Legal Rights in the Online Gaming Casino

The online poker scene was set on its ear with the arrival of the Swedish phenom known only by his Tolkien-esque moniker of “Isildur1.” Isildur1 burst onto the scene in September 2009 and soon began to frequent the nosebleed seats of US$1000/$2000 Pot Limit Omaha reserved for the true high stakes gamer. In terms of high stakes action, according to Pokertableratings.com, within four months of playing at the second largest online poker site Full Tilt Poker, Isildur1 had been involved with the 12 largest pots ever played online, the largest being a staggering $1.3M pot. At his peak, Isildur1 amassed over $5M in winnings within two months of playing at Full Tilt.

Reminiscent of the late chess great Bobby Fischer, Isildur1 would accept all challenges and was frequently seen playing the world’s top online pros including Tom “Durrrr” Dwan, Patrik Antonius and Phil Ivey, in heads up action all at the same time. Despite these unparalleled skills and an innate ability to know what his opponents were holding, Isildur1 has the infamy of being on the wrong side of a marathon session wherein he lost over $4M to poker pro Brian Hastings in December of 2009.

Controversy ensued when Hastings later revealed to ESPN that he beat Isildur1 by using a report prepared from a database of hand histories incorporating hands played by himself and fellow poker players Brian Townsend and Cole South. It should be noted that compiling a database of hand histories is considered cheating, and the collection of such information is a violation of Full Tilt Poker’s End User License Agreement (EULA).

End User License Agreement

Under Full Tilt Poker’s EULA, a player is prohibited from using “external player assistance programs (EPA Programs) which are designed to provide an unfair advantage to player.” EPA Programs include non-software-based databases such as a database of hand histories.

Upon Hastings’ admission that he had the assistance of a hand histories database to beat Isildur1, Full Tilt Poker took action. For his role in compiling the database of hand histories, Townsend’s “Red Pro” status was suspended for 30 days. Brian Hastings, however, was not penalized, even though he used the database in his win against Isildur1.

It can be argued that the actions taken by Full Tilt Poker are not severe enough to detract future cheaters. But does Isildur1 have any alternative legal recourse to recover the money lost?

Breach of Contract

Isildur1 stated that he would be making a formal complaint to Full Tilt Poker. If Isildur1 should remain unsatisfied after making the formal complaint, and want to pursue this matter further, then the most likely argument he could make would be breach of contract; specifically, that Full Tilt Poker breached its EULA.

However, it is unlikely that any EULA or Terms of Use of an online gambling site would prevent all fraud. A closer examination of Full Tilt Poker’s EULA confirms this, as the EULA states that upon knowledge that an online player has engaged in fraudulent behavior, including the use of EPA Programs, Full Tilt Poker is entitled to take any action it sees fit. Thus, Full Tilt Poker can argue that it satisfied its obligations by suspending Townsend’s Red Pro status for 30 days. Under the language of the EULA, it can be argued that Full Tilt Poker is not required to take any action at all.

It can also be argued that the breach of contract argument would be unsuccessful, as it was not Full Tilt Poker that breached the EULA, but Brian Hastings and Brian Townsend. However, lacking a privity of contract between them and Isildur1, Isildur1 would have no recourse against them under the breach of contract argument.

Recovery Under Tort Law

Assuming no restitution claim in addition to a breach-of-contract argument, from the common law perspective, Isildur1 may have an argument for recovery of money under tort law. Isildur1 could perhaps make a claim for the “waiver of tort.” This is a term most commonly used in situations in which a defendant has been unjustly enriched as a result of committing a wrong against the plaintiff, and the plaintiff seeks a disgorgement of the profits as a result.

In Isildur1’s case, Brian Hastings admitted that he cheated and was unjustly enriched as a result. However, there may be some jurisdictional issues that could prevent Isildur1 from bringing forth a claim.

Absolute Poker and Ultimate Bet

What happened to Isildur1 does not represent the first time — and it won’t be the last — that cheating has occurred on online poker sites. On or around November of 2008, online poker players playing on Absolute Poker and its affiliated site, Ultimate Bet, were cheated out of more than $20 million. It was later discovered that a former employee had cracked the software code so that he, along with his partners, was able to see all of the cards in the game as they were being played. As in the case involving Isildur1, the online poker sites in this situation did not take strong steps to punish the cheaters. Absolute Poker instead struck a deal: In exchange for protecting the cheater’s identity, Absolute Poker received a full confession as to how he did it.

To further rub salt in the wounds of poker players, there were jurisdictional issues that left them with few options for making further complaints. The computer servers for the poker games were located in Costa Rica, and online gambling in the U.S. (where the poker players resided, in this instance) is illegal. Thus, even if those poker players were able to put forth a strong breach-of-contract argument, or to recover money under tort law, there would be no forum where these players could make such arguments.

Game Over?

Even if options are available to Isildur1 to recoup his losses, it is unlikely that he will pursue them. He has yet to reveal his true identity, and it is unlikely that he will do so. Isildur1 hails from Sweden, where the tax laws are particularly onerous with respect to online gaming. It is likely that he already owes much more in taxes than he ever was up in winnings. Thus, Isildur1, along with many other poker players and online gamblers from Sweden, will most likely choose to remain anonymous in the hope of avoiding paying taxes on his winnings.

However, all is not lost for Isildur1. Due to his instant fame, he has been given opportunities to further his poker playing career. Other poker sites are interested in having Isildur1 play on their sites. Specifically, Real Deal Poker is offering him a dedicated set of high-stakes tables where he can personally invite others to play with him.

Details are unavailable, but there is no question that Isildur1’s gaming in the fall of 2009 increased online attendance for Full Tilt and kept the poker forums abuzz. With the cut-throat competition of online poker, other sites may soon follow Red Deal Poker’s lead, and additional offers may follow.

As for Isildur1, while his bankroll is reported to be in the red, he vows that it has not been decimated and that he is preparing for a return. There is no question that thousands upon thousands of “railbirds” (people who watch the high stakes poker play) are awaiting his next move.

Daisy Yu is a business and technology lawyer atHeydary Hamilton. Her practice is focused on commercial transactions, IT matters, trademarks and franchising law.

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