By MARTIN BASHIR
Online Gambling Is Illegal in the United States, but That Has Not Stopped Owner Calvin Ayre
June 23, 2006 — A battalion of bulletproof vehicles speeds around the dusty streets of Costa Rica.
Security is paramount — the president is in town.
The president, that is, of the Bodog Entertainment Group, whose Bodog.com is the most successful gambling Web site on the planet, where you can bet on horses or play endless games of poker.
Calvin Ayre, 45, was raised on a pig farm in Saskatchewan, Canada. He is now the founder and sole owner of Bodog, and he likes nothing more than to promote his business — always accompanied by beautiful women.
“Bodog is about having fun,” Ayre said as he relaxed at his compound where four bikini-clad models whose outfits just managed to contain the company’s eight-letter logo waited nearby.
“It’s no different than what you’ll see if you watch a James Bond movie. It’s basically the philosophy is that we sell fantasy. We’re in the entertainment business. It’s pretty much identical to what you see when you go to a movie like a James Bond movie. He’s got the similar strategy. And it’s attractive to people. People like it,” he said.
They certainly do. Last year, Bodog.com, in only its sixth year of business, turned over about $7.3 billion in wagers and gaming. What’s most surprising of all is that it is illegal to run an online gambling business in the United States. That hasn’t stopped Ayre.
Instead, he has arranged a complex international business model that means he doesn’t fall foul of the laws of any particular jurisdiction.
His core business is based on two floors of an office complex in Costa Rica, with employees running the main gambling business — setting odds and taking bets. His revenue is processed through the Royal Bank of Scotland in London where payments are received and winnings are paid out. None of his transactions take place within an American financial institution.
So although most of his clients are based in the United States, Ayre maintains that none of his financial processes are subject to this country’s laws or system of taxation. He has a term for his carefully conceived business. He calls it “jurisdictional arbitrage.”
“I think that any astute businessperson looks for arbitrage. This is merely jurisdictional arbitrage. … What I was doing was structuring a business so that everything that I do is legal. That’s what I was doing,” he said.
As a result, it is difficult to assess Ayre’s actual wealth. There are no published accounts and, for one so given to self-promotion, he is remarkably reluctant to discuss the details — especially when it comes to the vexed issue of paying taxes, as indicated in this excerpt from our interview.
MARTIN BASHIR: Do you pay tax?
CALVIN AYRE: Yes. I pay taxes all over the place.
MARTIN BASHIR: Do you pay tax in America?
CALVIN AYRE: I don’t operate in the United States.
MARTIN BASHIR: But you take money from —
CALVIN AYRE: United States has chosen to not allow our industry to operate in the United States. And they voluntarily made that decision. It’s not up to me to force myself into the United States to pay taxes there. The countries that I do operate in, I pay taxes in them.
MARTIN BASHIR: Do you pay personal tax in Costa Rica?
CALVIN AYRE: In Costa Rica? Personal income tax? We’re going to not talk about my personal tax structure. That’s another area that —
MARTIN BASHIR: So I’ll assume you don’t.
CALVIN AYRE: Pardon?
MARTIN BASHIR: I’ll assume you don’t.
CALVIN AYRE: We’re just not going to talk about my personal financial situation. I will talk about what I do from a corporate perspective, though.
MARTIN BASHIR: Go ahead.
CALVIN AYRE:We pay taxes everywhere. We pay taxes everywhere we operate. We pay taxes.
MARTIN BASHIR: So you pay taxes on your business here in Costa Rica then?
CALVIN AYRE: Correct. We pay transaction taxes. We pay income taxes. We pay licensing taxes. And we pay taxes in a number of other jurisdictions as well — including Canada.
MARTIN BASHIR: Do you pay personal taxes in Canada?
CALVIN AYRE: Stick to corporate stuff for now.
MARTIN BASHIR: Do you pay personal tax in Canada?
CALVIN AYRE: Corporate. Right.
MARTIN BASHIR: So you don’t pay personal tax in Canada and you don’t pay personal tax in Costa Rica.
CALVIN AYRE: I’m just not prepared to talk. The interview is going to be us talking about Bodog and what Bodog is about.
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