Offshore Bookies Offer Sports Gamblers a New Arena, But Buyer Beware
(continued from page 2)
It's as easy as buying a fruit basket.
You pick up the phone, dial a toll-free number that connects you to an office in a faraway land, give the nice man on the other end your account information and place your order. If you're lucky, a few days later your "merchandise" arrives in your mailbox. Only it's not strawberries and melons, but a check for thousands of dollars that shows up in the mail.
Welcome to the latest development in the world of sports gambling: offshore bookies.
While a sports bettor's options were once confined to the legal services offered in Nevada or the local but illegal bookmaker, many can now bet quasi-legally by telephone with an internationally based operation. We say quasi-legally because it is a crime in most states for residents to make a bet on sports over the phone; on the other hand, the bookmakers operating out of locations as far flung as Australia, Austria and Antigua are fully sanctioned by their respective local governments.
According to Professor I. Nelson Rose from Whittier (California) Law School, a leading authority on gambling and the law, "The Interstate Wire Act makes it a crime for anyone in the business of gambling to use a telephone line which crosses a state or national boundary to transmit information assisting in the placing of bets. Note that the law only applies one way: it is not a federal crime for a player to make a bet by phone." Some states, like California, have passed even stricter laws, which prohibit accepting or making an illegal wager. Most experts agree, though, that law enforcement officials are generally uninterested in busting bettors; they're focused on putting the bookies out of business.
As Rose notes, "True players never get arrested for making a bet." A seasoned sports better adds: "Unless you're a monster bettor, the feds aren't going to bother you."
Establishing an account overseas is simple. Many operations offer $100 or more in incentives to new customers. After filling out an application verifying age and identity, gamblers deposit U.S. funds in the bookmaker's bank, either via wire transfer or cashier's check. For a 3 percent surcharge, some places even take credit cards. After their account is activated, players are assigned a PIN number. To bet, customers call the bookie's toll-free number, identify themselves by code, announce their bet and listen as the clerk calls the bet back. (All telephone calls are recorded for mutual security.) A $50 minimum bet is required by most overseas operations. Maximums typically range from $5,000 to $20,000 per bet, similar to Nevada limits. If the player loses his bet, the money is deducted from his account. If he wins, the proceeds may either be reinvested in his account, like a dividend, or sent to America via overnight courier.
At present, offshore bookies accessible to American gamblers operate in the Dominican Republic, Antigua and Barbuda, Aruba, Grenada, St. Vincent, Venezuela, Curaçao, Mauritius, Australia, Belgium, Costa Rica, Panama, Austria, Belize, St. Kitts and Gibraltar. It's difficult to estimate how many operations exist--certainly hundreds --or how much money they take in. One publicly traded company, Interactive Gaming and Communications, which operates Sports International Race and Sports Book in Antigua and Grenada, reported gross wagers of nearly $50 million in both 1994 and 1995. Michael "Roxy" Roxborough, the world's preeminent oddsmaker (see Cigar Aficionado, Summer 1995), whose company, Las Vegas Sports Consultants, supplies many of the offshore bookies with their betting lines, says, "It's hard to say how much money the offshore bookmakers are taking in altogether. Certainly more than all the sports books in Nevada, which handled $2.5 billion last year. It's got to be a huge number. Anyone can pick up the telephone."
Terry Cox, formerly the race and sports book manager at Harrah's Reno as well as at an offshore operation in the Caribbean, says, "The growth of sports gambling is phenomenal, whether legal or illegal. Offshore bookies are taking advantage of that growth by providing a more formal, structured, reliable scenario than the typical illegal bookie."
Cash-hungry foreign governments that collect licensing fees and taxes from the sports books not only allow the bookies but encourage their business. Indeed, in October 1995, Antigua and Barbuda's minister of communication sent an open letter of invitation to bookmaking companies, saying that his government was "keen to develop its offshore market sector, particularly the offshore gaming sector" and that Antigua was "the perfect spot to relocate your sports betting company."
Years before Antigua rolled out the welcome mat, Ronald Sacco, a mob bookie known as "The Cigar," took his business to the Dominican Republic. Trying to outrun a series of felony convictions in the States, Sacco opened shop in the Caribbean country in the late 1980s, connecting to his old stable of clients via toll-free telephone lines. While the weather was hot, the pressure from law enforcement officials was not. Sacco thought he had found the perfect haven. But "The Cigar" was an old-time bookie who used old-fashioned methods for paying and collecting: a network of runners and clerks who made cash money transfers back in America. (The new breed relies on electronic or mail transactions.) Sacco was convicted of money laundering in 1994.
But his cronies had seen the light--or at least a reflection of the light. A substantial number of operators with organized crime ties (as well as prior convictions) transferred their businesses to the sunny Caribbean, where licensing fees cost as little as $5,000 (they now go for closer to $100,000) and background checks were nonexistent. They kept their wise-guy clientele and shadowy practices--no advertising, no publicity, no customer service--but took care not to make the same mistakes as Sacco.
While some offshore operations are still "mobbed up," in the past few years many international sports betting shops have become more corporate. Run by former (legal) Nevada bookmakers and backed by venture capitalists and marketing wizards, these sports books advertise heavily in such mainstream outlets as airline in-flight magazines (as well as Cigar Aficionado) and issue quarterly earnings statements. Some are even publicly traded companies.
Which leads to an obvious question: Will the offshore bookies put the corner bookies out of business? Will they take a bite out of Nevada's legal sports betting market?
"I think this is definitely the wave of the future," one major professional sports bettor tells me. "Everything is going to depend on this new Federal Gambling Commission"--which was set up this year to examine the ramifications of gambling and make recommendations--"and Congress and the Justice Department. If they all want to get involved, things could get messy. But if everything remains status quo--it's like it might as well be legal. Why would anyone want to deal with some goon with a paper bag full of cash when he can do it so clean over the phone?"
