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customers a 10-percent commission, called vigorish, on bets that
his customers lost.3
Mr. Paterson did not accept bets on other sports, except a
few on World Series games. He occupied himself during the
football off-season by gambling on golf and cards. He won as
much as $2,000 at a time on golf and card games but did not
report any of these winnings on his tax returns.
Mr. Paterson tried to avoid being caught at his illegal
activities. He accepted mainly cash from his customers and used
code numbers to identify his customers in case his bookmaking
business was ever raided. In addition, he destroyed his records
of who each customer was and how much each customer bet weekly.
He instead kept a tally of profit in his head.
Mr. Paterson attempted to comply with laws regarding
registration of bookmakers with the Internal Revenue Service
(IRS) because he feared that he and his sons would be jailed for
failure to register. He purchased a “gambling stamp,” Form 11C,
Occupational Tax and Registration Return for Wagering, for 1997
and 1998. Mr. Paterson also filed monthly Forms 730 with the IRS
for all of 1997 and January through October of 1998. The Forms
730 indicate that Mr. Paterson reported a total of gross wagers
of $196,500 for 1997 and $210,400 for 1998.
3Vigorish has been described as a means to compensate the
bookmaker for the privilege of placing bets. See United States
v. Pinelli, 890 F.2d 1461, 1465 (10th Cir. 1989). If a bookmaker
is balanced, meaning he or she has an even number of bets on both
sides of the contest, the vigorish will be profit to the
bookmaker. See id.
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Last modified: November 10, 2007