Alberta whistleblower faces $10M lawsuit from gaming company
Last Updated: Friday, October 27, 2006 | 9:45 PM MT
CBC News
An Alberta man is fighting a $10 million lawsuit from an American gaming company after he says he blew the whistle on casino video slot machines that he alleges could be made to pay out on demand.
Zues Yaghi, an Edmonton resident, said he has been the subject of a search warrant, a gag order and a lawsuit from WMS Gaming Inc. for reporting the flaws in its poker machines, which the company has since fixed. WMS Gaming has its headquarters in Waukegan, Ill.
Yaghi said this week that the gambling public has a right to know whether the software running on the machines have "back doors," which would make them vulnerable to hackers, or contain "Easter eggs," hidden bits of coding that could give some gamblers an advantage.
When he first discovered the design flaws, he said, he was appalled.
"I was angry. The first thing I was thinking, someone here should be shot for this," he said. "That's what I thought. You know, somebody's slipping aces."
In 1999, Yaghi went to the Alberta Gaming and Liquor Commission to report the flaw, saying he found evidence of a secret door that had been written into the computer software to allow players of casino video slot machines to collect jackpots with a few simple clicks.
Yaghi demonstrated to the commission how he could play the video slot machines and win. He said he wanted to be hired to help the commission fix the problem.
But instead of being offered a job or at least thanked for being a good citizen, Yaghi was served with a rare form of citizen search warrant by WMS Gaming, whose officials came to his door in February 2000.
'Big fat warrant'
"Knock on the door and I look and there's a nice collection of people that I haven't seen before and they have a big fat warrant to enter my premises," he said.
"It didn't have a time limit on it. It just allowed them to search and seize whatever they wanted which was relevant, or could be relevant to WMS. For three days, they were coming back and forth."
A few days later, the company obtained a gag order that prevented Yaghi from telling anyone how a player could get the slots to pay out. And it filed a $10 million lawsuit.
WMS Gaming officials will not speak about the lawsuit. But according to court documents, the company said it offered Yaghi $50,000 as a reward and an incentive for him to keep quiet. The company alleges in the documents that Yaghi asked for more money and refused to be silent.
According to its annual report in 2001, WMS Gaming reprogrammed its software to correct the problem that Yaghi found. That didn't stop U.S. regulators from fining the company for failure to notify them about the problem.
The company has made peace with state and provincial gaming authorities, including Alberta, by paying millions in compensation for lost revenue.
It denies that any programmer deliberately designed a game that could cash out on demand. And its lawsuit against Yaghi continues in the courts.
WMS Gaming, a subsidiary of WMS Industries Inc., designs, manufactures and markets video and reel-spinning gaming devices and video lottery terminals.
It started out in the video lottery terminal business in 1991. The company created, manufactured and placed VLTs in jurisdictions throughout North America. Once established in the video lottery market, it moved into the casino gaming business with the introduction of a video poker game. A year later, the company rolled out a line of upright slot machines.
