The Billionaire of Bodog - Living the Dream

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Transcript of The Billionaire of Bodog - Living the Dream

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biggest, but a respected player in both pokerand sports betting, with revenues estimatedin the neighbourhood of $250 million in 2006and a profit margin around 26 per cent,according to previously published reports.(As a private company, Bodog discloses verylittle nancial information.) And the futurelooked bright. Standard industry projectionssuggested the online gambling market would

double in size by 2010.Problem was, the U.S. Department of Jus-tice said it was illegal to accept wagers overthe Internet. Technically, in Canada all gam-bling is illegal except for specically clearedinstances, such as provincial lotteries andcasinos. However, legal experts say it’s unclear

whether placing bets online is a criminal act—especially when the bets are placed with anoffshore company. Ayre and his competitorsgot around such technicalities by basing theircompanies offshore, typically in Antigua orCosta Rica. Many, including Bodog, also housedtheir servers on Canada’s Kahnawake reserve,where the Mohawk Indians argue their nativesovereignty places them outside the jurisdic-tion of the laws of both Canada and the U.S.

 All of which bugged the Yanks, who passeda law last year to make it tougher for their cit-

izens to gamble online. The Unlawful InternetGambling Enforcement Act took effect at the

start of calendar ’07 and barred U.S. nancialinstitutions from processing gambling-relatedtransactions. Also last year, the U.S. Depart-ment of Justice began arresting executives whoworked for online gambling companies. Therst, David Carruthers, the CEO of London-based Betonsports PLC, was nabbed at Dal-las/Fort Worth airport on a layover on his wayto Costa Rica on charges of tax evasion and

racketeering; after several court appearances,he’s still being held in the States under housearrest, ankle bracelet and all. More recently,

 just as the company stood to make millionsfrom betting on SuperBowl XLI, Americanauthorities in January nabbed the two Canad-ian founders of NETeller, a $3-billion publicly

traded e-wallet, similar to PayPal, which func-tioned as a payment vehicle for gaming rms.The men, former Calgary residents JohnLefebvre and Stephen Lawrence, are chargedwith laundering billions of dollars in trans-actions through NETeller.

The combination of the arrests and thenew law roiled the online gaming industry.

“It’s caused havoc,” says Alex Igelman, a law-yer specializing in gambling law. Stock mar-ket valuations have tumbled to fractions ofwhat they were a year before. The industry’s

largest outt, PartyGaming PLC, is tradingat less than a third of the price of its shares

at the start of 2006. It, along with such majorpublicly traded competitors as SportingbetPLC and BetonSports PLC, all of whomderived most of their business from the U.S.,have either exited that market or are in theprocess of leaving.

 Where does the privately held Bodog t inall this? Ayre cancelled the online gamblingconference he threw annually in Las Vegas,

then followed the rest of the industry inannouncing the refocusing of his expansionefforts to Europe and Asia. Ayre also is mov-ing his operational headquarters and resi-dency to the former British colony of Antigua.Unlike Costa Rica, its government has dem-onstrated a willingness to protect its online

gambling industry from U.S. law enforce-ment. In fact, Antigua recently won a gam-bling-related trade dispute at the World Trade

Organization, providing its companies witha modicum of legal protection if they con-tinue to accept bets from Americans.

 Ayre will need the protection. So far as theU.S. Justice Department is concerned, thechief Bodog has got to be one of America’smost wanted. The reason is visible to anyonewho takes a tour through Ayre’s Costa Ricanhome. Located a half-hour helicopter rideaway from the coast, on the outskirts of San

 José, the Costa Rican capital, the Bodog “com-pound” is a 10,000-sq.-foot, $3.5-millionbachelor pad. The centrepiece is the pool

with a swim-up bar and a waterfall where Ayre likes to perform backips for admiringguests. An interior bar, this one chrome-plated,features photos of King Bodog with such fam-ous female celebrities as Paris Hilton and

 Jennifer Love Hewitt. Then there’s the cus-tom Harley with front forks that spell out

“Bodog” in tiny rubies. Tanning by the poolis Ayre’s requisite eye candy—this time it’sLindsay, an Arizona “model” Ayre ew downto San José after she sent him photos of her-self through email.

 A blown-up copy of his cover appearance

for the 2006 billionaires issue of Forbes maga-zine occupies a large slab of wall space in the

THE DAY’S EVENTS INCLUDE TWO ALL-FEMALE

FIGHTS, ‘TO BRING IN THE WHOLE CHICKS-

HAVING-SEX THING INTO THE EQUATION,’ HE SAYS

Bodog Fight, Ayre’s laes venure, akes mxe-maral ars fn an as a ealy se f sex appeal an mnmally cla wmen

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hall by the kitchen. Additional copies of theissue decorate horizontal surfaces through-out the house. When a visitor asks for one asa keepsake, Ayre is only too happy to oblige.

