IRS seizes $24 million after online gambling investigation
1st August, 2008
The IRS has now seized more than $24 million from payment processors used by Bodog after a two year investigation that included a probe into the online gambling Web site operator.
Although Bodog has been penalized for its use of payment processors in the United States, after the government passed a law restricting online gambling, the Internet gambling operator seems to be running as smooth as ever and its customers unaffected.
“Not one single player failed to get paid when this processor was disrupted,” said Alwyn Morris, CEO of Morris Mohawk Gaming Group. “Customer deposits are safe and every player has and will always be paid. All operators outsource payment processing functions to third parties and these payment processors are subject to regulatory constraints wherever they operate, and, occasionally in the U.S., are subject to legal action because of the uncertain legal environment there.”
The agent who was a probe into bodog during the two-year investigation submitted an affidavit supporting the seizures and gave insight into the case against these payment processors.
“Because of various developments (Department of Justice prosecutions and new federal legislation), it has become more and more difficult for Internet gambling Web site operators to move money into and out of the United States,” said Randall Carrow, IRS special agent, in an affidavit. “To continue to make ‘payouts’ to gamblers, some Internet gambling operators have begun using money processing businesses in the United States...Bodog, through various entities, has been sending money to various processors in the United States, using several different business names, including MPS Processing Ltd., Direct Channel LLC, JBL Services, EGALO and ZAFTIG Instantly Processed Payments Crop., dba ZipPayments.com.”
The agent who went undercover opened an account with Bodog in December of 2006 and place more than $3,500 in bets over the nearly two-year period. The agent then requested a $1,500 payout in February of 2007. He received a check in March from Mercantile Bank. Then bodog sent a check to replace the previous one when the first check bounced in April. This was the evidence they needed.
