The online poker world has seen more than its fair share of ups and downs since its inception in the late 1990s.
One of the most egregious scandals to hit the industry involved one of the largest sites, Ultimate Bet.
This site has had a series of missteps along the way, but still managed to compete with the largest competitors up until 2008 when the house of cards toppled over.
Let’s take a look back at the history of this site and its rise and fall.
The genesis of Ultimate Bet came from two people in the Pacific Northwest, Greg Pierson and Jon Karl, who started a software company called ieLogic back in the late 1990s. The software was originally designed to be gaming software for massive multiplayer online games of the role-playing variety.
Pierson was a poker player, and during his trips to Las Vegas, he came to know poker pro Russ Hamilton. Hamilton, a World Series of Poker Champion, convinced Pierson that he was using his software for the wrong purposes, and soon after that, the makings of Ultimate Bet were on the table.
Pierson and Karl had their team rework their platform to be used for dealing cards to thousands of players.
Hamilton used his network of poker professionals to start spreading the word about the impending launch of the site, wanting to use as many of them as possible as walking billboards for the new venture.
One of the first players to come aboard as a sponsored pro and potential investor was none other than Phil Hellmuth. Hellmuth was himself a World Series of Poker Main Event Champion, and also one of the most recognizable players on the planet.
With the software tested and ready to launch, and some professional players on board to promote the company, it was time to come up with a name. At this point, poker sites such as Paradise Poker and Planet Poker had been launched online – a trend of using “poker” in the name was emerging.
Pierson, who had visions of his software being used to power more than just poker in the future, decided to buck this trend and name the company Ultimate Bet. This type of forward thinking may have been considered genius, but this put the company at a disadvantage right out of the gate:
Regardless of the arguments about the name, Pierson came out on top, and with that, Ultimate Bet was launched in 2001. At the launch, it was clear that the site was going to use the newfound popularity of televised poker to drive its traffic; the stable of sponsored pros included heavyweights like Hellmuth, Hamilton, Annie Duke, and Antonio Esfandiari.
In the early 2000s, it seemed like all a site had to do was hang a shingle and players would sign up in droves. Sites like Party Poker and Paradise Poker continued to grow their business on the backs of small-volume players, but Ultimate Bet had something all the sites were jealous of – high-stakes traffic.
These games, featuring many of the top land-based poker pros in the world, were pushed to the site by Hamilton, who was promising that they would always be able to find a high-stakes cash game to play.
The site, as a result, became the place for amateur players to go to see their new idols play online poker. This allowed the site to grow to become the third-largest online.
While they definitely didn’t have the budget of some of their competition, their niche and their marketing efforts gave them the chance to grow without having to spend as much money.
As televised poker tours like the World Poker Tour were looking to expand, partnering with these new online juggernauts seemed like a no-brainer. Hamilton had been playing a significant amount of poker on the tiny island of Aruba, and this gave him a great idea.
They would propose to have the World Poker Tour partner with Ultimate Bet on a tournament to be held on the island, with the final table being played outdoors.
Well, it didn’t take long to convince the WPT executives, and with that, the Ultimate Bet Aruba Poker Classic was born.
The first Aruba Poker Classic was played in 2003, and attracted some of the top names in the sport. The event was part of the second season of the World Poker Tour, and the backdrop alone made for excellent television.
The event was a huge hit with players; it was the only tournament in the world that rewarded a player for busting out by giving them more beach time!
The site, which at this point was set up in Costa Rica with a license from the Kahnawake Gaming Commission in Canada, had grown to a point where it was time to head to the next level. In the gaming world, that meant taking the company public.
Many other companies had done so in 2004 and 2005, the most notable of which was Party Poker, which became the most valuable gaming company in the world when it floated on the London Stock Exchange.
To prepare the company for its IPO, Pierson and the team hired Jim Ryan, the CFO of CryptoLogic, to be the CEO of Excapsa. Excapsa was the new name given to the poker software company.
Ryan started to prepare the documents for the IPO, which was a costly endeavor.
In the meantime, the site continued to have excellent growth numbers through 2005; it was still far behind Party Poker and PokerStars in size, but it was generating tens of millions of dollars in revenue each month.
More players were entering their flagship Aruba event each year, and the site was also making a significant presence at the World Series of Poker, qualifying hundreds of players for the Main Event.
With everything seemingly going their way, the company continued to grow its marketing and development teams, and with everything in place, Excapsa Software went public on the London Stock Exchange in February 2006. There were massive celebrations across the UB offices, and the shareholding founders were instantly multi-millionaires.
However… as they say, timing is everything.
In parallel to the preparations to take the company public, the development team was working on a major milestone of its own – a full back-end upgrade of the software.
The site had grown too large for its current database capacity; a switch was the only way to ensure the same speed and integrity as the site continued its massive growth numbers.
There was a lot of debate internally on when this upgrade should take place. The timing was falling in line with the IPO date, which was making for some very nervous and tense boardroom conversations.
The development team was confident in their plan, with only a few hours of overnight downtime, and so it was decided that they would go ahead with the upgrade in March of 2006…only weeks after the IPO.
