Bodog Seizure

Last week, the U.S. government seized $24 million from a unlicensed payment processor known as ZipPayments. The company's bank accounts have been linked to internet gaming company Bodog. Calvin Ayre, founder of Bodog, has long been a target of the Department of Justice (DOJ) for his outspoken and defiant violation of the U.S. Wire Act. Although Mr. Ayre has recently distanced himself from the company by announcing his retirement from daily operations, the company's actions are still being targeted. online poker 468x60 In the affidavit for the case, the DOJ mentions sports gambling as an illegal activity. There is no mention of poker, but that should not be taken to mean other U.S.-facing online poker rooms and their clients have no reason to be concerned. To seize this money, the DOJ relied on US Code Title 18,1960 which prohibits the operation of an unlicensed money transmitting business. This code does not require the underlying activity that is generating the funds to be illegal. In other words, the Department of Justice found a loophole through which to seize funds from an online gaming firm without having to address the legal nature of online gambling. Basically, they were able to take $24 million from Bodog simply by demonstrating the money was being transmitted by an unlicensed firm (ZipPayments). This could spell trouble for online poker outfits like PokerStars or Full Tilt who previously thought of themselves as less exposed to DOJ activity than Bodog since they do not book sports wagers. However, it is possible that these companies use licensed payment processors. After all, why hasn't the DOJ made a seizure like this a long time ago? Perhaps ZipPayments was a rogue processor whose funds could be easily seized. Bodog operations are unlikely to be dramatically affected by this incident. As far as online gambling sites go, Bodog has a good reputation for paying their players. Their sportsbetting operation is among the largest on the internet. Since the company likely profits in excess of $100 million a year, an isolated loss of $24 million isn't in and of itself a reason to cease operations. A lot of online poker players have displayed signs of panic by stating they are cashing out all of their money from Bodog. That is probably an overreaction. What this incident really speaks to is that the DOJ still has online gambling in their sights. Things have been mostly quiet since they arrested Neteller's founders in January of last year. The DOJ's approach in seizing this money was to make a quick and successful jab at an online gaming operator to send ripples of worry through the industry. Since the legal nature of online gaming (specifically online poker) is so murky in the U.S., this terrorism-style approach is their best shot at taking down online gaming outfits. Consider a group of radical Muslim extremists like Al-Qaeda. It is simply too insurmountable for them to think they can decimate all of America. However, if they can deal one isolated, yet effective blow, as they did in 2001, the ripple-effect can lead to compounding and large damages. This is clearly the approach the DOJ is taking against online gambling. Moving into the foreseeable future, it is unlikely we will see any significant changes to the legality of online poker in the United States. There will not be any legislation passed that legalizes or criminalizes the activity. Party Poker won't be "coming back soon" as some players foolishly believe. And Barack Obama is not going to overturn the UIGEA, as some players even more foolishly believe. Sorry to burst everyone's bubble, but legal issues the online gaming industry faces in the U.S. will remain infrequent and boring for years to come. Occasionally, a plane will hit a building and everyone will get excited, but after a while, things will return to business as... unusual.