Digital Media

The Electronic Frontier Foundation, an advocacy group for Internet users, is expected to argue in court on Tuesday that it's unconstitutional to prevent Americans from suing the telecom companies that allegedly helped the federal government unlawfully spy on them.

The FISA Amendments Act (FAA) gives telecommunications companies retroactive immunity for opening their networks to the National Security Agency. The telecoms can walk away from lawsuits as long as the government claims the request was "lawful" and authorized by the president. Before the law was passed, EFF had brought a lawsuit against AT&T that is before the 9th U.S. Circuit Court of Appeals in San Francisco.

"The flawed (statute) improperly attempts to take away Americans' claims arising out of the First and Fourth Amendments," EFF wrote on its Web site. "(The law) violates the federal government's separation of powers as established in the Constitution, and robs innocent telecom customers of their rights without due process of law."

Opponents have said that the law is an endorsement by both major political parties of illegal surveillance conducted by the Bush administration. Among the U.S. senators who supported the law was President-elect Barack Obama.

Under the law, no lawsuit may proceed against any "electronic communication service provider" if either one of two conditions is met. The first is that the company provided assistance "in connection with an intelligence activity" authorized by the president between September 11, 2001 and January 17, 2007, when the wiretap program was altered to include more judicial oversight.

The second condition involves a company that received a "written request" from the U.S. Justice Department saying the activity was lawful and authorized by the president.

Maybe all our refined, enlightened interests are lost in the long tail, because Britney Spears once again was the most popular search subject in 2008 on Yahoo.

For Yahoo, Spears wasn't the only pop-culture icon in Yahoo's top 10 searches. Also on the list were Miley Cyrus at No. 4, Jessica Alba at No. 6, Lindsay Lohan at No. 7, and Angelina Jolie at No. 9.

Apparently a lot of people are curious about World Wrestling Entertainment, because WWE was No. 2. The online game RuneScape was No. 5, anime series Naruto was No. 7, and American Idol finished in 10th place on Yahoo's list.

Yahoo also broke down searches for various other subjects. For economic searches, the top 10 list started with IRS stimulus checks, then followed with oil prices, gold prices, gas prices, Dow Jones, Sallie Mae, stock market, AIG, foreclosures, and debt consolidation. The list reveals that people use general-purpose searches for everything ranging from how-to advice to the latest news.

In the people of politics, President-elect Barack Obama led the list. Next came Sarah Palin, John McCain, Hillary Clinton, George Bush, Ron Paul, John Edwards, Mike Huckabee, Arnold Schwarzenegger, and Mitt Romney.

AOL also shared its top search terms for 2008, though it didn't break out overall terms.

Ask.com also spotlighted popular 2008 searches, and has a few variations on the standard search categories. Its top questions are as follows:

1. How do I get pregnant?
2. How do I lose weight?
3. How do I write a resume?
4. How much is minimum wage?
5. How much is my car worth?
6. How do I change my name?
7. What is the meaning of life?
8. How do I register to vote?
9. Why is the sky blue?
10. How do I download videos?

And since Ask.com bought Dictionary.com earlier this year, it's releasing top search terms for that site. People's vocabulary expansion efforts concentrated on these terms: maverick, socialism, economy, recession, radical, cyclone, solace, realtor, environment, and potholes.

Apparently Google, which has shared search trends on its annual Zeitgeist list since 2001, didn't get the memo to release its results Monday, but expect it to cough up some new results soon--and, I hope, some of the accompanying graphs.

Netflix suffered a nearly hour long site outage on Monday, the company confirmed.

The site went down at about 3:40 p.m. PT and Netflix posted this note to the site's front door at about 4 p.m.:

"We're sorry, the Netflix website is temporarily unavailable. Our shipping centers are continuing to send and receive DVDs , so your movies will be processed as usual. And you can still instantly watch movies via your Netflix ready device."

Netflix has suffered several costly outages in the past year. A hardware glitch prevented the company from shipping DVDs to customers for several days in August. A malfunction at the company in March also delayed shipments.

