GPWA Times Magazine - Issue 11 - January 2010

While 2005 was a great year for on- line gambling, 2006 was an awful one. The year began innocently enough – although Bodog founder Calvin Ayre probablywishes Forbes’s headlinewrit- ers had chosen something different from “Catch Me if You Can.” In March of 2006, Forbes published a special is- sue looking at the world’s billionaires, which included a profile of Ayre that chronicled the founding of Bodog, Ayre’s lifestyle and Ayre’s promotion- al stunts. The phrase “catch me if you can” never appears in the story. But the catchy headline raised Ayre’s profile in theconsciousnessof theU.S. public, and the U.S. govern- ment. On July 11, theU.S. House of Representatives passed the Internet Gambling Prohibi- tion and Enforcement Act. The bill, authored by Rep. Jim Leach (R-IA), attempted to criminalize and prohibit Internet gambling and the transfer of funds from Inter- net gambling companies toplayers. At the time, fewpaidattention to thevote because the general consensuswithin the onlinegambling industrywas that thebill wouldneverpass theSenate. Almost a week after Leach’s bill passed, BetOnSports CEO David Carruthers was arrested inDallaswhilehewasona layover onhis trip fromEngland toCostaRica.He waschargedwithconspiracy inparticipat- ing in an illegal gambling operation. Car- ruthers eventually reached a plea agree- ment and was sentenced to 33 months in prison. Other BetOnSports executives, including founderGaryKaplan, havepled guilty tocriminal chargesaswell. As disappointing as the BetOnSports ar- rests were, the worst news of the year from theU.S.was yet to come. September of 2006was poised to be just another typicalmonth in the online gam- bling industry. Online poker was boom- ing. The online gamblingmarket, both in the U.S. and Europe, was growing expo- nentially.NETellerwasusedbyeveryone. Andonline gaming executivesweremild- lyworried about theU.S. JusticeDepart- ment, but not enough to stop what they were doing –whichwasmintingmoney. Then came the lastweekof September. Theweekbeganwithabigwin for theon- line gambling industry. Then SenateMa- jorityLeaderBill Frist failed inhis efforts to attach the UIGEA to a defense spend- ingbill. Frist had thought thedefensebill wasa “mustpass”by theSenateandCon- gress. “Senate Armed Services Committee Chair- man JohnWarner, a Virginia Republican, raised a ‘strong objection’ to attaching any unrelated legislation to a pending defense bill,whichhasbeenviewedbysupportersof theInternetgamblingbillasaprimevehicle for it,”reportedReutersonSept.27,2006. But even thoughFristhadbeen thwarted, hewasn’t givingup. “ARepublicanaide saidFrist hasnot giv- en up on passing the Internet gambling bill before lawmakers recess at the endof thisweek tocampaign for theNov. 7elec- tions,” Reuters reported. “He and other proponents are looking at other possible vehicles, such as a pending measure to bolsterport securityagainstpotential ter- rorist attacks, aides said.…” Even though Frist was determined to get the UIGEA passed, the online gambling industrywas fairly certain the billwas goingnowhere. “I’d say there is a 40 percent chance it comes backupdur- ing the lame-duck session (in November), a 40 per- cent chance the defense bill passes this week without an Internet gamblingbanor any other attachments, and a 20 percent chance the defense bill passes thisweekwith the Internet gambling ban,” a lobbyist told iGamingNews. Luckily for the lobbyist, he chose to re- main anonymous. Frist–astheRepublicanaidetoldReuters – did manage to attach the UIGEA to a port security act and the UIGEA passed the full Senate on a late-night, weekend votewithout debate. And theonlinegam- bling industryasweknew itwasover. Shares of PartyGaming, Sportingbet and 888 Holdings cratered on the London Stock Exchange the Monday after the bill hadpassed. The three companies lost Frist . . . did manage to attach the UIGEA toaport securityact and the UIGEA passed the full Senate on a late-night, weekend vote without debate. And the online gambling industryasweknew itwasover. Left to right:CalvinAyre,DavidCarruthers, Sen. Bill Frist, Rep. Jim Leach 16 Online Gaming Stories of the Decade