Bill Reynolds - Life Real Loud - John Lefebvre, Neteller and the Revolution in Online Gambling

As Lawrence got serious about building his new Internet idea into a bona fide business, Lefebvre got more stoked. French Kiss, covering for McMullen, and lawyering in general were all dropped without ceremony. “With my requisite level of enthusiasm, I ran Jane’s business into the ground,” he says. “I phoned Jane in September and said, ‘I’m sorry, I can’t practice law anymore, I’ve got something more rewarding to do.’”

Bergman, who had given birth back in May, recalls, “I’m pissed off. Here I go again, dealing with this crap that John’s left behind.”

They discussed what it would cost Lefebvre to let the business die and settled on $25,000. Not that he could pay. After ten years of start-ups and shutdowns, he owed everyone money. He says, “Jane was disappointed the law practice wasn’t there as an escape valve for her. She is really not comfortable being reliant on the income of, for instance, a husband.”

Lefebvre paid off his debt to McMullen in late 2004, penalizing himself with a highly usurious interest rate. He handed her a $500,000 Christmas present and, over a year later, a $500,000 birthday gift. “She was shaking and welling up,” he says, “like all the fears of her life had just been obviated. You’ll always find some things to be afraid of. She had children — that’ll do it.”

Sometimes You Play an Inside Straight

In 1997, Stephen Lawrence wanted to develop a strip mall located in Midnapore, a subdivision about twenty miles south of downtown Calgary. Two decades before, Midnapore had become an official neighborhood, although it had been annexed by the City of Calgary back in 1961. Lawrence leased all but one of the retail bays at the Midpark Boulevard SE location. Rather than sell Midnapore Car Wash, Inc., he decided to operate it himself. Not only was it located just off the main thoroughfare, Macleod Trail SE, it functioned like a small-business deduction.

To run this side business, Lawrence hired a kid named Jeff Natland, whose father had been after him to stop messing with his computer all day, get out of the house, and go find a real job. Good for responsibility, toughened you up, made you a better person — the usual. But that was old-school thinking because, in fact, Natland was working. He was developing software for businesses, and he was making money. When he took the brainless gig working for Lawrence at the car wash — taking out the coins, putting in the soap — he was also writing programming and helping friends and others who needed it.

“Steve was a bit of a tech nerd at that time,” says Steve Glavine, who took over from Natland as head of IT at Neteller in the summer of 2000. “He had a subscription to 2600 , the hacker magazine. Him and Nat were always talking about this and that, and one day Steve said to Jeff, ‘How can we just sit on a beach and make money?’ From what I’ve heard, Jeff’s reply was, ‘I don’t know, but I’ll tell you tomorrow.’ He went home, did a little research, came back the next day and said, ‘We need to start a gambling site in Costa Rica.’”

Natland’s research included gambling online. Here was this kid wasting days at the car wash. Then he went home and wasted his nights on the internet. The ensuing conversation went something like:

Lawrence: Hey Jeff, you know people are actually betting on the net?

Natland: I was doing it last night.

Lawrence: Really? How?

Natland: With my dad’s credit card.

Lawrence: Think you might be able to program a blackjack game?

Natland: I don’t know, why not?

Lawrence: What about a roulette game?

Natland: Sure, why not?

While Natland programmed an elementary gaming site, Lawrence sought help from certain Costa Ricans to set up a site in that country, where gambling is legal, or at least not illegal, in brick-and-mortar casinos as well as online.

While Lefebvre toiled away part-time on Lawrence’s real estate files in Calgary, including taking care of the legal documents for the Midnapore strip-mall project, he continued to busk and play clubs with Fowlie in French Kiss. Lawrence told him he and his wife, Perle, would be flying down to Costa Rica with this Natland kid. They wanted to spend six months immersing themselves in San José’s gambling culture and start their own business. They might not come back and might have to send for him.

The first couple of weeks, Natland stayed at the Hotel Del Rey. Nothing wrong with that, except it’s a gambling house and a whorehouse and he’s a kid. “And Jeff’s saying, ‘Yeah, Steve, the girls are so nice here.’ And of course they’re all prostitutes,” says Glavine. At any given time the place was lousy with hookers. “That was the genesis of Neteller.”

Lawrence and Natland were in for a rough apprenticeship in the volatile gambling business. They tried to test-drive their own little start-up, GambleUSA.com — the name being a “poke of the stick in Uncle Sam’s eye,” says Lefebvre — but found a lot of bad road. The pair started out with a casino site, which offered blackjack, roulette, and other games online. They weren’t rolling; they were taking baby steps.

Glavine said, “They had a house, they had the servers, everything. Jeff was running the whole thing and Steve would pop down every so often to see what was going on, or what was needed. Jeff hired a bunch of guys from Canada to come down and work for him, but they really didn’t know what they were doing.”

Lawrence and Natland got a firsthand look at the money flowing through sports betting, and they wanted in on the action. It was obvious that the National Football League’s Super Bowl Sunday was the number-one betting day of the year, but college basketball was also huge. The annual National Collegiate Athletic Association (NCAA) tournament constituted the largest ten-day stretch of the year for gambling. NFL Sundays and Monday Night Football were routine business by comparison.

So GambleUSA.com moved into sports betting territory. Caveat emptor: you had to know what you were doing at that level. In no time, what became apparent to Lawrence and Natland was, so far as online betting was concerned, they were mired in the minor leagues. They had no experience setting lines, and if you didn’t shift them as new information came in, bettors noticed and arbitraged against you. GambleUSA.com received a good spanking. Like Fagin in Dickens’s Oliver Twist , Lawrence and Natland decided that, hmm, perhaps they ought to review the situation. They packed it in, sold off the website and headed back to Canada.

Glavine explains,

It’s a hard racket. You need a guy changing the lines constantly. You get your lines out of whack, somebody will just pound it. They had this guy there who was cutting lines — that’s what they called it, changing the odds on the games. He’d be there in the morning, changing the odds, and then he’d f-off in the afternoon and go for a drink. All of a sudden, one of these games, the quarterback would break his arm, the odds would swing, and nothing would change because this guy’s gone, and they’d get hammered. This went on for a while and then Steve sold it for next to nothing.

Lawrence and Natland met some unusual people down there, such as “Nick Barlow,” an American who ran about ten online casino websites. He would prove useful. Lawrence set up a Western Union account, which they used to transfer some money for Barlow. “Nick was just a guy we had some traction with,” says Lefebvre. “He was obviously one of the guys we continued to work for once we got Neteller going.”

Competing against other bookies in San José wasn’t Lawrence’s greatest business triumph, but one crucial aspect to online gambling beamed through this fog of frustration: Lawrence realized that while it was difficult, if not impossible, for him to make a buck in legal gambling jurisdictions on the actual gambling side, that wasn’t the real problem with online gambling. The problem hobbling the entire industry wasn’t the stiff competition in the gambling business itself. It wasn’t even the FBI getting tough on gambling (although that was always a looming hazard). It was the money transfer issue. “It was operating in a vacuum,” says Lefebvre. “They needed to bring in some professionals to create reliability and security to the money transfer side of the business.”