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Despite blow, online betting still strong

by Chad Millman ESPN

 

Five weeks ago, the Internet gambling world endured what I’d like to call The Reverse Rapture.

Rather than the Almighty beaming web-wagering pros up to heaven, it was the Department of Justice that sucked online poker companies and some of their bosses into the abyss. In the industry they called April 15 Black Friday, and it marked the day that PokerStars, Full Tilt and Absolute Poker ceased to exist in the United States. Citing bank fraud, money laundering and illegal gambling, the U.S. Attorney for the Southern District of Manhattan seized the companies’ domain names, indicted 11 of their top execs and essentially shut them down.

Since then, the questions for those remaining post-Reverse Rapture have been: What would happen next? Would it touch on sports?

Now we know the answer. Kind of.

 

On Monday, the U.S. Attorney for the District of Maryland announced that, “A federal grand jury returned indictments charging two gambling businesses and three defendants with conducting an illegal gambling business and money laundering.”

 

It also seized the following domain names: Bookmaker.com, 2Betsdi.com, Funtimebingo.com, Goldenarchcasino.com, Truepoker.com, Betmaker.com, Betgrandesports.com, Doylesroom.com, Betehorse.com and BetEd.com.

 

For the past two years, Homeland Security Investigations has been operating a phony, Baltimore-based payment processing business known as Linwood Securities, where it transferred winnings from places like Beted or Bookmaker to gamblers. According to the affidavit, between December 2009 and January 2011, Linwood processed more than 300,000 transactions worth more than $33 million, including transactions for people in Maryland.

 

“It is illegal for Internet gambling enterprises to do business in Maryland, regardless of where the website operator is located,” U.S. Attorney Rod J. Rosenstein said in a news release. “We cannot allow foreign website operators to flout the law simply because their headquarters are based outside the country.”

 

What’s interesting about these domain names is that, unlike the poker indictments from Black Friday, they are mostly sports book domains, headed by one of the biggest of them all: Bookmaker.com. (I emailed Bookmaker.com’s reps for a comment but have not heard anything back.)

 

“Our focus was on Internet gambling in general,” Vickie LeDuc, the public information officer for the U.S. Attorney in Maryland, told me Tuesday afternoon. “By offering undercover payment services we thought we would attract various types of business, including sports betting poker and casino games.”

 

There have been hints from the online sports betting industry that execs knew something like this was coming. Several weeks ago, sportsbook.com very quietly stopped accepting new accounts from U.S. bettors. When I asked the company rep for a comment, his answer was, “We’d prefer to keep a low profile, and we decline to comment.” But, to be sure, if you don’t have an account with them already, you can’t get in.

 

Meanwhile, almost the moment bookmaker.com was seized, it was redirecting customers to a new URL, bmaker.ag. (For the record, I tried creating a new account at this address, and it worked.) And late Monday night, Bodog — even though it wasn’t mentioned by the U.S. Attorney — began routing customers to a Bodog.eu address. The Bodog reps declined comment as well. “After Black Friday happened, a discussion began in the industry about what would happen if the DOJ came after sports betting domain names,” says Joe Brennan, chairman of IMEGA, the Internet gaming association involved in a lawsuit to overturn the federal sports betting ban. “They decided to use domains that could not be seized as easily, that meant finding country suffixes like .EU or .AG or .FR.”

 

It would be normal, given the prominence in this news of frightful terms like “indictment” and “rerouting” and “undercover operations,” to assume that this is a knockout blow for online sports betting. The truth is, I don’t think it is. Yes, places like Bodog and Bookmaker have spent a lot of money on branding, marketing and search engine optimization. But there is enough consumer equity in their companies at this point that changing URLs and rerouting customers amounts to a nuisance, not a death knell. Especially because it’s happening in May and not on the eve of a football season. I asked Betonline.com’s Dave Mason for his take, and he responded, “We have a lot of respect for the folks at Bookmaker, and what happened really doesn’t come as a surprise to any of us. They are already up and running again — business as usual. Just like it is here. In this industry we’ve all been through these types of situations before. This is a very resilient industry.”

In reality, this is an industry that has long existed in a gray area. For the past decade, as sports betting activity has increased, the Internet has become the bookmaker of choice for everyone from high school kids to nuns running office pools. Most of them don’t really know whether betting online is legal.

 

And the Internet books are inconsistent about access. Exchanges like Betfair and Matchbook and more traditional books like Pinnacle block U.S. citizens from making bets. But Betonline.com and Bodog have long accepted our business. Many bookmakers operate with a gold rush mentality; they’re prospectors landing on sun-splashed islands every day and putting out shingles claiming they are open for business. The decision of whether to take a bet from the United States seems to be based as much on a founder’s tolerance for risk as it is on existing law. If the boss is willing to taunt the authorities, the billion-dollar American betting market is something they’ll openly tap.

Which means that if you don’t get an NFL bet down come September, it’ll be because there aren’t any games, not because you can’t find an outlet.