Jon Karl – Ultimate Bet Founder

While the online gambling industry is still relatively new, a number of names
have emerged to take up positions as some of the leading newsmakers and
trendsetters. While Jon (pronounced “Yawn”) Karl has certainly been included in
his fair share of news stories involving Internet gambling, he’s also far from a
household name.

In fact, a quick search of Google shows that most stories involving Mr. Karl
tend to be on the negative side of the news spectrum, as this Internet
entrepreneur was involved in a major scandal that rocked the gaming industry in
2008 and beyond. Beyond that, most mentions of his name tend to come from a
series of press releases and social media bios.

Jon Martin Karl is obviously a man who prefers to stay out of the limelight
as much as possible. Despite this fact, I’ve made an effort to track down as
much information as possible to present a biography of sorts on this
controversial figure. While it may not explain his motivations over the years,
it should at least present a picture of his role in the gaming industry and
where he may be headed in the future.

The Early Years

While some people share every aspect of their lives online, there are still
those who almost seem like phantoms when it comes to the Internet. Jon Karl is
one such person, at least as far as his early life goes.

There’s no indication of when Jon Karl was born. For that matter, his
childhood years are also a subject of mystery. The only logical conclusion is
this: Jon Karl was born, he grew to adulthood, and nothing particularly exciting
happened along the way. I’d at least like to know why his first name has such an
odd pronunciation, but even that remains unknown.

The first real record of Jon Karl comes with his graduation from Oregon State
University. While the exact year is unknown, his degree in Business Marketing
has been mentioned in a number of online sources. Since future business partner
and UltimateBet co-founder Greg Pierson claims the same alma mater, it’s also
not unreasonable to assume the pair might have met in college.

Following graduation, Karl began looking for a source of steady income.
Employment soon came courtesy of Hewlett Packard, where he took a job as a
consultant and marketing executive.

During this time, he also developed a love for massive multiplayer online
role-playing games. While this was nothing more than a hobby at first, it would
soon tie into the most important decision of his career.

The Creation of ieLogic

Karl was approached by his pal Greg Pierson, the latter being something of a
budding entrepreneur. He had an idea for a software company that would work with
the online role-playing industry. Both men were fans of these games, so it
seemed like a logical move. In 1999, ieLogic was born.

The Birth of Ultimate Bet

As they began to establish a reputation and add some money to their bank
accounts, both Karl and Pierson began looking for additional business
opportunities. The pair came to realize that the online gambling market had vast
potential, with the world of Internet poker being especially lucrative.

The duo began work in earnest to make their dream a reality. While Karl
helped develop some of the software that would be used for Ultimate Bet, his
main responsibility was to develop a series of marketing strategies to allow
their new endeavor to gain a foothold in the rapidly expanding world of online
gaming.

Karl had the idea to bring professional players aboard, and Russ Hamilton,
one of the champions from the 1994 World Series of Poker, was contacted about
his interest. Hamilton was more that interested; he also agreed to contribute
money to the effort and become a primary figure in the company’s development.

The site officially launched in 2001, and it immediately made a splash by
offering a user-friendly interface and top notch graphics. Karl wanted to
involve more poker players, since these individuals could then wear Ultimate Bet
apparel during televised tournaments and provide free advertising. Hamilton was
a major help in this area, bringing aboard WSOP champions such as Phil Hellmuth
and Annie Duke to act as spokespersons for the fledgling website.

Karl also championed the idea of the site making a number of skins available
to players. Each skin basically offered a different appearance of the same site,
allowing clients to customize their experience while they played. This proved to
be a popular idea, with skins such as “Devil Fish Poker” and “Green Tie Poker”
drawing in thousands of eager online gamblers.

Unfortunately, the trio of Karl, Pierson, and Hamilton also had one terrible
idea to go along with all the good ones. When the software was being developed,
a “God Mode” was created and installed. This allowed someone using the feature
to see all the cards of their opposition, giving them a great advantage during
gameplay. Although the original idea of the mode was to help catch cheaters, it
would eventually be used in a manner than scandalized Ultimate Bet and led to
its demise.

The Golden Years of UB

Ultimate Bet became celebrated for its anti-fraud and security software. When
combined with their celebrity endorsers, massive poker tournaments, and quality
graphics, it soon became one of the most well-known destinations for online card
players. Each year, millions of dollars in revenue were generated, and UB rose
to become one of the top-four poker rooms on the planet.

The company split into two entities in 2004. The non-gambling part of the
business was maintained by Pierson, and it was named iovation. The poker room,
meanwhile, was purchased by a Canadian outfit by the name of Excapsa.

Iovation continued to provide security for the site, and they also worked
with other leading gaming outfits such as AbsolutePoker. Excapsa, meanwhile,
grew large enough to become a publically traded company, although this ended
when it became obvious that the United States government was on the verge of
passing anti-gaming legislation (aka the “Unlawful Internet Gambling Enforcement
Act”).

Just prior to the passage of the UIGEA, Excapsa was sold to a private Maltese
company known as Blast Off Limited. The sale was for $130 million, although some
questioned whether or not the transaction was entirely legal. There were enough
questions, in fact, that Ultimate Bet eventually merged with Absolute Poker and
was sold to Tokwiro Enterprises. At this point, it became known as the Cereus
Poker Network.

The Great Ultimate Bet Controversy

Following a major cheating scandal at Absolute Poker, rumors and accusations
began to circulate about a similar situation at Ultimate Bet. Most of this
centered on a specific player account that enjoyed unusual success, and the
accusations soon became something that could no longer be ignored.

