After a two-year investigation into Bodog, the IRS has seized over $24 million from two payment processors accused of processing payments for the online casino gambling, poker and sports betting website. $14.2 million was taken from JBL services between January and February of this year, according to federal court documents. An additional $9.87 was seized from ZipPayments on July 2nd, but Bodog says it hasn’t had an effect on business. In fact, Bodog has continued its timely payment to customers; an area where many other online casinos fail.
“Not one single player failed to get paid when this processor was disrupted,” said Alwyn Morris, chief executive officer after JBL came into question, “Customer deposits are safe and every player has and will always be paid. All operators outsource payment processing functions to third parties and these payment processors are subject to regulatory constraints wherever they operate, and, occasionally in the U.S., are subject to legal action because of the uncertain legal environment there.”
Bodog first came into question in 2003 following an IRS conducted interview with Calvin Ayre. A formal investigation was not put into play until 2006. Unfortunately because of the investigation, IRS Special Agent Randall Carrow became well acquainted with the payment process to and from online casinos.
“Because of various developments, it has become more and more difficult for internet gambling website operators to move money into and out of the United States,” Carrow reported, “To continue to make ‘payouts’ to gamblers, some internet gambling operators have begun using money processing businesses in the United States. Based on my training and experience, I know that, typically, the gambling website operator will send a U.S. processor a check or wire transfer of a relatively large sum of money, usually hundreds of thousands or millions of dollars. The processor then distributes the money to individuals, either by check or electronic transfer of some type. None of the transfers identify the money involved as gambling proceeds.”
Thanks to an informant, Carrow was able to determine the payment processor owned by Calvin Ayre near the end of 2006. The IRS had access to credit card transactions used to deposit money to Bodog and its affiliated companies. An undercover agent opened a gambling account in December of 2006, and was able to place 40 bets, amounting to well over $35,000, by January of 2008. In doing so, the agent tracked checks down to a Direct Channel bank account with Mercantile Bank. With the help of the checks and “cooperating individuals,” the IRS was able to link Bodog to JBL Services and Zip Payments.
Bodog maintains that not all of the money seized from Zip Payments belongs to them. In a statement released by Bodog, officers stated, “This is simply false.”
It seems online casino gambling is the hot topic in U.S. government legislation this year, as yet another Congressional bill has been proposed in opposition to the UIGEA. HR6663, or the UIGEA Clarification Act, is Representative Pete Sessions attempt to limit prosecution of online gambling activity prior to 2006.
The new bill would certainly prove beneficial to online casino companies that had been active in the U.S. gambling market prior to the passing of the UIGEA. Many online gambling establishments and third party payment processors were forced out of U.S. revenue after the Unlawful Gambling Enforcement Act was signed in late 2006, but still faced criminal charges. HR6663 seeks to prohibit any further federal prosecution, based on internet gambling or the financing of such, on any company or individual that no longer accepted U.S. wagers after October 13, 2006.
Online casino, sports betting, and poker websites like Party Gaming, 888.com, as well as NETeller and Citadel, who withdrew from the U.S. Market when the UIGEA was introduced, still faced punitive action. Since the signing of the UIGEA, there have been numerous reports that major online gambling companies have met with American authorities to try to avoid criminal charges for pre-UIGEA violations, and therefore would receive the new bill with enthusiasm.
HR6663 does not protect online sports betting companies that accepted wagers before or after the UIGEA’s enforcement. Officials believe that the new bill entails a “sense of Congress” provision that the implementation of the UIGEA should be focused on sports betting.
The bill states that “prior to the passage of the Unlawful Internet Gambling Enforcement Act of 2006, Public Law 109-347, on October 13, 2006, Federal law was both vague and outdated regarding Internet Gambling activities, as Federal criminal gambling statutes were passed decades before the commercial use of the Internet. To date, all Federal Internet gambling prosecutions have involved sports betting, creating a lack of authoritative court decisions on the applicability of other federal criminal statues to Internet poker and casino-style gambling.”