The man who makes the odds doesn't necessarily agree. "I don't think the illegal corner bookies will disappear," Roxy says. "The offshore bookies will hurt the illegal guys, but not put them out of business. Because the illegal bookies still offer credit, and they probably have lower minimums." Roxy thinks the offshore operations will have even less impact on legal sports books. "The offshore operations definitely won't affect Nevada, unless someone suddenly puts 100,000 hotel rooms in Antigua. Vegas sports betting is done mostly by tourists. The offshore bookie is going after a different customer."
Indeed, Roxy thinks that rather than eroding the existing market in sports gambling, the offshore bookies are expanding it. "We're seeing a whole new segment of sports gamblers," Roxy says. "We're seeing professionals, successful people who like the security and discretion of the offshore bookies, people who might not be comfortable dealing with a mob bookie. For these players, the kind of gambler who reads Cigar Aficionado, doing business with an offshore bookie is like calling their stockbroker."
Since no money changes hands on U.S. soil, you have about as much chance of getting harassed for making an overseas sports bet as you do for smoking a Cuban cigar. This is why Scott Kaminsky, odds manager for Bowman International out of Mauritius, says his business can only get bigger. "I don't know a single person who has ever been charged with as much as a misdemeanor for betting. The American government won't say it's illegal to bet with an organization such as ours, so you can almost assume they're implying it's legal."
Kaminsky, whose office employs up to 100 clerks during the heart of football season, says offshore bookies are serving an enormous market. "We're helping make a billion dollar industry become legal. It seems like two new offshore shops open every week. This isn't necessarily gambling's future but it is definitely the present."
Offshore bookies offer American sports bettors several appealing improvements over the mob-connected bookies operating out of your corner bar such as:
* Accessibility. With toll-free 800 or 888 numbers manned by dozens of clerks, it's often easier to get a bet down with your man in the Caribbean than it is to reach a customer-service representative at your long-distance company. According to one major Las Vegas gambler, a man who can make phone bets legally in his home state but prefers to deal with the international bookies, "I'd rather bet with some of these offshore operations. They run their business like a business. They treat you like they want your action. Try calling a Las Vegas sports book--they'll put you on hold for 10 minutes. They act like they're doing you a favor. The offshore guys are all about service."
* Different odds. One of the keys to beating the bookies is getting a good "price," or odds, on your bet. Smart sports bettors shop around, looking for the best deal. If Vinny is offering the Packers as seven-point favorites and Sid has them at 6.5, players who want to take the Packers will bet with Sid, who's offering a half-point discount. Gamblers who play with offshore bookies can get a dozen or more different quotes on the game of their choice, ideally finding a bargain price. "The offshore books don't usually move their lines as quickly as the bookies in America," one professional sports gambler says. "I'm not saying you can find numbers that are outrageous, but sometimes you can find a good value."
* Large menu of bets. Ask your local bookie if he'll take your action on a European rugby match. Or a South American soccer game. Or a Japanese golf tournament. Chances are he'll only offer action on football, baseball and basketball, and the occasional fight. Offshore bookies, who cater to an international clientele, post numbers on just about anything, including elections. "The offshore bookies put up a lot of exotic bets, some strange propositions," the professional sports gambler says. "I don't know if they're good values--probably not--but if you're looking for unusual action, they'll give it to you."
Betting with offshore bookies can have its downside, particularly if you wager large sums. "I believe that 90 percent of these operations would be in trouble if every one of their clients asked for their money at the same time," says Roxy Roxborough. "A lot of these start-up operations are living on the float. One bad football month, four losing weeks in a row--and that can happen--you'll see a real shakeout." Among the other risks of offshore gambling are:
* Getting stiffed. While a telephone bettor has an assurance that his licensed offshore bookmaker won't be suddenly shut down by the government--as happens occasionally to illegal bookies--he is nevertheless faced with the very real possibility of getting ripped off. Most American bookies let their customers play on good-faith credit: you make your bet, and pay off or collect later. Offshore bookies, however, will let you bet only what you have on account. In other words, you've got to put up a lot of front money. Sending cash overseas to someone you've never seen--potentially a con man with bad intentions--clearly exposes you to fiduciary chicanery. "It's one thing to win a bet and not get paid," a serious sports bettor says. "To lose everything you put up, that's a catastrophe."
* Odds. Just as the variance in price quotes between your local bookie and one offshore can work in your favor, it can also hurt you. "If you don't shop around, if you accept whatever odds an offshore bookmaker offers, you might be getting a bad price," Roxy Roxborough says. "On the other hand, if the odds are too good, you could be looking at a going-out-of-business sale." Always call several outlets and compare.
* Uncollectible debts. Unless you're interested in flying to, say, Costa Rica to chase down a few hundred bucks, you'll have little recourse, legal or otherwise, to collect money owed to you. Whereas you can see your local bookie (or one of his runners), with an offshore office you're merely dealing with a voice on a distant telephone. Do your research well, because once you're screwed by an international bookmaker, you'll probably never collect.
When selecting an offshore bookie, look for these three attributes: quick and efficient payment, competitive odds and courteous service. "The whole key to playing with an offshore bookie is buyer beware," Roxy says. "Do your research. How long have they been in business? Have friends and colleagues reported good experiences? What's their reputation? Do they even have a reputation? Of course, this is the same common sense approach you would use buying a used car or a vacuum cleaner."
Except buying a used car or a vacuum cleaner was never this easy.
Contributing editor Michael Konik is Cigar Aficionado's gambling columnist.
Log in if you're already registered.
Search our database of more than 17,000 cigar tasting notes by score, brand, country, size, price range, year, wrapper and more, plus add your favorites to your Personal Humidor.