In what is likely an unrelated event, some users of the Netflix Player by Roku have complained for two weeks of receiving dramatically inferior video quality in the movies Netflix streams via the Roku box. Roku executives told me they suspect the source of the problem is Netflix's content distribution network (CDN). Netflix's Swasey said the company is investigating.

Roku's November 13 note to customers asking them for help determining the cause of a dramatic decline in video quality.

(Credit: Roku)

The Netflix Player by Roku, which enables owners to watch streaming Web video on their TV sets, has received plenty of applause from pundits and owners since debuting last May. But the box now faces its first major challenge.

Customers from around the country have been "experiencing inexplicable loss of video-streaming quality," for at least three weeks according to Roku's engineers, who have posted comments at the company's Web forums. Device owners have posted complaints to the same forums about receiving less than half of the video quality they've had in the past. One user told CNET that the video stream is now "unwatchable."

Tim Twerdahl, vice president of consumer products at Roku, told CNET News on Monday that the company is still unsure about what exactly triggered the problem, but he said indications are it originated at Netflix. Twerdahl added that the problem likely affects Netflix's other boxes as well as Roku's player.

"All we know is Roku didn't make any changes," Twerdahl said. "This is not a box problem. We know from some reports that this seems to be correlated with a change in Netflix's content distribution network (CDN), and Netflix is trying to figure out what the issue is."

Analyst firm eMarketer has reduced its estimate for online ad spending in 2008 to $23.6 billion from its August estimate of $24.9 billion, with this year's online ad growth rate of 11.3 percent dropping to 8.9 percent in 2009.

Looking on the bright side, eMarketer said in a statement, "It is important to note that the lowered estimate still represents an increase of 11.3 percent over 2007 spending." And eMarketer expects spending to reach $25.7 billion in 2009, $28.5 billion in 2010, and ultimately $42 billion in 2013.

But the rough news still jumps out. Hardest hit is spending on display ads, the graphical variety that typically are used to promote brands, for which the growth rate estimate was cut from 16.9 percent to 3.9 percent. "Display is suffering because many of the vertical industries--such as auto and retail--that are key players for the format are slashing their ad budgets," eMarketer said.

The other major variety, textual ads placed next to search results, is expected to grow at 21.4 percent in 2008, its lowest level so far. Next year the search-ad growth rate should be at 14.9 percent, the company predicted, dropping to 10.4 percent in 2013.

The search-ad growth rate is still larger than the overall market, though.

Television as we know is about to change drastically in the U.S. in February when broadcasters switch solely to transmitting digital signals. And even though there are many benefits to this transition, there are also a few downsides.

Here's the lowdown on what you can expect from the new digital TV service, the good, the bad, and the ugly.

First, let's start with the good. On February 17, broadcasters throughout the country will flip a switch turning off their old analog TV transmitters, and they will begin transmitting their TV signals only in digital format. Over 90 percent of TV stations today already broadcast both analog and digital stations, which means that consumers don't have to wait until February to test and tweak their TVs to get digital TV.

For the most part, the switch to digital TV will benefit all Americans, regardless of whether they watch over-the-air TV.

Digital signals use wireless spectrum much more efficiently than analog signals, which is why the government mandated the switch in the first place. Congress set the February 17, 2009, deadline so that the government could free up wasted spectrum so that it could be used to build more robust emergency wireless networks, as well as provide the private sector with more spectrum that could be used to develop new wireless broadband services. The government has already auctioned off most of the unused spectrum. And after February, service providers who won licenses in those auctions will be able to get to work building their next-generation wireless networks.

For over-the-air TV viewers, the switch to digital also has many benefits, including sharper pictures, better sound quality, and more content. Using analog signals, broadcasters can only transmit one channel of content at a time. But with digital signals, broadcasters can transmit multiple channels at once. In fact, many broadcasters have already launched three or four separate digital channels, each carrying programming of interest to diverse communities. And because there is more bandwidth available, broadcasters are also transmitting some of these channels in high-definition.

In some cases if consumers have a high-definition TV, they'll even be able to get some HD channels for free. For example, all the major networks--ABC, CBS, Fox, and NBC--transmit some shows over the air in HD. This means that many consumers will be able to access HD content without subscribing to a pricey cable package.