UB was slow to comment, which did nothing for the level of trust between the
company and their customers. A statement was finally issued, admitting to a
pending investigation and the belief that numerous accounts had been caught
cheating during a period between March 2006 and December 2007.

Members of the Internet began to conduct their own investigation, and it soon
became clear that Ultimate Bet management was somehow tied to the accounts in
questions. This would eventually result in Russ Hamilton being implicated as the
main culprit, as he was accused of using the “God Mode” installed in the
software to beat opponent after opponent to the tune of millions of dollars.

Hamilton eventually took the fall, although many also pointed their fingers
at Pierson and Karl for their role in designing the security software that was
supposed to keep players safe. Ultimate Bet avoided any sort of suspension, but
they were fined $1.5 million and ordered to pay back all those who’d been
cheated. Multiple lawsuits were also issued during this time, and the company
suffered permanent damage to their reputation.

2010 saw the Cereus Network sold to Blanca Gaming. Black Friday occurred the
following year, which resulted in the U.S. government seizing the domain names
of numerous gambling sites. That same year, Blanca Gaming filed for bankruptcy,
which signaled the end for the once-great gaming site known as Ultimate Bet.

In 2013, Hamilton assistant Travis Makar released audio tapes of a meeting
between Greg Pierson, Russ Hamilton, and attorneys Sanford Millar and Daniel
Friedberg. In this meeting, the men were heard discussing ways to minimize their
financial liability, which did nothing to help their reputation. The audio of
Hamilton was especially damning, as he was heard to say,

“I did take this money
and I am not trying to make it right, so let’s get that out of the way.”

It should be noted that Jon Karl was silent throughout this scandal. While
his name certainly came up on occasion, there was never any evidence that he had
knowledge of any cheating going on at Ultimate Bet.

A Little Good News

In 2012, Jon Karl made some positive headlines for a change, as iovation
assisted Kirkland, Washington police in busting an online theft ring that had
victimized more than 15 people to the tune of tens of thousands of dollars in
fraudulent charges. This feat was accomplished with the help of the company’s
Reputation Manager 360 prevention software.

The case first started in 2011, when Detective Adam Haas of the Kirkland
Police Department Investigation Division received a report of $5,000 in
fraudulent charges being made on a credit card at a series of department and
electronics stores. The credit issuer was contacted, and they used the
ReputationManager360 software to follow a trail to a specific computer.

The iovation software then managed to tie the same computer to another victim
of fraud. Soon, more than a dozen additional victims were also discovered.
Thanks to a combination of offline police work and surveillance videos,
authorities soon pinpointed a primary suspect. Working out of various hotel
rooms, this individual was stealing residential mail and using it to apply for
online credit cards and create fake ID cards.

According to Haas,

“This is a unique case, because it wasn’t exclusively an
online or offline crime. Offline clues helped, but the online digital bread
crumbs sniffed out by iovation were critical in tying everything together,
leading to a much bigger crime ring than we originally suspected.”

Initially viewed as a state case with a lone victim, the investigation
eventually resulted in a nine-count federal indictment. Thanks to charges such
as aggravated identity theft and bank fraud, the primary suspect was arrested
with the chilling prospect of several years in prison.

Thanks to this positive publicity, the normally media shy Jon Karl issued a
statement touting his company’s software. According to him,

“ReputationManager360 was developed specifically to bust fraud rings like this.
This private-public partnership is an example of how sharing data through
iovation helps limit losses for both businesses and consumers.”

Later that year, Karl, Detective Haas, and identity theft expert Robert
Siciliano delivered a presentation on the case at the Merchant Risk Council’s
10th Annual e-Commerce Payments & Risk Conference in Las Vegas. While this
seminar didn’t shake the foundations of the gambling world, it did provide Karl
and iovation with some welcome positive press.

Post UB Endeavors

While the Ultimate Bet scandal tarnished the reputations of all involved, Jon
Karl has continued to work in the gaming and tech industry. In this section,
let’s look at an overview at what he’s been up to in the time since the UB
incident rocked the virtual gambling world.

• Continues to work at
  iovation. In addition to being the co-founder of the company, he serves as the
  Vice President of Corporate Development. He also sits on the company’s board
  alongside Greg Pierson, Molly O’Hearn, E. Nicholaus Efstratis, and Harry
  DiSimone.
• Frequently gives speeches
  at industry trade shows on topics ranging from emerging anti-fraud technologies
  to online fraud management.
• Serves on the Board of
  Directors for the Merchant Risk Council.
• Serves on the Board of
  Directors for SplashCast, a Portland-based media syndication start-up.
• Has invested in a number of
  tech start-ups, including RNA Networks, Environmentally Neutral Design, Values
  of N, BugleMe, Platial, and Expert Insight.
• Karl and iovation broke
  into the Las Vegas market in 2016 when the company received a Class 2 gaming
  license from the Nevada Gaming Commission. The company had been unsuccessful in
  their bid to secure a license in 2015, but their tireless efforts and an
  expenditure of $500,000 finally paid off.

Conclusion

While Jon Karl isn’t viewed as the biggest villain ever to emerge from the
world of online gambling, his name is often mentioned alongside some of the
industry’s more notorious figures. Despite these scandals, the Portland resident
and entrepreneur continues to go about his business, accumulate money, and try
to make people forget about his past. Given the successes mentioned in the
previous section, I’d say that he’s done an admirable job.