IRS Seizes $24 Million From Payment Processors Linked to Bodog
by Hillary LaClair, Senior Editor
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.”
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