"Digital broadcast will vastly improve free TV viewing," said Graham Jones, the director of communications engineering for the science and technology department of the National Association of Broadcasters. "All the networks are broadcasting in HD, and viewers can receive it for nothing. They don't have to pay a cent. And with modern receivers and antennas, reception is very solid."

Better for many, not all
But with the good, also comes some bad. Unfortunately, not everyone in every corner of the U.S. will experience all the great benefits of digital TV. Because analog signals transmit over longer distances than digital signals, some over-the-air viewers living in rural areas may find that they do not get all the same channels they were able to when they received analog TV.

This scenario is mostly true for people who already receive weak analog TV signals. For example, if someone generally gets a snowy or fuzzy picture using an antenna to receive an analog TV signal, there's a good chance that the viewer won't be able to receive the digital signal at all.

"Some people may have been able to put up with a poor analog signal, because the receiver still received the transmission, albeit in a fuzzy form," Jones said. "But if a digital signal is weak, the receiver can't decode it, and the transmission stops, which means people simply get a blank screen."

This is exactly what happened to some viewers in Wilmington, N.C., when the Federal Communications Commission and local broadcasters tested turning off their analog signals earlier this year.

Broadcasters have tried to compensate for this issue by boosting transmission power, but Jones said because digital and analog signals are broadcast at different frequencies it may be difficult to replicate broadcasts exactly, which means some people may be left without some channels they could have received with analog transmissions.

The issues won't be limited to rural consumers. Some city dwellers may also have trouble receiving certain channels. Even though people living in a city such as New York or Chicago will likely be able to receive strong digital broadcast signals, they could fall victim to other issues that preclude them from receiving certain channels further up the dial. The reason is simple. Channels broadcast at higher frequencies don't go around buildings or through walls as easily, and this could disrupt transmission.

Consumers may have to do a little research
But consumers shouldn't throw their hands up in defeat too quickly. With a little investigation and a few extra dollars spent on new equipment, even viewers in some challenging geographies could still receive a good quality digital TV experience.

So what's a consumer to do? First, consumers who rely on over-the-air broadcasts need to determine whether they want to keep their old analog TVs or invest in new digital or high-definition TVs. If a consumer keeps his old analog TV, the government is offering $40 coupons to help defray the cost of buying a digital converter box, which attaches to the TV and costs about $60. These boxes essentially turn an old TV into one that can view digital signals. If he is already getting a good analog signal, he'll likely be able to keep the same antenna for the digital service. But if he was already getting a poor signal, Jones recommends upgrading to a better antenna.

But Jones also emphasizes that to get the best digital TV experience consumers should buy a new digital or high-definition TV. As of March 1, 2007, all television reception devices, which includes TVs, VCRs, and DVRs, sold in the U.S. have been required by law to contain a digital tuner. And with smaller HDTVs selling for as little as $400 or $500, high definition has also become an affordable feature.

But even with a new digital TV, Jones said that consumers will still need an antenna to receive the over-the-air signals. For help in determining which kind of outdoor antenna you might need, check out AntennaWeb.org. This is a Web site set up by NAB and the Consumer Electronics Association that allows consumers to enter their address and provide details about their immediate surroundings, such as how many trees or tall buildings are nearby, to help determine which type of antenna would be best.

Jones also recommends that before consumers buy a new antenna they try their old one first. Several retailers, including Best Buy, are offering workshops around the country to provide information to consumers. There is also information on the Web site DTVanswers.com.

And Jones suggests that consumers call their local broadcast stations directly to figure out in which direction they should point their antenna for the best reception. Local broadcasters will also be able to provide information about whether consumers are even within range to receive the new digital signal.

"There are some 1,700 broadcasters in the U.S.," Jones said. "The local stations will know better than we will how to help viewers in their specific region. So if people have questions, they should call their local broadcasters. And these broadcasters should be available and able to help them."

Several local stations have already set up hotlines for consumers to call. And broadcasters around the country have been "soft" testing the transition. During these tests, broadcasters turn off their analog signals. If consumers are still trying to view the channel using an analog TV, a screen will pop up where the program had been informing viewers of the deadline and how to get ready for the digital switch.