Well, as you can imagine, the upgrade did not go as well as planned. The site not only went down for the scheduled maintenance, but it also crashed only hours after coming back online. Rather than shutting down the site to try to determine the problem, the site decided to fix it in real time.
They would patch an issue and put the site back up, only to have it crash again hours later. There were numerous crashes over the next few days, each of which locked player funds at tables.
Of course, this had an impact on the stock price, as well; investors had no idea what to make of these issues facing the software company, but they definitely were not happy.
All told, the crashing took over three weeks to fix, and the state of the database was cleaned up as much as possible (this will come into play later).
With the database issue out of the way, the site could move on to the 2006 World Series of Poker and the Aruba Poker Classic, which had grown to be a huge event.
The World Poker Tour and Ultimate Bet had severed their partnership due to a contract dispute, so Ultimate Bet decided to film the event themselves to package and sell to a television network.
The site’s presence at the WSOP rivaled that of their competition, but how was the site able to keep up with all the spending in such a cutthroat environment? Revenues were growing, but not at the same rate. The stock price wasn’t moving, making it hard for the company to raise additional cash for business purposes.
Furthermore, a new site, Full Tilt Poker, had stolen all of the high-stakes players away from the site (another story altogether, which you can read about in detail in our Full Tilt Poker History).
The 2006 Aruba Poker Classic was the best attended to date; hundreds of players had qualified for or bought into the $5,000 event, creating a prize pool with a $1,000,000 first place prize. Everything seemed to be back to normal for the site after their database issues…and then it all came crashing down.
Right in the middle of the event, news came that the United States had passed legislation meant to cripple the offshore online gambling business.
The Unlawful Internet Gambling Enforcement Act was tacked onto other legislation, and it was written to make the financial transactions that were processing deposits and withdrawals to gaming sites illegal.
In 2006, it seemed that the industry was bulletproof; millions of dollars were being spent on traditional advertising, essentially flying a flag in the face of the U.S. government.
But with one stroke of the pen,
the industry was turned upside down.
UIGEA sent U.S.-facing gambling sites into two camps. The publicly-traded Party Poker and 888 decided to give up over half of their current revenue and shut down the access of American players.
They felt that they had enough dollars coming in from other countries that they could survive in the long run. Privately-held companies like PokerStars and Full Tilt Poker did not feel that they were breaking any laws, so they decided to stay in the market and scoop up the players looking for a new home.
Ultimate Bet found itself in the worst position of all the companies. They were publicly traded, so it seemed all but decided that they had to leave the market, but doing so would likely crush the company – the majority of their business was coming from American players.
After much debate on the topic, Pierson and one of his competitors – Scott Tom of Absolute Poker – decided to meet. Tom’s company was using a piece of security software that Pierson had built, so they already had a relationship.
Absolute Poker was privately owned and was much smaller than Ultimate Bet. However, there were a lot of similarities between the two companies (some of which would come to light in the coming years).
The groups agreed to terms, and then an announcement was made: Excapsa was going to de-list from the London Stock Exchange and sell its assets to the Absolute Poker team. This would allow the new company to continue to take action from the U.S.
All during this period of growth and turmoil, there was another issue brewing at Ultimate Bet. The high-stakes players who had spent so much time in the game over the years were getting cleaned out by a handful of players.
It seemed as though these players could do no wrong. The poker world is very good at self-policing, however, and rumors of possible collusion started to bubble up on forums and around the poker community.
The merger with Absolute Poker wasn’t as smooth as everyone had hoped – customer service agents were being let go in Costa Rica, and this wasn’t pleasing the good folks in the Latin American country. To make matters worse, the site itself was not responding in a timely fashion, further fueling the rumor mill.
Finally, after constant harassment by the players to investigate these players who seemed to be winning at an alarming rate, the site put out a statement. They acknowledged that there had been collusion on the site, confined to the time range of March 2006 to April 2007.
It is important to note here that March 2006 was when the database upgrade had taken place; the current database had no records listed from before that date. The company agreed to pay out a settlement to the players that had been impacted by these accounts, and they were shut.
However, the players didn’t think this was enough, and they wanted to do some more digging of their own. As many of the players had relationships with their customer service agents, all they had to do was find the right one – and they did.
An unnamed whistle-blower within the Ultimate Bet organization provided screenshots of account information on a couple of the colluding accounts; this information tied the account to none other than Russ Hamilton himself.
Armed with this information, the players decided to take the issue to the next level – the press. Soon after the account information had been revealed, a complaint was filed with the Kahnawake Gaming Commission, citing their failure to protect players from this cheating. This is where the story gets even crazier.
The Absolute Poker group had just gone through a cheating scandal of their own, which had been traced back to one of the company’s management (or so they made it seem). How was it possible that two companies, now linked, could have had this happen to them?
This was when players started to realize the connection; both sites used iovation fraud software, which had been built by…yep, Greg Pierson’s company.
To make matters worse, the registered owner of both Ultimate Bet and Absolute Poker was Joe Norton, the former chief of the Kahnawake tribe. He was well protected by the commission, so it was hard to say if there would be any recourse for the players.