It goes on to say that sports betting is viewed as particularly harmful to the gambling community because of its “impact on the integrity of professional and amateur sports.” Sports betting, which is illegal in 49 of 50 states seems to be the whipping boy of the gambling community. The bill does not however, address the issue of horse racing, which is the only legalized form of sports wagering both online and off.
HR6663, like many other bills introduced, also calls for clarification of the UIGEA and what is considered illegal. The bill referred to the House Committee on Wednesday, but further action will be delayed because of the August recess of Congress. The same recess has help up Representative Shelley Berkley’s proposal for an independent study of internet gambling. It is thought to be unlikely that anything will happen with HR6663 until September.
A management dispute between two online casino operations has ended in the closing of Aspiritus Gaming. Aspiritus was operating under a Curacao license and Playtech gaming software, but following a “major bust-up” with Inside Gaming, the gambling services were cut off.
The partnership between Inside Gaming and Aspiritus was short-lived. Those trying to access Aspiritus were informed that it was closed for maintainance. By July 29th, users were given a notice that the online casino operation was searching, however unsuccessfully, to find a different software provider or partner. The notice said that due to “time constraints on delivering new products, the cost of obtaining new licenses or a mixture of both” the site was left inoperable.
Aspiritus’ management goes on to say, “Over the last week, Aspiritus management has been reviewing the business and it is with great regret that we will have to close the Aspiritus business with immediate effect as the impact… of the recent contractual dispute, and ultimate termination of the contract, with our gaming operator has been devastating.”
The notice does not specify what really happened between the two operators, but it does continue, “The dispute has put Aspiritus under further financial strain and after reviewing the cash flow of the business, the Aspiritus management team has been left with no alternative.”
From what anyone can gather, the dispute may be the result of contractual and financial disagreements. Aspiritus implied that the fees and charges from Inside Gaming were too substantial to both the operators and the members. It was mentioned that Inside Gaming was charging 35% more than was agreed to in the contract.
“With the recent transfer restrictions placed on our members, Aspiritus suffered major losses as the casino and poker products make up 95% of revenues. The effect this has had on the goodwill and reputation of the business in supplying services, especially for a community based site such as Aspiritus, are devastating.”
It has also been announced that Aspiritus will transfer its online casino players to an unidentified gaming operator so that users are do not feel the effects of the site’s closing. According to the notice, “While the decision has been made to close the Aspiritus business, Aspiritus management has held discussion with a new gaming operator, who will be opening their website in August, and they have agreed to place Aspiritus members into their database.”
This leaves former Aspiritus users discomforted, however, as the site is not only new to them, but brand new to the market. Members holding Club Equity credits have also express concern that the time and effort put into obtaining these credits will be for naught. Aspiritus has stated, however, that they will further negotiate with the mystery-casino operator in attempt to give value to the credits through future ownership of the new company. Aspiritus also intends to convince the new company to transfer the VirtuDAQ and S8 + Superdraw products.
Inside Gaming has not yet issued a statement, claiming that spokesperson Richard Hogg is away on leave.
Further concerns about the Unlawful Internet Gambling Act have been voiced following the tied vote failure of bill HR5767. HR5767 proposed that the implementation of the UIGEA be halted until more specification was made as to what forms of online casino gambling and sports betting violate the Act. On Monday, four Republican representatives sent out a letter to Federal Reserve Board and U.S. Treasury officers, seeking a more deliberate approach to making regulations for such Act.
Many criticisms have been made by politicians and the banking industry that the UIGEA is neither practical nor precise in leaving its enforcement to the financial institutions. The Act, which does not criminalize online gambling but rather the financing of such, has been the subject of many complaints made by federal legislators since its passing.
Representatives Judy Biggert, Christopher Shays, Jim Gerlach and Kevin McCarthy maintain that a more formal definition should be made as to what unlawful internet gambling is. While none of the four support online casino gambling, they are concerned that the “vague language” in the regulatory act will burden the banks in charge of enforcing it.
The letter says, “As proposed, these regulations do not provide clear guidance to the public, in particular those that engage in online skill games or regulated industries regarding what constitutes ‘unlawful internet gambling.’ We believe that implementing such vague law and regulations, while holding the public related industries liable for non-compliance, is an abdication of the federal government’s responsibility to both the public and unregulated industries.”
