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Phrase derived from the popular game, Call of Duty 4 in which a team who were previously owned, opt out of the following round in fear of a subsequent defeat. They then lie saying 'We need to back out (leave current lobby) and get Karl' who is an imaginary player. The phrase was originated when a group of players left a game in search of 'Karl'. Ten seconds later they rejoined, accidently, shouting 'Where's Karl?!' amongst laughter. Use this a sneaky way of leaving a game without owning up to the fact that your opponents are too good for you. This phrasing can be used in almost any online FPS game.
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