A federal jury in Denver has convicted a local man, Jonathan Arvay, of running an illegal gambling business that employed a fake cryptocurrency to conceal the exchange of gambling credits for cash.
Arvay, 38, was found guilty of one count of conducting an illegal gambling business and one count of conspiracy to conduct an illegal gambling business in connection to his operation of the Player One Arcade in Denver. The arcade was part of a network of establishments throughout Colorado that were raided by federal agents in February 2022. These businesses were equipped with popular “fish-shooting”-style arcade games and other slot-style machines, according to court documents.
At all these businesses, wagers were placed using a proprietary cryptocurrency known as “Obsidian Digital Asset Coin (ODAC),” which could be purchased and sold on-site. Prosecutors stated that the network of gambling dens was linked through the common use of the ODAC cryptocurrency, as well as through their management and ownership.
Two other defendants, Nathan Sugar and Jovan Walker, also face similar charges for their involvement in the network. Additionally, Sugar faces three extra counts of money laundering. Casino-style gambling in Colorado is legally confined to three Rocky Mountain gambling towns—Black Hawk, Central City, and Cripple Creek—and two Native American casinos in the Four Corners region.
The defendants argued that the use of ODAC legitimized their businesses under a 2018 Colorado law that banned gaming machines from paying out cash prizes. Despite this, ODAC could be exchanged for cash at an ATM-like “cryptocurrency teller machine” inside the arcade.
“These gambling dens masqueraded as arcades with a veneer of legitimacy,” said Acting United States Attorney for the District of Colorado Matt Kirsch. “I am grateful to law enforcement for digging beneath the veneer and finding that these establishments were causing real harm in our communities.”
FBI Denver Special Agent in Charge Mark Michalek added, “These defendants created a large, complex illegal gambling operation, both online and in person in Pueblo, Colorado Springs, Lakewood, Denver, Aurora, and Greeley. Their illicit proceeds led to crimes involving money laundering and fraud against the US government, among other violations.”
Arvay is scheduled to be sentenced on December 12. Both he and Walker face up to five years in prison and a $250,000 fine. Due to the money laundering charges, Sugar could face a term exceeding 20 years.