A bill passed in the U.S. Senate last week that would require some broadcasters to offer this information screen to viewers for 30 days after the February 17 deadline. The measure must still pass the House of Representatives before it becomes law. But even if it does become law, Jones said that not every broadcaster would be able to continue broadcasting the message over its analog channel, because as of that date, new spectrum holders will have access to those airwaves. Instead, he has been encouraging viewers not to wait until the deadline to test their digital TV readiness.

"Broadcasters are already transmitting digital signals today," he said. "So there's no reason for people to wait until February to make their equipment tweaks and start benefiting from digital."

As a cable customer, I thought I was immune to any problems related to the upcoming digital-TV transition. But I recently discovered that cable's own migration to digital-TV transmission also has its share of headaches.

Imagine my surprise last month when I turned on the TV in my bedroom to watch a rerun of Sex and the City to discover that TBS, which had been part of my basic cable package, was no longer viewable. I clicked a few more channels and discovered that TNT was also missing. In fact, all that I am now left with on this particular TV are the basic national networks, ABC, CBS, NBC, Fox News, along with the public access station C-SPAN and WNET, my local public television station.

I was annoyed to say the least. I live in New York City and subscribe to Time Warner Cable. I pay about $66 a month for my basic and expanded digital-cable service with a DVR-enabled set-top box in my living room, which I love. But in my bedroom, I was not willing to pay the extra $7 to $10 per month for a converter box. So I simply plug the cable into my TV, and I had been able to get at least a dozen or so channels of basic cable. But now it looks like my choices for even the very basic TV channels are shrinking.

When I first called Time Warner to inquire about what had happened, I was told by a misinformed customer service agent that my shrinking cable lineup was a result of the government mandated switch to digital TV.

This information was, of course, incorrect. The transition to digital for over-the-air TV broadcasters was mandated by Congress and has a deadline of February 17, 2009, when all broadcasters will transmit signals only in digital format.

But this broadcast transition to digital has nothing to do with the cable industry's switch to digital. In fact, for cable customers, the over-the-air switch to digital should have no effect on their service. Customers who subscribe to cable TV service won't have to get a digital converter box nor will they have to do anything else to their TVs in anticipation of the February 17 deadline.

That said, cable is also migrating to digital transmission. As a result, I discovered that some cable operators, such as Time Warner Cable, are moving channels from their basic analog tier of service to a more expensive digital tier that requires renting a digital set-top box.

While the Time Warner Cable spokesman I spoke to for this article, apologized for the misinformation I received from the customer representative, he defended the company's practice of moving some analog channels to digital.

"Like any business, we change our offering from time to time," said Alex Dudley, a spokesman for Time Warner Cable. "Our customers won't have to do a thing when the over-the-air digital transition occurs in 2009. But we are also migrating some of our channels to a higher digital tier to make room for new services. And if customers want to receive those channels, they'll have to rent a box."

Suspicious timing?
Some consumer advocates say that the timing of these channel moves is suspicious considering it coincides with the broadcasters' transition to digital. A survey conducted in October by Consumer Reports found that about 19 percent of cable customers said they noticed in recent months channels in their basic cable package disappearing and moving to a higher tier.

Consumers Union, the advocacy arm of Consumer Reports, argues that cable's timing for moving channels off basic service to a higher tier service was done deliberately to capitalize on the confusion around the over-the-air TV broadcast digital transition. Despite the fact that there is nothing legally prohibiting the cable industry from moving channels into different tiers, the chairman of the Federal Communications Commission has opened an inquiry into this practice.

"The timing of these moves seems deceptive," said Joel Kelsey, a policy analyst at Consumers Union. "Many cable companies are doing this when consumer confusion is at its peak. Consumers essentially feel painted into a corner and are forced to choose between paying the same amount for less service or paying more to get the same service back."

But cable operators argue the timing is more coincidence than an underhanded attempt to squeeze more cash out of consumers.

"For us, this is purely a bandwidth issue," Time Warner Cable's Dudley said. "We need to move certain channels from our basic analog tier to digital to accommodate more HD channels. It has nothing to do with getting folks to upgrade their service, but it has everything to do with us remaining competitive by delivering as many HD channels as we can."