The letter also suggests that the drafting process should require a more specific project backed by an Administrative Law Judge and that there should be a Regulatory Flexibility Analysis on the financial impact created by the UIGEA’s enforcement.
Following the seizure of funds from JBL and ZipPayment, Bodog’s Canadian-based North American associates Morris Mohawk Gaming Group has released a statement. The timely statement was in response to an article in Forbes Magazine, saying that the story made “several misimpressions.”
“As most of our customers already know, all operators outsource payment processing functions to third parties and these payment processors are subject to regulatory constraints wherever they operate, and occasionally in the US, are subject to legal action because of the uncertain legal environment there,” the statement reads. “However, the seizure of funds from these US payment processors was mischaracterized in this article, which refers to two specific legal cases against US processors. Rightly or wrongly, the article does not make a clear distinction between these cases, which, as a result, paints a misleading picture.”
According to the statement, the two cases had no relation to each other, and there was a large gap in time between the seizures of funds from such. There has been punitive action against many other payment processors, many of those that are not utilized by Bodog or its consumers. The U.S. has begun to crack down on the online casino gambling market, and even Paypal has undergone scrutiny. In compliance with the IRS, many of these processors have released clientele information.
The article goes on to allude that all of the $9.9 million seized from ZipPayments.com belonged to Bodog user accounts. The online casino, sportsbook and poker room says differently.
“The second case refers to a payment processor known as ZipPayments.com and seizure of funds from this processor’s bank accounts in Nevada. The article falsely implies- but does not go so far as to state – that $9.9M seized from ZipPayment’s Nevada bank accounts were funds on account for ‘Bodog.’ This is simply false.”
While the United States claims it exercises no discrimination against foreign nations in its implementation of the UIGEA, Ohio has announced that it intends to allow online and televised keno as early as August of this year.The legalized form of online casino play will add to the state’s lottery revenue and is expected to reach $70 million a year. U.S. Representatives might as well just approach WTO officials with a slap in the face in the next hearing with Antigua. Online keno in Ohio is obviously an important step toward removing the ban on internet gambling, but adds to the long list of double standards in the U.S.
Ohio state Spokesman, Joe Caputo was very direct when telling reporters his motivation in allowing the internet casino gambling. He said that the introduction of online keno was Ohio’s response to player demand and that it creates much needed funding for education and balancing the state budget during the country-wide economic crisis. “It’s just another shot to keep us afloat with the way things are going,” said Caputo.
Some are in awe as to how the U.S. government would permit such activity, when it clearly has a hostile position on online casino gambling and sports betting. However, most of us are not surprised to learn that U.S. legislation can be generous in making exceptions to the UIGEA. Take horse racing, state lotteries, fantasy games and the World Series of Poker for example. Each of these forms of gambling promotes and contributes to online gaming. The announcement to launch internet keno comes right on the heels of Representative Jim McDermott’s bill to regulate internet gambling.
The online keno that will now be available to Ohio citizens will draw winners every four minutes, and there have been many enthusiastic responses for sales venues, including bar owners whose business have decreased since the current public smoking ban.
Playtech is releasing an exciting new software development that online casino aficiondos are calling "an epic in the works." Playtech has been established as one of the leading, safest and most impressive software developers for the internet casino industry. Players will remember the Lara Croft Tomb Raider game as an example of a themed game that casino gamblers received with much anticipation. Now Playtech has announced that it has obtained the rights to develop online slots games based on the movies, Gladiator and the Untouchables.
Playtech is notorious for its great graphics, features and exclusive license with Paramount Digital Entertainment to develop games based on users favorite movies. Online gamers could think of no better developer to take on this project.
"We are pleased to have secured this important deal with Paramount Digital Entertainment, which will enable our licensees to offer games featuring two very well-known brands, Gladiator and The Untouchables. We are confident that this exclusive material supplied to our licensees will support their marketing efforts by increasing the profile of their games portfolio and enhancing the gaming experience for customers," said Mor Weize, Playtech CEO.