“Cyber bookie Calvin Ayre sticks it to Uncle

Sam,” reads the cover tag line; the headlinefor the story inside blares, “Catch me if youcan.”

There are Third World dictators who havebeen deposed by the U.S. for less. Making

 Ayre even more of a target is the fact that,almost alone among his major competitors,Bodog continues to accept bets from Amer-icans who have gured out ways to circum-

 vent the new laws, including using other,offshore-based e-wallets to process their trans-actions. “Look, any entity taking bets fromU.S. citizens is on a list for prosecution,” says

Michael Tew, a New York-based online gam-bling consultant. “[Ayre] is in the top 10,particularly given his media prole, and hisamboyant way of doing business. Bodog isnow the 1,000-lb. gorilla taking bets fromU.S. citizens.”

Legally dubious capitalism is nothing newto Calvin Ayre. He was born in 1961 andraised in Lloydminster, Sask., the second offour children of Ken and Wilma, a Scottishcouple who made their living as grain andpig farmers. The couple instilled an entre-

preneurial streak in their children by assign-ing them a litter of pigs to raise each year.

 When it was selling time, Calvin and his sib-lings kept the cash—an excellent lesson innurturing a business, he says. When Ayrewas in Grade 6 his family moved to B.C.’sOkanagan Valley, where Ken Ayre foundeda water purification business. After highschool, young Calvin went east for a sciencedegree at the University of Waterloo. Nextwas Western, for law school, but Ayre’s grades,he says, got him kicked out in the rst year.

In 1987, when Ayre was 25, his father, Ken,

and several friends became embroiled in amarijuana-smuggling scheme. The plan,

according to one of the participants—a B.C.drywall contractor named Bill Roberts, whohas two kids with one of Calvin’s sisters—was

for Bill’s brother, Paddy, a licensed pilot, toy a plane from the Bahamas to a small NewBrunswick airstrip. To make the long journey,the men arranged to outt a plane with long-range gas tanks. Problem was, the companythat installed the tanks was a front for Amer-ican law enforcement, which outtted thetanks with a transponder. When Paddy Rob-erts landed, on Oct. 3, 1987, the RCMP werewaiting. In 1988, Paddy Roberts was sentencedto ve years in prison. Ken Ayre and Bill Rob-erts later got four years each.

 Asked about the incident, Ayre says only:

“I was in university at the time.” He wouldsoon have his own legal entanglements toworry about. In 1990, Ayre had just nishedhis M.B.A. at Seattle’s City University whenPaddy Roberts was paroled from prison. Ayrehad gotten a job as president of an ailingheart-valve manufacturer, Bicer Medical Sys-tems, then listed on the Vancouver StockExchange. Ayre hired as marketing directora friend Roberts knew from prison: ErichBrunnhuber, a notorious Vancouver stockpromoter who’d just been paroled from aseven-year sentence for fraud, for falsely

inating the share prices of a half-dozen Van-couver Stock Exchange companies. Regula-

tors forced Ayre to fire Brunnhuber. Butaccording to the results of an investigationthat spanned several years, Ayre continued

to associate with Brunnhuber; he also mis-represented Bicer’s affairs to regulators andcommitted insider-trading violations. As aresult, in 1996, the province’s securities com-mission ned Ayre $10,000 and barred himfrom working as an ofcer or director withpublicly traded companies in B.C. for 20

 years. “That was my rst professional ven-ture, outside of university,” Ayre says. “Twomain lessons I learned from that—to pay alot more attention to detail, and to be a lotmore cautious about the quality of the peopleI associate with.”

 Which brings us to Bodog. The companygrew out of an investment Ayre made in thewake of his stock-trading debacle, in the mid-’90s, just as the Internet was revving its eco-nomic engine. Several Vancouver outts weresetting up offshore operations to accept sportsbets over the Internet. Styling himself as asoftware consultant, Ayre snagged a coupleof contracts to build programs to run the bet-ting sites, then began licensing his programto other companies. His biggest deal, he says,was a $4-million contract with a Vancouveroutt called Cyberoad. But as he whipped

his program into shape, he realized there wasfar more money in running a gambling site

BUSINESS 

AYRE IS NO STRANGER TO DUBIOUS BUSINESS.

IN 1996, HE WAS BARRED FROM WORKING WITH

PUBLIC COMPANIES IN B.C. FOR 20 YEARS.

The only spctatrs ar t figtrs,

famiis ad t Csta Rica pi-up girs

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of his own. He happened upon the nameBodog because it was a short, catchy andslightly rude moniker with, most importantly,a free dot-com URL. It’s grown to include amusic label and a poker lifestyle show, Cal-vin Ayre’s Wild Card Poker , plus BodogFight ,

which also stages pay-per-view live events ontop of the cable show. But the big money stillcomes from gambling: seven years after itbegan operating, Bodog is the largest com-pany still accepting sports bets and for-moneypoker wagers from the U.S. market.

