated under different companies, use entirely different software platforms.) The perpetrator in the AP case never cashed out his ill-gotten gains from the AP site, and therefore recovery of the stolen funds was relatively easy; the perpetrator in the UB case did cash out. The cheating on AP took place over only six weeks, starting on August 14, 2007; the cheating on UB lasted for three years, starting in January 2005 and continuing until it was detected in January 2008.

Once Tokwiro discovered the cheating scandals, the company reacted with a determination to do everything it possibly could to protect customers in ongoing play, and to reimburse them for their losses in previous unfair play. In the AP case, Tokwiro immediately fired the perpetrator, a holdover from the previous ownership; and, in return for agreeing not to prosecute, received a full account from the perpetrator of exactly how the scam was done, in order to be able to know for sure that the hole had been plugged. Other employees who had been associated with the previous ownership, but who were not linked to the cheating, also left under negotiated circumstances.

In the case of UB, after a thorough investigation we were able to determine how the scam took place, and immediately disabled and removed the illicit software code that the perpetrator made use of from our operational systems. This software code had been installed on the servers many years before we acquired the business, and was unknown to Tokwiro until this investigation. We then had third party auditors verify that the software that enabled the cheating was indeed removed, and that cheating was no longer possible.

Our next priority was to implement another layer of security so that we could automatically detect any abnormal winning statistics in real time. This essential layer of security allows us to detect cheating instantly even if a hacker or an internal employee were able to breach our hole card security. We built this intelligence into a new software application that we call our Security Center. We engaged mathematicians and poker experts to help us with the requirements for this extremely important initiative. We have also integrated the automated detection of bots, chip dumping, and multi-accounting into the security center. We also believe strongly in the continual addition of more layers of security to ensure that we are constantly improving in this area and staying on the cutting edge.

Tokwiro changed its business culture and operational structures. The previous business culture was entrepreneurial, decentralized and individualistic - there was less emphasis on process and procedure. With the management changes, Tokwiro put a strong focus on accountability and oversight, and introduced more centralized management. The company brought in a new Chief Operating Officer (COO), Paul Leggett, as well as a Compliance Officer, two Security Managers, risk assessment procedures, and internal audits. In addition to the existing security department, the company created a new, specialized Poker Security Department. Tokwiro hired outside gaming industry analysts to do a full audit of all software code and internal practices, and to make recommendations about best practices.

Management instituted and disseminated strict new policies: a Whistleblower Policy to formally protect Tokwiro employees and contractors who report any suspicion of cheating, and an Ethics Code that, among other things, formally prohibits any employee or contractor for any Tokwiro business from playing for money on any Tokwiro site.

Tokwiro overhauled its internal communications practices and its policies regarding account names and treatment of VIP Pro players at cashout. Account name changes absolutely cannot be done now except under a very limited set of circumstances, such as a user name having been the victim of abuse in a chat room. There are now only five people at the company - including the COO - who have the security clearance to make user name changes. And rather than being "greenlighted" at cashout, VIP Pros are now subject to the same checks and oversight as any other players.

The company believes that these comprehensive efforts show just how seriously Tokwiro took the cheating incidents at AP and UB, and show that it has really done everything possible to make sure that things like this can't happen in future.

Tokwiro’s detailed updates on the course of the cheating investigations can be found here. The KGC’s final report and ruling on the Absolute Poker cheating can be found at:
http://www.kahnawake.com/gamingcommission/KGC-AP-0111.pdf

The KCG’s investigation into the cheating at UltimateBet is not complete, and therefore it has yet issued a final report.