UPDATED: Online Gambling Mogul Living it Up

July 7, 2006 — -- A battalion of bulletproof vehicles speeds around the dusty streets of Costa Rica.

Security is paramount -- the president is in town.

Watch the full report tonight on "Nightline."

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."