Interesting story, thanks for posting it. Glad you reported them, they deserved it.
It goes without saying that if I ever heard either of my two sons behaving in one tenth of the way you described I would revoke their Xbox Live privileges for a very long time. On the other hand, they don't have access to games above their age range, and I've taught them to take losing as a learning experience. Something the obnoxious, maladjusted little scumbag you ran into clearly needs.
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I am doing the same thing with my kids....they will not grow up to be the annoying one in the party.