US Government Targets Payment Processors for Online Gambling in States

Written by:
C Costigan
Published on:

As widely reported on the website over the last few days, Zip Payments, a payment processing solution which handled business for a number of online gambling establishments, had its funds seized by US authorities.

Now comes word that once again a payment solution dealing with Internet gambling firms was based - not offshore - but in the United States.

$9.9 million was seized by US authorities in eight accounts at Nevada State Bank, a unit of Zion Bancorporation (nasdaq: ZION - news - people ), in the name of Zaftig Instantly Processed Payments, doing business as, according to Forbes. The companies are described as helping to facilitate parts of the Bodog operation. But it was unclear whether Bodog itself was at the center of the investigation.

Ironically, Forbes Magazine featured Bodog founder, Calvin Ayre, on its cover of its prestigious "Top 100 Billionaires" issue in March of 2006. The following year, Forbes reported that Ayre had fallen off the list and there were implications made that he probably should not have been on that list in the first place. Ayre told "Forbes had no clue about his financial situation in 2007.

Both Forbes and Gambling911 were cited in a Costa Rica complaint resulting in a raid on Ayre's posh home during filming of a poker reality series attended by Chuck Liddell, Shannon Elizabeth, Cheryl Hynes (Curb Your Enthusiasm) and many others. Over a hundred Costa Rican law enforcement agents descended upon the home believing they would find prostitutes and an illegal poker tournament, none of which came to fruition. The Forbes "Billionaire" issue hit the stands that very same day.

Ayre abruptly retired from Bodog three months ago and has since been lying low and traveling only in countries that do not have an extradition treaty with the US.

This is not the first time that online gambling businesses have been named in complaints centered around payment processing solutions operating from the US.

In May of 2007, a federal grand jury in Salt Lake City unsealed a 34 count indictment charging seven individuals and four companies based in Utah with conspiring to violate laws prohibiting financial institutions from processing internet gambling transactions.

The defendants operated businesses based in the state of Utah that disguise credit card charges. All credit card transactions have codes associated with the transaction to identify what type of business the merchant is conducting. The defendants were coding the transactions using the 6000 series which is designated as the series used by general ecommerce funding merchants. The transactions should have been coded using the 7995 code, which is designated for internet gambling merchants.

The main focus of that investigation was on Gateway Technologies, LLC, which operated from the state of Utah. It should be pointed out that Utah does not allow any form of gambling and is devoid of a state lottery.

That indictment also alleged the individual defendants and three related businesses, CurrenC, LTD, also known as CurrenC Worldwide LTD; Gateway Technologies, LLC; Hill Financial Services, conspired to purposefully misclassified credit card transactions to fool banks into processing internet gambling charges; collected monies transferred from bettors in the United States via credit card transactions; and transferred the collected funds to various internet gambling web site operators.

News of the latest indictment comes just as word surfaced that a new online bank catering to online gambling enthusiasts, Ivobank, has opened its doors in Europe.

While Bodog was the subject of the Forbes report, a number of major online sports books and one of the largest online poker rooms, had been doing business with Zip Payments up until the time of the seizure.

The poker room in question is now a "target of a US Justice Department investigation" as a result of their "relationship with ZIP Payment", a source tells Another smaller online poker network tied in with one of the largest online poker rooms was also utilizing the services of ZIP. follows industry protocol not to name specific affected gambling sites unless there is reason to believe they are deliberately withholding funds from customers, which none of the above named companies are.


Christopher Costigan, Publisher

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