Indeed, Time Warner Cable, which is facing stiff competition from Verizon Communications' new Fios TV service, has added about 40 to 50 HD channels in the New York City market alone. The company hopes to offer about 100 HD channels by the end of the year in New York.

Like TV broadcasters and cell phone operators, which have also switched to digital transmission, cable is migrating to digital because it's much more efficient than transmitting using analog technology. This means that cable operators can free up more bandwidth to offer services like telephony, video on demand, and more high-definition TV programming.

Cable's transition to digital has been happening for over a decade. Some cable operators are much further along in their migration to digital than others. For example, Cablevision, which serves the New York metropolitan area, has converted about 90 percent of its customers to digital service. Nationwide about 60 percent of cable customers have already switched to digital, according to the National Cable and Telecommunications Association, the cable industry's trade organization.

So what is a consumer, such as myself, to do? Well, it looks like I have a couple of choices. I can pony up the extra $7 a month for another converter box and remote. Or I can get a digital converter box and an antenna to attach to my old TV and try to receive digital TV signals over the air. Digital TV over theair is free. And because more capacity is available via digital than was available with analog, many broadcasters have added additional channels of TV programming, which could mean that I would get even more channels than before.

While I may be tempted to take the over-the-air TV option, Time Warner's Dudley said the company isn't worried about massive subscriber defections to over-the-air TV.

"Cable offers a convenient way to ensure signal quality on your TV," he said. "We actually think that the customers we may lose to over-the-air TV will be offset by the new customers we sign up who don't want to deal with converter boxes and antennas."

In the wild, wild west, when a poker player was caught cheating it was a capital offense, with the punishment quickly dispensed right across the card table. But today if you're caught cheating in the popular and lucrative world of Internet poker, you may get away scot-free.

At least that seems to be what is happening in the biggest scandal in the history of online gambling. A small group of people managed to cheat players out of more than $20 million.

And it would have gone undetected if it hadn't been for the players themselves, who used the Internet to root out the corruption. As a joint investigation by 60 Minutes and The Washington Post reveals, it raises new questions about the integrity and security of the shadowy and highly profitable industry that operates outside U.S. law.

Editors' note: Videos of the 60 Minutes segment are embedded below. The first is the full, 12 min., 53 sec. video. The five that follow are shorter excerpts. The text in this post is a transcript of the 60 Minutes segment. (For The Washington Post's full report, see "Inside Bet: Cracking the two biggest cheating scandals in the history of online poker.")

* * * * * * * *

If you had to pick the moment that the poker boom began, it was probably the day an unknown accountant named Chris Moneymaker won $2.5 million at the 2003 World Series of Poker.

Suddenly every amateur with a hat, sunglasses and a stack of chips saw themselves as the next big money maker. Nearly 7,000 competed in this year's tournament for $180 million in prize money. But the fever has spread far beyond Las Vegas.

It is the richest sporting competition in the world. And yet all this pales in comparison to the half million people who are playing on the Internet right now in the unregulated world of online poker.

As we learned in a tutorial, all you have to do to play is log on to the Web, click your way to an online gambling site, open an account with your credit card, choose your game and pull up a seat at a virtual table.

"These people could be playing from anywhere in the world. They could be here in the United States. They could be, you know, in India. They could be in South Africa," Australian computer security expert Michael Josem tells 60 Minutes correspondent Steve Kroft.

We should tell you that this $18 billion industry is illegal in the U.S., but the ban is almost impossible to enforce since the Internet sites and the computers that randomly deal the cards and keep track of the bets are located offshore, beyond the jurisdiction of U.S. law enforcement.

And unlike land-based casinos, there is almost no official regulation, enforcement or supervision. But it hasn't stopped thousands of mostly young men from making this their livelihood. Todd Witteles, a former computer scientist-turned-poker pro, says you no longer have to go to Vegas to find a high stakes game.

"You could do it from your own living room," he says. "You don't have to get dressed. You don't have to anything. It's right there on your computer."

Witteles says online poker is much different - faster, more aggressive and less personal.

"You're not lookin' at somebody sittin' across the table. You're just playing the cards that tumble out of the computer," Kroft remarks.

