When the internet first came about many bookmakers in the United States decided to take their operations offshore believing that as long as their bets were taking place in jurisdictions that deemed the activity legal (i.e. Antigua, Costa Rica, Kahnawake etc.) they had nothing to fear from the American government. That changed quickly when Attorney General Janet Reno issued arrest warrants against several of them in 1999 and more so in 2002 when Jay Cohen was found guilty in a U.S. court of law of violating the wire act for taking wagers from Americans on the WSEX servers located in Antigua. Nevertheless bookmakers continued to set up shop offshore but that virtually stopped around 2006 when the UIGEA was passed.
Realizing the feds were out in force to find the operators of illegal websites and realizing it was getting increasingly more difficult to get money in and out of the U.S., most bookmakers just remained underground and decided they would operate as they always had. But of course where there's a will there's a way, so some entrepreneurs in the Caribbean came out with a new model called pay per head, price per head or PPH that was geared directly to these underground bookmakers. The PPH model took away a lot of the grunt work from the bookmaker and instead put it in the hands of the PPH provider.
Instead of taking a bet from a client, putting it on a piece of paper or in a spreadsheet and keeping track of winnings and loses, as was always the tradition with 'street' bookmakers, those same bookmakers would send their clients to a website where the client would place the bets. So effectively underground bookmaking went online, but without the same notoriety and dangers that post-up offshore bookmakers had.
The pay per head provider is generally made up of personnel with knowledge of sports and betting who would list a host of bet options for the players to bet and a handful of techno geeks. The advantage to the bookmakers is that their site is available 24/7, has a live agent available to answer questions, has all the relevant games available, including horse racing, as well as various bets local bookmakers wouldn't be able to usually handle, including in-play betting. Customers would place their wagers with the PPH who would keep track of the profits and losses in various forms of software and at the end of the week or month the bookmaker would take a look at the profit and loss sheet of the player to see how much they had to pay or collect from the client. Moreover, the bookmaker has full control of his clientele, so he can set limits or deny plays from clients who are routinely beating him. In addition, it's still important for the bookmaker to ensure that he doesn't book more than he can pay which is a concern that will be discussed later.
The obvious advantage of the PPH model to the bookmaker is that his name is nowhere out there for the feds to see, the clients can still be gambling online and most importantly the bookie simply collects all the winnings without doing much work. And all this is done at a cost between $5 and $20 per player (head) per week depending how many bells and whistles (i.e. customer service options) the bookie wants the PPH to provide. So, if a client bets 3 games or 500 games in a week the cost to the bookie is one low, flat fee. The bookmaker's time is thus relegated to finding new clients as well as paying or collecting from clients. Unfortunately for the bookies PPH sites deem themselves to be just the techno and service part of the operation and will not have anything to do with collecting money for the bookies for legal reasons. For that reason clients can't pay or collect with credit or debit cards, but still have to meet up with the local bookie at a designated location to complete the collection or payment from the last week.
Not surprisingly this type of solution has been working wonders and many large underground bookmaking operations stateside have been quite successful and clients have been quite happy betting via a price per head provider. The problem is that success breeds competition and many, many sportsbooks that are nothing more than PPH operations have sprung up, and, like anything else, some are better than others.
These are operators that look like legitimate bookmaking sites that usually aren't. More often than not they are failed former bookies, VIP clerks or previous PPH operators that have decided that they would take their list they acquired from their former operation and set up a PPH shop under the guise that it is a post-up bookmaking operation. There is usually a belief from these front men that all players lose.These rouge operators find a way to get the money from players and if in that time the operation proves successful, then they will take their winnings and use them to pay the losers. But if they are incompetent, don't limit winning players or, as discussed earlier, book far more than they can pay and lose, they simply walk away. After all there is no audit trail, no forwarding number and nothing the player can do. They can't go to the country the operation is set up in or even visit the site directly because it never had a real physical location and licensing bodies will say that they have no beef with the company because the PPH supplier provides a service and is never really operating as a bookmaker. And even though there are legitimate new PPH shops, it seems most of the providers do not do any background checks on bookmakers who sign up with them as there is no risk to the PPH provider if the bookmaking operation defaults.
Jim Quinn, president of OSGA, summed up his frustration dealing with disgruntled customers who were left high and dry by these operations. "We have seen too many outfits in the last several years that are nothing more than a guy with a list of players, and few dollars to get started and a good sales pitch. Players have been burned by clerks and operators offshore that they had trusted previously."
What's most frustrating to players is that many believe they are betting with a real post-up shop when in fact they are betting with a PPH 'bookie'. To help players OSGA has identified several possible ways to tell if a bettor is playing with a real post-up operation or a PPH bookie.
- A legit post-up operation will display a license from the country or jurisdiction it operates on the site to indicate its legitimacy. A PPH will simply have a "join us" link, a customer service phone number or live chat area and some very generic info. There will be no indication where they are located and definitely no license displayed.
- A legit post-up operation will have several payment options listed with a cashier and live links while a PPH site will usually just a phone number or email address with no little or no payment info. Some PPH operations do list several credit cards, MoneyGram etc. but the links will always take you to an agent.
- A legit post-up operation will answer the phone with the name of their operation. A PPH shop will likely have their phones answered with 'Sports" or "Can I help you?" or "What is your account number?" without any greeting or identifying where you are calling. Adn if players ask they will often be told 'This is just a call center."
- Post up operations will almost always indicate the year they started which is generally before 2006. PPH operations will generally say copyright 2014 or 2015.
- New operations that have familiar names recruiting players are particularly suspect. If you hear an old voice calling from a new place, he may be working as a sub-agent, taking a piece of your action.
Not all of these PPH operations are terrible, thieving places, but many are simply hoping players lose, as they don't have sufficient backing. Prime examples just this year are GlobalBet and BetMayor, two operations which both appeared to the consumer as post-up bookmakers, when in reality they were nothing more than former sportsbook managers with a list of clients. Even stand-up operators have had troubles when using the PPH model. GlobalWagering was fronted by a solid operator, who simply could not sustain the business after heavy losses and poor risk management. Luckily for players, he had help due to a partnership with his PPH provider (which is extremely rare).
Here are a few brand new operations that appear to be operating using the PPH model:
We always tell players to beware of ANY operation that has not been in business for at least one football and baseball season. And comparing any of the PPH operations to the giants of the industry is ludicrous. Yet some players will get sucked in.
What still amazes us is that a player will take a 150% bonus from a brand new operation with no track record rather than stick with places like BookMaker, Heritage, BetOnline, YouWager, Diamond Sports, Bovada, 5 Dimes and others that have all been around over a decade and have a flawless record of paying out.
OSGA's original slogan was "What Good is Winning if You Don't Get Paid" and with the way new 'sportsbooks' appear out of nowhere, the places to send money to thousands of miles away should not be an operation that is nothing more than a guy with a list . . . and a sales pitch . . . and a PPH provider to take his bets.