Online casino gamblers have seen such recognizable themes in casino games, but Playtech has the most impressive portfolio by far. Evidence of such is seen in licensing agreement between such a lucrative movie franchise like Paramount and Playtech. The company has quickly become a major competitor in the industry, and the license has been the center of attention in the industry.
Wyandotte Kansas is due for a new casino in the upcoming years. While gambling legislation has not been in favor of online casinos recently, new laws may be put into place that give state run land casinos leniency.
There have been several proposals by state officials to open a new casino in Wyandotte Kansas. There are four separate companies seeking to license and operate the casino, and the city has been awaiting the financial benefits.
However, Las Vegas Sands Corp. pulled out of the race, lowering the amount of possible developers to four. There were many reasons given by Sands Corp. as to why they will no longer consider licensing Wyandotte’s casino, but many feel that this is mostly due to the pending law change in Missouri. This coming November’s referendum ballot in the neighboring state would eradicate the $500 loss limit per person in a casino during a two hour period.
Because Sands Corp. was banking on a consumer base generated out of Missouri, the law change would put a damper on the business that Wyandotte is looking to bring in. The change would have a great impact on gamblers who would travel to Kansas to bypass the law limiting their gaming. If the law changes, Missouri gamblers would have no motivation to visit the Kansas casino.
"This change, together with the increased borrowing costs in today’s financial marketplace, significantly decreases the expected returns from our proposed development in Kansas and limit our ability to generate appropriate risk-adjusted returns on the proposed investment vis a vis our expected returns on our other global investment opportunities," said Sands Corporation’s President, William Weidner.
These are issues that many online casinos gamblers are unaware of. Internet gamers are often provided with a hassle-free platform and travel never presents a problem. Legislation like the $500 limit promotes further online casino gambling in the future.
Paypal, possibly the most widely used third party payment processor, was found to have sold its users to the IRS. Several online casino gamblers use Paypal to put money into their accounts, and this news could have a large impact on the gaming community.
An announcement has been made that the company has opened their supposedly secure client account information to the IRS, creating quite the quandary for online casino users. There is already a substantial limit on the methods for payment to these websites, and the disclosure of this information may make it very difficult for online gamers to gamble online altogether.
Paypal stopped accepting payment to and from U.S. players in 2002 due to a fine they received by Attorney General Elliot Spitzer.
It should be noted that any online casino gambler report all earnings to the IRS to avoid repercussions from findings like this. Any online winnings that are not reported can and most likely will lead to legal action, including hefty fines and jail time.
Speculation is that the IRS is investigating more than just internet gambling. This information could provide the IRA with banks that are allowing transactions that violate the UIGEA to occur. From there, the crackdown on internet gambling could be detrimental.
"Even if they had kept themselves away, there was no reason for them to sell out the many people who gave them money and trusted them with private information," said online gambling analyst, Gordon Price.
The announcement has panicked the online gambling market. The move to share this information with the IRS is highly unethical and may very well lead to civil lawsuits against Paypal. With this finding, people feel that there has been a violation of security agreements
With the scare tactics that have been used in order to keep online casino gambling illegal, Australia has taken pro-active steps to alleviate problem gambling within the country. Officials have announced their intent to make use of cards with spending limits in order to regulate the amount of time spent on poker machines.
Poker machines have been a popular form of casino gambling in South Australia, as they are legal in pubs. When pubs are open in South Australia, several people can be found playing the poker machines through all hours of the night. Because of this, problem gambling has become a concern to Australian officials. The government has come up with an experiment in order to decrease the amount of gaming that takes place each day.
Next month, Australia will be issuing cards that can be used by all offline and online casino gamblers in which the holder can preset an amount to spend on gaming. Users will be alerted when they have reached their spending limit, and service to the poker machine will be severed.
The card is completely voluntary, as this is an experimental procedure. The company that operates J-Card will be in charge of the trial period.
"I’d reinforce the point it’s a tool for all gamblers- it’s not necessarily a tool that can be used by all gamblers to pre-commitment and set limits on their expenditure and it’s certainly a trial worth undertaking here in South Australia," South Australian Gambling Minister, Paul Caica said.