"Not only are you not looking at your opponents, you're not looking at the cards being dealt, you're not looking at who's dealing them to you. So, you don't know if the whole thing is legitimate, even if all the players sitting with you are just as legitimate as you are. Maybe the whole game isn't," Witteles says.

And as Witteles found out, it wasn't, at least on a popular Internet site called "Absolute Poker." His suspicions were first aroused in a high stakes game of Texas Hold 'Em, against what he thought was an incompetent, and lucky, amateur using the screen name "Grey Cat."

"This Grey Cat person was new. And at first, he seemed like a live one. He seemed terrible," Witteles remembers. "He seemed to play crazy. It seemed like he was giving his money away. Except the only thing was, he wasn't losing. He was playing in a style that was sure to lose, but he was killing the game day after day."

While Witteles was losing $15,000 to the apparent novice, other high stakes players began to notice improbable and endless winning streaks on Absolute Poker's sister site, "Ultimate Bet."

David Paredes, a Harvard grad who has made enough money playing poker to pay off his law school loan and live in an expensive New York apartment, got fleeced by a player called "Nio Nio."

Asked how much he lost, Paredes tells Kroft, "I'm probably down somewhere in the range of $70,000 to that particular player."

Paredes says there were other players who lost higher sums. "In the range of $250,000, $90,000, $70,000, $210,000."

Tracking old hands via software
Serge Ravitch, another lawyer-turned-poker pro, began using a software program called "Poker Tracker" to review thousands of old hands.

"What I saw did not make any sense," he remembers. "This account was simply winning too much money for the type of game that he was playing. And he was doing it by never having the worst hand. When the other person was bluffing, he would always go all in. When the other person had some kind of made hand, he would always fold."

Ravitch says it was like he knew what everybody's cards were.

"If you can see everybody's cards in poker, you could be the worst poker player in the world, up against the best poker player in the world, and you're gonna beat him just about every time," Witteles says.

Soon, the Internet poker forums, chat rooms and blogs were atwitter with fresh reports about suspect players. And when Absolute Poker and Ultimate Bet failed to respond to complaints, the online poker community undertook its own investigation.

"We knew for sure there was cheating going on. We just didn't know who was responsible yet," Witteles says.

The most likely explanation seemed to be that someone had gotten access to an administrative or security account at Absolute Poker and Ultimate Bet that would have allowed them to see all of the cards in the game as they were being played.

"Somebody with access to a server, a computer server that would give that information to them in real time?" Kroft asks.

"Yes," Ravitch says.

"So either a really good hacker or somebody on the inside?" Kroft asks.

"Exactly," he replies.

Late last year, the poker sleuths got lucky. When one of the players requested the hand histories of a suspected cheater known as "Potripper," someone at Absolute Poker inadvertently sent them an Excel spreadsheet with 65,000 lines of data that include all of the cards that had been played in thousands of games against hundreds of Potripper's opponents.

It allowed Michael Josem to recreate some of the hands, as the cheater would have seen them, in and turn them into a video that he posted online, along with a statistical analysis of the cheater's win rate.

"We have here a whole lot of people in the middle, which is pretty normal, they lose a little, they win a bit. A few people got lucky for a bit, a few people were losing a lot of money. Right up here, in the very top right hand corner, we have the cheater," he explains. "We did the mathematical analysis to find that they were winning at about 15 standard deviations above the mean, which is approximately equivalent to winning a one-in-a-million jackpot six consecutive times."

"Now, this sort of stuff just doesn't happen in the real world," he adds.

But more importantly, the Excel spreadsheet also listed the user account and the IP address of the suspected cheater, which the sleuths traced to the computer modem of an Absolute Poker employee.

The company, which is headquartered in a shopping mall in Costa Rica, was finally forced to acknowledge that a former employee had cracked their software code and cheated online players by looking at their cards.

But what really made the victims angry was that Absolute Poker cut a deal with the cheater to protect his identity, in exchange for a full confession of how he did it.

"Here, these people stole millions of dollars from their customers, from their best customers, from the high-limit players of the site, and in the official report released about what happened, not only did nobody get into any kind of legal trouble, their names weren't even publicized," Witteles says.

