WaPo and 60 Minutes Team Up on Internet Gambling

The Washington Post and 60 Minutes put their investigative heads together for a nice two-day collaboration on Internet gambling that ends today.

While today’s story is worthy, it’s pretty pedestrian. But yesterday’s long story—about the cheating at two big Internet poker sites—was fascinating.

AbsolutePoker and UltimateBet operate out of a shopping mall in Costa Rica, run their games on computer servers housed on an Indian reservation near Montreal, and are licensed by a Mohawk tribe that has no background in casino gambling and does not answer to federal or provincial regulators.

Joseph Tokwiro Norton, who owns both Web sites, is the former grand chief of the Mohawk tribe. He was instrumental in setting up the licensing agency and a highly profitable companion business that owns the server farm…

In addition to hand histories, the poker detectives said, Johnson’s spreadsheet contained e-mail and Internet addresses that appeared to connect one of the suspicious accounts to Costa Rica, to a home owned by Scott Tom, the founder of AbsolutePoker who sold the business to Joe Norton in October 2006. When the poker detectives posted their findings on a popular poker forum called Two Plus Two, bloggers pounced on the information as proof that Tom must have known about the cheating, if not have cheated himself.

Talk about a multi-layered investigation: The cheating was brought to light by citizen detectives, then expanded upon by a newspaper and a TV show.

One interesting thing from today’s story:

The government’s efforts haven’t been limited to sports books. The Sporting News agreed to a $7.2 million settlement to resolve claims that it had promoted illegal gambling by accepting advertising from Web sites. And last year, the Justice Department reached a $31.5 million settlement with Microsoft, Google and Yahoo for accepting online advertising for sports books and casino-style games. None of the companies admitted liability.

That raises some pretty serious First Amendment issues that would have been nice to have seen explored a bit more.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.