Illegal Internet gambling has obviously taken a front seat with the Department of Justice, various District Attorneys offices and several enforcement divisions, including Homeland Security. In the 12 years the OSGA has been online helping players, the last month has featured the most severe crackdown yet by U.S. officials on the online gambling industry. In addition to April’s Black Friday, this past week it came to light that the government had two separate, two-year long investigations aimed at taking down illegal operators.

Now these are two very different cases. In one, Maryland Homeland Security personell setup a payment processing company to infiltrate the world of Internet gambling while proving clear violation of the Unlawful Internet Gambling Enforcement Act (UIGEA). In the other, a local bookie who was running his operation from the back of a video store and using a server in Costa Rica allegedly used strong arm tactics and charged outrageous interest on gambling debts.

The case out of Maryland that saw the seizures of websites like Bookmaker.com, Doylesroom.com and BetED.com is the most intriguing one we have come across. A phony payment processing company was setup in 2009 and had been processing gaming transactions ever since. This processor, run by Homeland Security agents, apparently moved over $33 million to players in the U.S., while processing some 300,000 transactions. That is an amazing volume! Who would have thought that the government could become such a successful processor? A little quick math based on standard processing fees paid currently by offshore operators shows that Homeland Security made between 7 and 10 million dollars operating the bogus processing operation. The big question is what is Homeland Security doing running a sting to apprehend gaming operators? Wasn’t this the arm of the government setup after 9/11 to fight terrorism?

According to our inside sources Linwood Payment Solutions was originally setup to process poker payments and got into business with the formerly indicted Absolute Poker and Doyle’s Room. The company’s representative continued to troll Costa Rican gaming operations using the poker operators as references. One operator told us that the representative “ did not appear to know very much” and that his lack of knowledge in both the gaming industry and processing transactions cause them to pass and tell the guy they were not interested. However, Linwood continued to solicit more business and eventually landed sports betting operations like BookMaker and BetED. 

Our sources indicate that BookMaker did not use this processor very heavily, but apparently BetED did. It has been widely reported that BetED is out-of-business and the general consensus is that players will be stiffed. According to one popular gaming forum BetED had all of its money in the bank accounts seized during the operation. There is not one person in the industry that believes this is true. Online gaming operators have money in bank accounts around the world and nobody puts ALL of their money in their reserves with a processor. Though we had rated BetED highly, we have little faith that this place is going to pay back players. The owners were named in the indictment and the Costa Rican offices of BetED have been shuttered. It does not look good for BetED customers.

We even made a few inquiries for a potential ‘bailout’ as we have done in the past when books decide to run with player funds. However, because of the indictment no one wants to touch BetED’s players. In addition, BetED did not do much business with many other books, so no one we spoke with really knew how many players are involved or how much money would be in included in any ‘bailout’.

As far as BookMaker and all of its related operations, they were prepared. An inside source told us that shortly after the domains of the Big Three poker companies were seized, the Costa Rica Sportsbook giant began contingency plans. So far these have appeared to work, as even their smaller websites are all up and running now using the .ag domain extension. That extension is one used for Antigua and I would speculate that the U.S. would have a much harder time making a grab of these new websites than it did with the dot com ones seized in recent weeks.

BookMaker is also a VERY different outfit than BetED. They have thousands of customers worldwide, have been through the ringer several times and are a huge organization. And the proof is in the pudding, whereas many outfits would have had a run on the bank, the majority of the customers at BookMaker believe what they are being told, that it is “business as usual.” We tend to agree that out of all of the operations out there, BookMaker is in a bona-fide position to keep operating.

Still, in the ever-evolving world of online gambling, it appears the time has come to include a “what will happen to the operation if the DoJ goes after them” in the overall gaming operation rating.

Players have been calling into OSGA, emails have been flowing in  and every chat on the osga.com website had been related to these recent indictments. Players are frankly, nervous and confused, and perhaps, rightfully so. To think that the DoJ would pursue a two year sting operation would not have been imagined during an Obama administration when he was elected. The industry wrongly believed that things would ease up with the more gaming-friendly Democrats in power and perhaps even become legalized. But instead, the enforcement ship is plowing full steam ahead.

What lies ahead is anybody’s guess, but it would be hard to imagine more arrests with all that the DoJ has on its current plate. But when you can confiscate millions of dollars, while operating  a profitable processing operation, nothing would surprise us. After all, as the legalization of Internet gambling approaches here in the U.S., so it appears do the increased efforts on current online gambling operators that service the lucrative U.S. market.