The Canadian connection
But in the murky world of Internet poker there was precious little the players could do about it. The companies were located in Costa Rica, and they couldn't really complain to U.S. authorities because online gambling is illegal. The only pretense of supervision--and the players only hope--lay with a tiny nation thousands of miles to the north that hardly anyone had ever heard of.

The virtual poker games are actually run on computers servers from a Canadian Indian reservation outside of Montreal. It's all licensed by the sovereign tribe of the Mohawk nation, which has no experience in casino gambling and doesn't have to answer to Canadian authorities.

The grand chief is Mike Delisle.

Chief Delisle says Internet gambling is illegal in Canada, but tells Kroft, "We're not Canadians. We're a member of the Haudenosaunee Five Nation Confederacy. And we're Mohawk Kahnawake people. We're not Canadian."

And that legal distinction has allowed the Kahnawakes to rake in millions of dollars a year by licensing Internet gaming sites and housing their computer servers on the reservation. They now register and service more than 60 percent of the world's Internet gaming activity from a highly protected and nondescript building that used to be a mattress factory. 60 Minutes drove by the former factory with The Washington Post's Gil Gaul.

"This is nondescript," Gaul remarks.

"This takes nondescript to an entirely different level," Kroft comments.

The operation is overseen by the Kahnawake Gaming Commission, whose three commissioners meet in secret. The commission is independent of tribal leaders, including Chief Delisle, and its investigation of Absolute Poker and Ultimate Bet have been neither transparent nor particularly aggressive.

A lot of the players who were cheated suspect it's because the owner of the discredited sites is Joe Norton, a former grand chief of the Kahnawakes, who helped establish the gaming commission that cleared him of any wrongdoing in the scandal.

The commission fined the two sites a total of $2 million, ordered them to repay the losses to players who were cheated, but Absolute Poker and Ultimate Bet are still in business.

"Here you had a gaming commission. It was originally set up by Joe Norton. And his two companies come before the board and they get a slap on the wrist," Kroft tells Delisle.

"Well, I don't think it's a slap on the wrist," Delisle replies. "We are comfortable in saying that through the gaming commission, they have done the investigation, saying that he didn't have a part in the cheating scandal."

Asked why the commission didn't suspend his license, Delisle says, "Well, they were afraid that if that was happened and the rug was pulled out from under them, so to speak, that the players wouldn't be paid."

Neither the gaming commission nor Joe Norton would talk to us, but in a statement the companies said they were victimized by insiders and former employees and accepted blame for overlooking the security problems with its software.

The only clarity in the investigation was provided by Frank Catania, a former director of New Jersey's Gaming Enforcement Division, who was hired by the tribe to look into the cheating that the players themselves helped expose.

"We owe it to the players themselves for finding this out," he says.

Catania found that the scam at Ultimate Bet went on for four years, and says the mastermind appears to have been a former giant in the world of poker.

No charges filed
Asked if he knows who did the cheating, Catania says, "Well, the one name has already been released by the Kahnawake Gaming Commission. That's a fellow by the name of Russ Hamilton."

Hamilton is a former champion at the World Series of Poker.

In 1994, Russ Hamilton won $1 million and his weight in silver for winning the main event at the World Series of Poker.

According to the gaming commission, Hamilton and five unnamed conspirators used multiple screen names and accounts to cheat online players out of more than $20 million. And so far they seem to be getting away with it. Because of jurisdictional issues, no criminal charges have been filed, and no one even seems to be conducting a criminal investigation.

"We're willing to work in collaboration with anyone who wants to bring these people to justice," Delisle says.

"In this case, you have somebody who you know was cheating. It's like the person's gotten away with it," Kroft says.

"I believe that anyone else, named or not, will be brought to justice," Delisle says. "If they can be found. That's really the defining factor."

But we didn't have that much trouble locating Hamilton. He seems to be holed up at his home in Las Vegas behind the security gates of an exclusive golfing community.

Last week, we called his house and were told by a woman that answered the phone that he would be back in a little while. We left a message, but he hasn't returned the call.

"If you hadn't investigated this on your own, you think it'd still be going on?" Kroft asks Witteles.

