Bodog Seizure!!!!

wayschaff

wayschaff

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Bodog Seizure

THE WEEKLY SHUFFLE, 2008-08-03, by Ozone
http://www.shareresults.com/t/url.php/cid/12974/sid/14999
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.

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.
The Weekly Shuffle is our Sunday column with our observations and commentary on the poker world. Have an idea for an article? Leave a suggestion on the feedback page.
 
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angelaus

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wow ! I would deposit some money there yesterday :)
 
kaiWalk

kaiWalk

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Bodog Seizure

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.

It's actually a very inflammatory article relying on innuendo and ignorance to make a point.

The payment processing industry is a shady business. I was the operations manager for a payment processor (I left once I was brought up to speed on the true nature of the business) & we used to handle deposits & withdrawals for a gaming site that many board members use.

Shutting down an unlicensed business is hardly a loophole used to seize the funds of a gaming firm.

A common practice among these payment processors is to resell the banking information used by depositors. Contrary to popular belief, they are not a pawn of the gaming industry; They are primarily used by online adult content providers and tele-marketers. Internet gaming is a relatively small percentage of their business.

The DOJ should not be cast as the "bad guy" here. Senate Majority Leader Bill Frist attached the UIGEA to the already passed SAFE Port act, effectively bypassing debate or even a vote on the subject. (it only needed joint committee approval) The bill made it illegal for US financial institutions to accept or transfer funds to or from gaming sites, while not clearly defining what was gaming.

There is considerable ambiguity in the text of the law, and it places the onus on the banks to prove that the transactions they process are legitimate. The UIGEA targets financial institutions, not gaming entities or users.

Finally, 9/11/01, I worked for Morgan Stanley. Our operational headquarters was 2 WTC. I had 11,000 coworkers, some people I talked with everyday, in the second building that was struck. To equate the UIGEA with the loss of life, or even the loss of life-savings, due to the effect on the global financial markets, is short-sighted, ignorant, and purposely inflammatory.

Please understand, I take issue with the author (propagandist) of the article, not you Wayschaff.
 
gnk2727

gnk2727

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Ive had my fair share of problems with Bodog, but I am not gonna bash them for this. Right now this is a risk we all have to take no matter which poker room we use..........
 
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cajinstorm

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I wonder if money is guarenteed to bodog players if they decide to shut down operations.
 
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