Bodog Fears Mount as Payment Processing Issues Worse Than First Thought
BodogLife.com (formerly Bodog.com), the beleaguered online gambling and poker website, has been having payment processing woes that go beyond what unfortunately has become routine in the industry following passage of the Unlawful Internet Gaming Enforcement Act.
Forbes.com reported last month that the US Government seized $24 million from bank accounts linked to Bodog (BodogLife.com). And while Bodog was not the only online gambling firm with monies tied to Zip Payments - the subject of a U.S. attorney's office out of Baltimore - the company has not had the same degree of success setting up new processing means compared to their counterparts. Of greater concern are the rumors that have been circulating that Bodog also set up shell corporations in the state of Nevada to help facilitate transfers of funds, though Gambling911.com has not yet been able to confirm these stories.
The court papers detail an elaborate international structure put together to allow Bodog to collect money and write checks to winning gamblers in the U.S. One affidavit by Randall S. Carrow, a special agent with the U.S. Internal Revenue Service's Criminal Investigation Division, said that $248 million involving entities linked to Bodog was processed through Wachovia Bank, from which $11 million of the $24 million was seized.
According to Carrow's detailed sworn statements, the IRS's Criminal Investigation Division started looking at Bodog in 2003 and opened a formal probe in 2006, around the same time the US Government began severely cracking down on high profile online gambling companies the likes of BetonSports and Neteller, another payment solutions business that deals exclusively in online gambling.
The extensive sleuthing has involved close examination of public and bank records, the enlisting of unnamed cooperating witnesses and informants, and undercover efforts to make bets on football and collect winnings.
This week, Gambling911.com learned that Bodog laid off nearly 300 employees with more terminations likely in the coming weeks. The company has been trying to break into the European market, however, they do not have a proper license to advertise in the United Kingdom. Bodog's new Dublin, Ireland office is said to be so quiet you can hear a pin drop.
One source from within the company told us: "The situation is horrible. Nobody wants to process payments for us."
Bodog's inability to maintain a low profile has been at least partially to blame.
It was just last month that Gambling911.com's founder, Christopher Costigan, was quoted extensively in Fast Company Magazine discussing possible explanations as to why Bodog's founder, Calvin Ayre, retired so abruptly during the spring. Josh Dean, who was writing the Fast Company piece, said that the magazine had invested much time and money into the article, which was originally to detail Bodog's plans to conquer the world market much as it had in the US.
In its early years, Bodog was promoted almost exclusively via the Gambling911.com website as the "future of online gambling". Little did anyone know just how successful Bodog would become over the next couple of years, reaching its pinnacle of success in 2006.
The Gambling911 website has long had a strained relationship with Bodog. In late 2006, Bodog acquired BetCorp, at the time G911's largest sponsor. Bodog did nothing with the brand, which resulted in drastically cut revenues for Gambling911. Costigan has also been highly critical of Ayre's brash and - some would say - reckless behavior. Ayre often isolated himself from the rest of the industry and failed to join causes such as iMEGA.org's challenge against the Unlawful Internet Gaming Enforcement Act, insisting that the sector was better off "unregulated" (and essentially, "untaxed").
Nonetheless, Ayre has been active in charitable ventures, including the construction of a school in poverty-stricken Costa Rica that Gambling911.com visited firsthand. He and Bodog have had a positive effect on the i-gaming industry in the sense that they have brought more media awareness and - as a result - more players.
But concerns continue to mount. After six years, Gambling911.com this weekend made the decision to sever all ties with Bodog following similar steps made by sports betting's largest news portal, Covers.com
Bodog in its present state still has a life expectancy beyond this coming football season barring some unexpected catastrophe. The company's casino and poker products are enough to sustain it short term. Mounting losses through haphazard marketing efforts in recent years along with an inability to convert a large enough number of new customers mainly the result of processing issues lead many to question BodogLife.com's long term viability.
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