"I'm sure it would be going on," Witteles says. "The people who did this were very greedy and very blatant. But the scary thing is there may be other accounts out there like this, maybe even on other sites that are not being done with the same sort of recklessness. And maybe this has been going on, on more than just Absolute Poker and Ultimate Bet. Maybe it's going on in several other places. And maybe it's even still going on in these sites."

"I'm sure there're people out there right now figuring out, 'Here's a way we can do it again,'" Catania says.

Produced by Ira Rosen.

Facebook Connect--the service launched last spring that lets members log on to other Web sites using their Facebook profile--appears to be entering a new phase.

The New York Times, in a big-picture story Sunday about the social network's plans to extend its reach across the Web, notes that the Facebook Connect service is gearing up for expansion:

In the next few weeks, a number of prominent Web sites will weave this service into their pages, including those of the Discovery Channel and The San Francisco Chronicle, the social news site Digg, the genealogy network Geni, and the online video hub Hulu.

TechCrunch's Michael Arrington chimed in with a related post about Facebook Connect and other such services, noting that Facebook had slated Sunday as the start of "a big press push" for Facebook Connect.

Facebook Connect was launched in May as a way for members to connect their profile data and authentication credentials to external Web sites, much like services offered by rivals MySpace and Google. Members can use their Facebook identities across the Web, including profile photos, names, photos, friends, groups, events, and other information. Facebook handles the authentication process and stresses that user security is a priority.

Some of the other announced Facebook Connect partners include Movable Type, Amiando, CBS.com, CNET (that's us, of course), CitySearch, CollegeHumor, Disney-ABC Television Group, Evite, Flock, Kongregate, Loopt, Plaxo, Radar, Red Bull, Seesmic, Socialthing, StumbleUpon, The Insider, Twitter, Uber, Vimeo, and Xobni.

It wasn't a blockbuster, but Black Friday wasn't a bust, either.

ComScore on Sunday reported that online, nontravel retail sales on the Friday after Thanksgiving, traditionally a big day for consumer spending, reached $534 million. That's up from the same day a year ago, but just barely--online retail sales rose just 1 percent, from $531 million.

On Saturday, comparison-shopping site PriceGrabber.com said that Web shopping traffic on Black Friday was up 11 percent. The Nintendo Wii was the most popular item, according to both PriceGrabber and eBay.

Sales on Thanksgiving Day itself rose 6 percent to $288 million, up from $272 million in 2007, ComSore said.

But for the four weeks of November through Friday the 28th, retail e-commerce dropped to $10.4 billion, down 4 percent from $10.8 billion for the same period in 2007, according to ComScore.

For the full holiday season, even Friday's slight gain may look good. ComScore predicted that for November and December, online sales will be flat compared with 2007, coming in again at $29.2 billion.

A somewhat cheerier report Sunday came from the National Retail Federation. The NRF's Black Friday Weekend survey--covering Thursday, Friday, Saturday, and predictions for Sunday--posits 172 million shoppers visiting Web sites and brick-and-mortar stores for the four days, up from 147 million last year.

Holiday sales will rise 2.2 percent this year to $470.4 billion, the NRF projects.

"Pent-up demand on electronics and clothing, plus unparalleled bargains on this season's hottest items helped drive shopping all weekend," NRF CEO Tracy Mullin said in a statement. "Holiday sales are not expected to continue at this brisk pace, but it is encouraging that Americans seem excited to go shopping again."

The NRF put total sales for the four-day period at $41 billion, with shoppers spending an average of $372.57, up 7 percent from $347.55 a year earlier.

The retail group said that 36 percent of shoppers purchased consumer electronics. Slightly over half of shoppers bought clothing and accessories, and 39 percent bought books, DVDs, CDs, and video games.

The next big test of how online commerce is faring in a deeply troubled economy will be almost immediate: Cyber Monday, the first Monday after the Thanksgiving weekend.

"It's probable that on Black Friday consumers responded positively to the very aggressive promotions and discounts being offered in retail stores," ComScore Chairman Gian Fulgoni said in a statement, "so it will be important to see how they respond to similarly attractive deals being offered online on Cyber Monday, the traditional kick-off to the online holiday shopping season."

Purchases from the workplace account for approximately half of all e-commerce spending, ComScore said.