Controversial cybersecurity company Iovation has been granted a gaming license by the Nevada Gaming Commission to offer geolocation services to the online poker industry.
Why so controversial? Well, Iovation was also once the software provider for UltimateBet.com (UB), and its founder and CEO, Greg Pierson, was a co-founder and CEO of UB.
In 2008 it was discovered that former WSOP Champion and major shareholder in UB, Russ Hamilton, had cheated players out of roughly $20 million between 2004 and 2008.
Many well-known players, such as Mike Matusow, Prahlad Friedman and Robert Williamson III, had not only their bankrolls but also their confidence and sanity decimated by Hamilton, who was using a so-called “God-Mode” that allowed him to see his opponents’ hole cards.
God-Mode, known to UB internally as “Audit Monster,” was created by Iovation at the behest, claims Pierson, of Hamilton himself.
While an investigation by the Kahnawake Gaming Commission named only Hamilton as a perpetrator of the fraud, at least 13 UB accounts are believed to have been used in conjunction with Audit Monster and it has long been suspected that others were involved.
In an interview with Gaming Intelligence this week, Pierson said he believes that the extensive investigation conducted by the Nevada Gaming Commission into his past and the workings of his company exonerated him from any wrongdoing in relation to the scandal.
“This has been the issue that will never die,” said Pierson of the UB scandal. “We have not lost any important customers to date, but in the gambling industry there are probably some big publicly-traded companies, which have shied away from us.
“If large publicly-listed companies and their compliance officers are happy that Nevada has checked this box, then all the time, effort and expense of this investigation will have been worthwhile.”
It remains, however, a very odd decision by the Gaming Commission. Putting the UB scandal to one side, Nevada has very clear laws about companies that offered unlicensed online gaming to Americans post UIGEA, as UB did, from receiving licenses.
We also wonder whether the regulator’s stringent vetting process extended to listening to the notorious UB tapes, leaked in 2013 by a former assistant of Hamilton’s, in which Pierson is clearly heard to discuss strategies to cover up the fraud so that UB company would be liable to pay back as little of the stolen money as possible.
Pierson claims he has been vindicated by his Nevada license acquisition, but we’re not so sure. One way or another, the Nevada Gaming Commission just made a huge call.