An Off Shore Bet
With its advanced technical infrastructure, loose laws and beautiful women, Costa Rica has become a haven for hundreds of American sports-betting
From the Print Edition:
Tyson vs. King, Jan/Feb 04
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Turner entered the offshore sports-betting business after being accused of insider trading in Canada and carving out a niche for himself as a provider of e-commerce software. He shrugs off his crime as a youthful indiscretion, acknowledges that he changed his name and insists that he did nothing more than sign the wrong papers. Whatever the case, he is not alone in coming to Costa Rica after having a slightly sketchy situation up north.
If, as Casino author Nicholas Pileggi once wrote, Las Vegas is a morality car wash, then Costa Rica is the morality car wash of the morality car wash. One successful sports book owner here abandoned a similar operation in Vegas after he was robbed of millions and supposedly stiffed his winning gamblers for the dough; he's generally regarded as a great guy among his fellow expats. A highly esteemed oddsmaker got busted for money laundering, imprisoned and deported from the United States; he relocated to Costa Rica where he's since been embraced as an upstanding citizen. And even the guys who did nothing blatantly illegal inevitably turn squirrelly when questioned about their old lives in the States.
For all of that, the Costa Rican operations appear stunningly well run and efficient. Telephone rooms, with their long tables of bilingual clerks, are as antiseptically comfortable as any telemarketing setup in the United States. The businesses (which are run by men whose ambitions rarely exceeded 20 clerks in a little broom closet of a bookmaking office operating on the down-low) are solid enough that one was sold for $14 million and another supposedly went for $30 million, plus some $270 million in stock options. Both were purchased by the British company sportingbets.com. Hearing those amounts, though, and finding out that one bought-out company had the particularly enviable URL of sportsbook.com, I wonder if it was purchased partly for its online handle. Reggie Reggoni, who runs a mid-level sports book called Blue Marlin and was among the first half-dozen bookies to begin working down here, looks at me with some disbelief. "No," he says. "They bought it because they wanted the company's 80,000 American gamblers."
With deals like those, it's clear that bookies' lives in Costa Rica are as legit as it gets in this world. Undoubtedly, they're out of the shadows, perfectly legal and part of society. Collectively employing tens of thousands of young Costa Ricans, they pay better than average salaries, employ bodyguards (especially if they like to wear their diamond-encrusted Rolexes while swanning around town) and occasionally own the buildings that they occupy. Bet-On-Sports, one of San José's more successful books (it takes 1.6 billion bets per year), boasts an Olympic-sized swimming pool, a private club for its premier players and a free daycare center for the children of its employees. "The idea," says Bet-On-Sports' CEO David Carruthers, "is for our customers to realize that we are a substantial operation."
While CRIS's Mac goes so far as to say that the sports books have created a middle class in San José (a somewhat dubious assertion, as many Costa Ricans believe that the books are a corrupting influence on the good Catholic kids who work there), his boss, Mickey Richardson, gives the impression that being a bookie here has become too much of a real job. "It was more fun before," admits Richardson. "It used to be a party atmosphere. What used to be considered a racket is now a real business and we're dealing with things we couldn't even have imagined 10 years ago.
The watershed moment for all of this can be traced to the evening of December 13, 1992. That's when Steve Kroft of "60 Minutes" interviewed Ron "Cigar" Sacco, the lifelong bookmaker, who looked cocky with his shock of red hair, shirt pocket crammed with pens, and a signature Cohiba jammed between his teeth. Speaking from the Dominican Republic, to which he had relocated and set up dozens of toll-free phone lines, Sacco told Kroft that he was doing nothing illegal. Sacco insisted that he felt comfortable taking bets from U.S. customers in the Dominican Republic, where sports wagering had long been legal.
Sacco's message was a seductive one for bookies across the United States. "Seeing that interview changed me," remembers Richardson. "Suddenly, bookmaking seemed like something that could be done outside of the United States. It immediately appeared to be the ticket." In no time, the Dominican Republic was home to more than 200 expatriated American bookies, plying their trades beyond the reach of stateside authorities.
Within a couple years, however, the Dominican Republic ceased to be a gambler's Eden. "The government got greedy," says Reggoni. "You'd pay one general $50,000 and the next week his brother would show up demanding another $50,000." Following a false start in Antigua, Sacco moved his operation to Costa Rica; he was the first one in the industry and, once again, other bookies followed. Then, in the late 1990s, the Internet blew wide open. With easy access to information, the ability to place bets hassle-free, and an opportunity to monitor ever fluctuating lines (via services such as Don Best), the Web seems to have been custom-made for sports betting -- and it has ignited the multibillion dollar explosion in wagering.
However, all is not perfect in paradise. On the consumer end, gamblers run the risk of getting ripped off. It can happen surreptitiously or blatantly (in a well-publicized event, one of the major books in town stiffed a professional from Las Vegas for nearly half a million dollars, claiming that it simply didn't want wise-guy action, maintaining that the Vegas gambler knew this and bet anyway). "Some of these places get set up specifically for the purpose of not paying people," says one bookie, who did not want to be named. "They attract a lot of post-ups [the betting bankroll that you deposit up front] and then disappear, only to reopen under a whole other name." And it's not only the gamblers who face financial risk. "Sport Bucks [which worked as a bank for local sports books] recently went out of business, owing the books a total of $1.5 million," remembers Reggoni, adding that Sport Bucks got into trouble after its owners got hooked on betting games with money they were supposed to be minding. "We lost $30,000 on that one and felt lucky."
Even worse is the constant vulnerability to high-tech terrorists who cripple computer systems by flooding them with calls and demanding payments of $30,000 be sent to Saint Petersburg, Russia, or else the site will remain unusable. "We could have paid those guys who were putting out the denial of service attacks or stood up to them," says Will Gatten, a goateed hipster from Texas who does marketing for a respected sports book called Hollywood. "We did the latter and paid way more than $30,000 to upgrade our system" -- and make the attacks impossible -- "but it was the right thing to do."
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