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Bodog Online Gambling Site Shut Down

1 March 2012 by Devon Chappell

At the same time that numerous states are considering legalizing online gambling based on a ruling from the Department of Justice that indicated they could do so without violating the Wire Act of 1961 – the DOJ is still fighting old battles against its online gambling foes. After prosecuting three online poker giants last year, federal prosecutors took their fight to the ultra successful online gambling website Bodog this week.

The feds made their first move on Monday when they seized Bodog’s domain name in an effort to shut down their operation – at least for the time being.  Anyone who types in will be greeted by a webpage flaunting logos of the DOJ and the U.S. Customs Enforcement Homeland Security Investigations.

One day following the seizure, indictments naming Bodog founder Calvin Ayre, as well as operators of the company’s website David Ferguson, Derrick Maloney and James Philip, were unveiled in Baltimore. The investigation was a collaborative effort between numerous government agencies. In the lead was the U.S. Immigration and Customs Enforcement Homeland Security Investigations office in Baltimore. The HSI received support from the Maryland State and the Anne Arundel County Police departments. Prosecutors also credited the Internal Revenue Service for their involvement.

The investigation included feds posing as online gamblers as well as at least one former Bodog employee being interviewed. The government says winnings were paid by checks sent to Maryland addresses that investigators provided when they set up their Bodog accounts. They claimed to have knowledge of over $100 million paid in winnings to U.S. gamblers over the past seven years. The U.S. Attorney’s office also took issue with the tens of millions in advertising dollars Ayre’s company spent to entice US citizens to engage in illegal gambling.

U.S. Attorney Rod J. Rosenstein remarked, “Sports betting is illegal in Maryland, and federal law prohibits bookmakers from flouting that law simply because they are located outside the country. Many of the harms that underlie gambling prohibitions are exacerbated when the enterprises operate over the internet without regulation.”

This statement reflects exactly why so many legislators have recently been successfully arguing the need for state-by-state legalization. Their motivation is seemingly rooted in a desire to increase their state’s tax revenue in order to better fund critical programs like education – but the argument that best supports that effort is the need for regulation. Everyone agrees that countless U.S. citizens are engaging in online gambling each year, so it makes sense to many that states should protect these citizens by regulating online casino operators. At the same time, states could benefit by taxing the large amounts of money that at the moment are flowing into offshore accounts set up by companies that have figured out how to successfully game the system.

One has to think that if Bodog paid out over $100 million in winnings between 2005 and 2012, as the government alleges, the company must be taking in hundreds of millions, if not billions, in profits. Compared to this, the $500,000 fine that Bodog stands to receive as a result of the indictments looks more like a nuisance than a real punishment.

The possibility of prison time for Ayre and the three website operators is of course another story. Running an illegal gambling business carries with it a sentence of up to five years. To make matters worse, being found guilty of money laundering could land each of the four accused in prison for as many as twenty years. Arrest warrants have already been issued for Ayre, Ferguson, Philip and Maloney in conjunction with the indictments.

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