Big Money, No Whammies?

Most people who dabble with the online gambling world have, in one way or another, come in contact with Bodog Entertainment Group.  This also applies to most internet billionaires that have faced troubles with legality, they have likely heard the name Calvin Ayre.

Calvin Ayre was recently indicted by the U.S. Attorney in Baltimore, but why?  Why would the feds want this Canadian billionaire, but more importantly, who is he and what is bodog.com?

Let me begin by stepping back a few years.

In 1996, a man named Calvin Ayre went to Costa Rica to aid the start up of the first online gambling outlets.  At the time, online gambling was unheard of because of different users in the idea’s two major components: gambling and the internet.  People that actually used money to bet or go to casino were generally older men, while the people using the internet were predominantly the youth.  Therefore, an online gambling market did not exist.

Ayre helped to launch the first sites in 1996, and thus helped create the market.

He launched his own sports betting website in 2000, and soon after began offering other gambling methods and casino games.  Users would access the site and make bets by credit cards or online checks, and winners would collect through wire transfer.  Not long ago, Bodog.com had around 145,000 regular users, regular meaning each of these people be at least once a week, often times even more frequently.  These regular users were betting on average 60$ for sports and 13$ on casino games.  By taking bets from over 16 million customers and receiving 1.5 million different users ever month, it’s no wonder how Ayre made such ridiculous sums of money.

Why would the U.S. government care if this guy is making a fortune on the internet?  He is not a citizen of the United States, nor does Bodog Entertainment Group have a physical presence in the country, so why should they care?

They care because 95% of the funds are coming out of the U.S., and Ayre is not paying a cent in taxes.  Foreigners are required to pay tax on income from business done within the States, but this is where legality get tricky.  Ayre does not have a physical presence in the States, so how are geographical and political boundaries drawn in cyberspace?

Title 18, Section 1084 of the U.S. Code prohibits the use of telephones or other communication devices “in interstate or foreign commerce” to take bets, so Ayre is breaking the law and he knows it.

Ayre was even quoted as stating,  “we run a business that can’t actually be described as gambling in each country we operate in.  But when you add it together, it’s Internet gambling.”

The U.S. Attorney in Baltimore, Rod Rosenstein state, “Sports betting is illegal in Maryland, and federal law prohibits bookmakers from flouting that law simply because they are located outside the country.”

The whole issue of the endless expanse of cyberspace makes these sorts of situation difficult to judge, and much easier for men like Calvin Ayre to break the law.

Rosenstein also said in a statement, “Many of the harms that underlie gambling prohibitions are exacerbated when the enterprises operate over the Internet without regulation.”

This is the most important issue in the case.  Gambling in itself is an addiction, the internet also has the capacity to be addictive, but when the two combine, the result can be hazardous for the individual.  Online gambling is much easier to be addictive than going to the casino or calling your bookie because people don’t have to leave their chair or interact with anyone.  The most frightening aspect of this vice is that people can lose their lives in front of a computer screen without anyone knowing.

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One thought on “Big Money, No Whammies?

  1. This is truly a bizarre story. I like the way you’ve been able to summarize and present it so clearly. It’s kind of sad to see that such wealth can be created through the internet for something of such dubious value.

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