PaniK, known as the Player Killer of Darkness in the Japanese version and Yamitsukai in certain video games, is a player eliminator hired by Maximillion Pegasus. He is a brutal man who targeted Duelists who had earned many Star Chips.
When Yugi Muto and his group arrive, Mai has just been defeated by him.
In order to salvage the situation and return Mai's Star Chips, Yami Yugi challenges PaniK to a Duel. Upon losing, PaniK then activates the flame ejectors that are in the ring, attempting to incinerate Yami Yugi. However, Yami Yugi is safe because of the power of the Millennium Puzzle, and he inflicts a Mind Crush on PaniK.
In the English anime, PaniK's soul is sent to the Shadow Realm. In the Japanese anime, Yami Yugi "purifies his evil heart" by inflicting a Mind Crush on him.
Because of his brutality and the apparent frequency with which he knocks Duelists out of the tournament, he wears 2 double-sized Dueling Gauntlets. PaniK forced Mai to wager all eight of her Star Chips in their duel despite she only needed to wager two to achieve the ten required.
Waking the Dragons
PaniK also appeared in the Waking the Dragons arc as one of the lost souls wandering the sacred circle Yami Yugi ventures through to find his other half. 
Panik plays a "Darkness" Deck. Using "Castle of Dark Illusions" he conceals his monsters within a field of shadows, protecting against attacks since his opponents cannot see his cards and thus cannot know how powerful they are; the Night also provides his monsters with a Field Power Bonus, while covering other terrains, preventing his opponents from gaining the same advantages.
His monsters are Fiend-Types with unusual ATK and DEF values, ending in 10, 30, 80, etc, while most monsters have values that end in 00 or 50. This is so that their ATK and DEF become close to their manga ATK and DEF after they gain the Field Power Bonus from the night. e.g. "Castle of Dark Illusions" had 1200 ATK and 2500 DEF in the manga. In the anime it had 920 ATK and 1930 DEF, which rose to 1196 and 2509 after the Field Power Bonus. In the manga, it did not gain a Field Power Bonus.
When his monsters are revealed by "Swords of Revealing Light", Panik switches to a defensive strategy, bolstering his monster's DEF with "Chaos Shield". Yami Yugi claims Panik's method of Dueling is the way of a coward, only powerful when he strikes from the shadows and cowering when confronted in the open, with Yugi's counter-strategy using Panik's reliance on defense against him by putting him in a position where his defenses trap and destroy his own monsters.