Now the word was getting out to the general press, causing 60 Minutes to start doing their own investigation for a piece on the topic.
During all of this, Ultimate Bet put out another statement; they had determined that the cheating had been going on since before 2006, and they were working with the Gaming Commission to determine the extent of the damage.
Through all of this, the site continued to operate, although with the reputation damaged to this level, it was definitely in survival mode.
In 2008, the investigation into the cheating at UB concluded, and the Gaming Commission released their findings. They determined that the cheating had been going on since 2004, and had cost players tens of millions of dollars.
They also made the announcement that they could clearly determine that Russ Hamilton was directly involved in the scam. However, they refrained from releasing the information on the other accounts and players involved, which enraged the poker community.
Furthermore, the Commission only fined Ultimate Bet $1.5 million USD and allowed them to continue operating. This was the last straw for many players, who quickly demanded their money and went on to play at other sites.
While the scandal now seemed to be behind Ultimate Bet, paying the players who had been scammed was still in question. This is when Tokwiro, the new owners of the site, filed a $75 million lawsuit against Excapsa, claiming they caused this incident to happen and hid this information from them.
However, the Excapsa liquidation team still had millions of dollars it needed to disperse to shareholders as a result of the sale.
After months of “negotiations,” Excapsa reached a settlement figure of $15 million, which would be used to pay back players who had been cheated by the rogue account players who had been able to see all of the cards with their “superuser” statuses on the site.
With all of this now behind them, Ultimate Bet tried to regain some credibility in the industry. They continued to have a loyal hardcore following, which allowed them to generate revenue.
A merger with the Absolute Poker database to create the Cereus Poker Network was next; this liquidity would allow for more rake to be generated more quickly, and continue to allow the company to try to compete with their now much larger foes.
The site rebranded to UB.com, added some new blood regarding sponsored players, and continued to run the Aruba Poker Classic until 2009. In 2010, it was announced that the company was shifting its focus and that Aruba was no longer a viable event for them to hold. This upset many of their most loyal players, which caused another dip in revenue.
By the time April 15th, 2011, came (known as Black Friday in the gaming world), Ultimate Bet was a shell of its former self.
Pros like Phil Hellmuth and Annie Duke had long since left the brand, and when the Department of Justice shut down the site, it also opened up one final wound: the player money was nowhere to be found. It was estimated that $50 million of player balances had been lost as a result.
All through these final years, one question still nagged in the minds of players: who was really behind all the cheating? Could Hellmuth, Duke, and other high-profile names have been involved? Did Jim Ryan know about this when he took the company public?
There was much speculation about those who would be tied to Russ Hamilton in this scandal; many people believed it would have been impossible for him to have masterminded this on his own.
One person decided to take matters into his own hands. Travis Makar, one of Hamilton’s right-hand men, started to feel as though the entire issue was going to be pinned on him, so he decided to secretly record a meeting that took place between Hamilton, Pierson, and the two Ultimate Bet lawyers, Dan Friedberg and Sanford Millar.
In this meeting, the group discussed how the cheating had taken place. Several accounts had been given “God Mode” for testing purposes; these accounts could see all of the cards at the table, which, as you could imagine, would make it very easy for someone to win hands.
In the meeting, Hamilton admitted to stealing between $16 and $18 million USD from players; he made no apology and had no intention of paying any of it back.
It seemed as though this meeting was meant to determine the cover-up story—who would be blamed, how they would go about limiting the damages, and when and if players would ever be paid.
It was determined in this meeting that Hellmuth had no idea that the mode existed, but that Annie Duke had not only been told about the accounts but had herself been given one with a 15-minute delay built into it. Both players released statements after the recording was released. Here is what Hellmuth had to say:
Naturally, these recordings set the record straight, but aside from that, they didn’t accomplish anything else; no one was arrested or charged with any crime.
Some good news came out of nowhere for Ultimate Bet (and Absolute Poker) players in 2016. As a result of the 2011 seizures and settlements, the Department of Justice was able to pay out Full Tilt Poker players, and after those payouts were complete, there was a surplus of seized funds that they were going to apply to UB and AP accounts.
Now, more than five years after the sites were closed and all seemed lost, players were paid back over $30 million of balances. While this isn’t the full extent of the damage caused by the sites, it is still considered a huge victory for players.
The major players in the Ultimate Bet growth and demise seem to have come out of the whole endeavor unscathed. Jim Ryan went on to become the CEO of Party Gaming, successfully managing a merger with bwin. He now runs a tribal-based gaming company.
Greg Pierson continues to run iovation software, although it would appear they are no longer involved in gaming companies. Hellmuth continues to be one of the biggest names in the poker world, and based on his social media accounts, he shows no signs of changing his bombastic ways.
As for Russ Hamilton, he continues to be occasionally spotted in small cash games in Las Vegas, but for the most part, he seems to have faded into obscurity.
The players at Ultimate Bet will always fondly remember what the site became: a community-based site that forged great relationships through their annual interaction in Aruba at the Aruba Poker Classic.