 Cruising at about 500 feet in a chopperover the Costa Rican coast, Ayre points belowhim at a hilltop manse that has an entireisland all to itself. “I bet that guy can play hismusic loud,” he says, sounding envious.Sounding, in fact, a bit like a male in early

adolescence. Ayre has built an empire byresiding at that level of maturity. Still, thereis something prototypically Canadian about

 Ayre’s pursuits. Like the Bronfmans in thedays of prohibition, or any number of Can-adian entrepreneurs since, Ayre is makingreams of money using the U.S. border, andthe gap between what’s possible, and what’slegal, to make money from American vices.

 What’s remarkable now is his decidedlyun-Canadian absence of self-consciousness.

“I got into mixed-martial arts because I likedit,” he says. “That’s how I decide to get into

anything. I’m the brand; if I like it, I gurethe people who like Bodog will like it too.”

 Ayre says with Bodog he’s catering to malesbetween the ages of 18 and 40. That’s aiminga little higher than he hits.

There remains one form of rebellion Ayredoesn’t dare to transgress. He will not setfoot in the U.S. His situation has some ironyto it. Throughout his life, Ayre’s aspired to acertain breed of success. You can see it in thecelebrity photos he’s xed to the wall of hishouse. You can see it in the way he’s engi-neered his own persona as the public face of

the Bodog brand–the Casanova soldier offortune as comfortable pulling a pen acrossnine-numeral contracts as pulling the triggerof the Heckler & Koch 9mm handgun hebrags about keeping in his desk. He aches tobe seen as a Hugh Hefner for the poker-play-ing, post-Maxim age.

Is he still a billionaire? Well, that’s compli-cated. On his own frequent press releases,

 Ayre’s name is seldom mentioned withoutthe adjective “billionaire” preceding it. Andsince the crackdown, Bodog has clampeddown on the nancial information it discloses,

so any discussion of his revenues is unveri-able guesswork. But for what it’s worth: “The

crackdown has probably helped his revenues,”says Michael Tew, an online gambling con-sultant who says Bodog has attracted Amer-

ican punters as its larger competitors haveleft the U.S. market.

So wouldn’t that mean his net worth hasactually gone up? Well, no. Despite increasedrevenues, Bodog’s value has likely decreasedbecause its industry has grown far more risky.

“The risk has increased tenfold,” says Tew. “Any-one wanting to acquire Bodog would discounttheir offering price because the whole marketis so difcult to predict.” If it was acquiredtoday, Tew says Bodog would get far less thanthe billion it was valued at last year.  Forbes agrees; Ayre didn’t make the 2007 list.

In the meantime, Ayre insists not beingable to go to the United States hasn’t affectedhis life whatsoever. “I didn’t go there muchanyways,” he says. “Actually, my life’s improvedsince I stopped going to the United States.I’m not a fan of those celebrity parties any-

way.” Minutes later, Ayre is talking about hisplans for BodogFight  when he mentions plansto stage a pay-per-view event this summer in

Los Angeles. “Of course,” he says. “I won’tbe able to be there.”

The smirk that follows is a l ittle forced. It’sapparent he’s still coming to terms with hisnew situation. His fate seems redolent of theshort story about the monkey’s paw, whosewishes, once fullled, force its owner to regretever making the wish. The mechanism that’sresponsible for his success, online gambling,has made it impossible for him to becomethe sort of gure he’s always aspired to be. Solong as he’s barred from the United States,

 Ayre will never be able to build his celebrity

prole to the extent that he craves. “Whoknows,” Ayre says poolside at his Costa Ricanbachelor pad. “Perhaps this whole thing willeven help build the myth.”

Perhaps. In the meantime, he’d better getcomfortable in that palm-backed throne.M

MOTHER AND CHILD DOING FINE BUT TEAM ISN’T

University of Nebraska at Kearney women’s basketball coach Carol

Russell isn’t one to miss a game. Last week, five hours after giving

birth to her first child, Russell was out cheering her players on.

She’d travelled to Grand Forks, N.D., to have her baby expressly

because that’s where the team was playing, and after watching her

Lopers lose to North Dakota she said her team looked tired in the

second half, then added it was something she could relate to.

AYRE INSISTS HE DOESN’T MISS GOING TO THE

UNITED STATES. ‘MY LIFE’S IMPROVED . . . I’M NOT 

A FAN OF THOSE CELEBRITY PARTIES ANYWAY.’

KING BODOG travels around Costa Rica ina chartered helicopter and bulletproofHummer, but he dares not go to the U.S.

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