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AbsolutePoker.com says ‘geek’ hacked system to prove it could be done.

In a case that illustrates the perils of online betting, a leading Internet poker site said Friday that a hacker exploited a security flaw to gain an insurmountable edge in high-stakes, no-limit Texas holdem tournaments — the ability to see his opponents’ hole cards.

The cheater, whose illegitimate winnings were estimated at between $400,000 and $700,000 by one victim, was an employee of AbsolutePoker.com who hacked the system to show that it could be done, said a spokesman for the company, who spoke with msnbc.com on condition of anonymity.

The spokesman said the employee did not withdraw any of the money from the accounts that were used in the scheme, the company also was contemplating filing a lawsuit and criminal charges against the employee.

In its first statement on the allegations, the company said, “The result of our investigation is that we found no evidence that any of Absolute Poker’s redundant and varying levels of game client security were compromised. In other words, we have determined with reasonable certainty that it is impossible for any player or employee to see whole cards as was alleged. There is no part of the technology that allows for a “superuser” account, and there is no way for any person to influence the game software to their advantage.”

“I think that the reasons this got handled the way that it has, with a happy ending, is because the overwhelming majority of people in the industry … want things to be run in a fair and honest way,” said Small of Pocketfives.com. “…  There is a perception that a lot of people in the industry are thieves, but that’s not the case for the most part. When something like this happens, the rest of the people, as soon as they catch wind of it band together and look for ways to pool information and bring people down who have done harm to them.”