Off Shore Gaming Association

A funny thing happened on the way to the sportsbook this week. I got excited about soccer, err . . . futbol. And it wasn’t because of the dramatic U.S. victory in the 91st minute. It was because the sportsbook I was headed to was not in Las Vegas, but in Latin America. Apparently, this World Cup thing is HUGE in the rest of the world.

From the moment I got off the plane in Panama, there were signs of the World Cup. People from all walks of life were wearing jerseys from soccer teams around the world. Brazil and Spain appeared to be very popular ones smattered with England, Mexico and Portugal. On the way to the airport, I asked the taxi driver about World Cup fever.

“Oh Ches. De World Cup is berry big down here.” But, Panama does not have a team in the tournament, I remarked. “Every body picks dare team or where dare grandfadders and modders come from”, I was told. Apparently, his team is Brazil, which looks like a solid pick.

Upon arriving at the hotel, all of the employees were all wearing the same colored shirt – orange - for the Dutch squad. Apparently, the parent company that owns the hotel is Dutch. Then it’s off to the hotel bar, where four extra 40 inch flat screens were sitting on tables for all to watch. As one English-speaking local told me, “At my little local bar, there are 6 brand-new plasmas. It’s not that big a place, it’s like there is plasma overload in there.”

On one trip around Panama City in the afternoon, I noticed far less traffic in what is normally a congested area. I was told by that taxi driver that, “everyone is watching futbol.” So, with all of this, and the next several days of soccer, soccer and more soccer, I have been converted. A 0-0 tie really can be exciting. And watching the English bemoan their team and the French cry in their wine, the World Cup has become quite exciting for this American.

And, I am not the only one. Handle is up throughout Latin America and Caribbean sportsbooks. Industry giant Bodog told us that, “We are seeing great action through the first matches of the World Cup. The handle is comparable to an NFL Sunday regular season game.” Sill, 5Dimes is seeing even more wagers than that! “Action is about double what we expected. We expected similar action to a typical NFL Monday night football game. We’re getting double that”, the top man at 5D told us.

One reason for the exceptional handle might be in the outcomes of some of the early games where a number of soccer ‘giants’ went down. 5Dimes added that “this World Cup has exceeded expectations to this point.” And this is only destined to increase.

The belief offshore (and a valid one) is that the handle in the next round will even larger, as bettors get a better grasp on who is playing well, Bodog expects the 2nd round wagering to be “comparable to an NFL first round playoff game.”

Of course, some games will get more bets then others depending on the teams playing, just like in the NFL. But powerhouse countries like Spain, Brazil and Germany will see a good deal of action. And of course, for sportsbooks that service the American market, they can expect to see a ton of bets on the U.S. But, book who have an international clientele, like Bodog, with Canadian, European and South American clients, will get wagers on both teams and thus balance the action.

So have American bettors embraced the World Cup? Yes, is the definitive answer. And for books that take U.S. bets, with clients who have new affinity for soccer betting, GOOOAAAL is the word of the month.

On a side note, in the U.S. the ESPN announcers really do not do the sport justice. International commentators really get into the match. You can have a beer in your hand, turned away from the bar, and hear when it is time to watch the flat screen. The excitement builds in the announcer and the viewers, all waiting to hear the afore mentioned scream of GOOOAAAL! Great stuff, but not on a TV set in America.

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The biggest betting event of the year is underway - the FIFA World Cup. And the first round saw nothing that would sway a savvy bettor except for Wednesday’s shocker in which Spain lost to Switzerland, 1-0. Soccer is hands-down the biggest sport in the world and the huge action taken already by the Ladbrokes and Paddy Powers of the world has already been well documented. But, surprisingly, every book we spoke to in the Caribbean and Central America is also seeing a lot of action, not only from their existing customer base, but from new bettors as well.

BetED, based in Costa Rica told us that “From the initial figures the turnover has exceeded even our highest expectations based on historical data.” Throughout Costa Rica books are experiencing high volume and U.S. facing books are seeing an interesting phenomenon. Though teams like the U.S., England and Germany expect to draw large handle, “the World Cup is the only international tournament where your roots mean more than your birthplace/citizenship”, added BetED’s senior sportsbook manager. Apparently, throughout North America, players are betting with their heritage and teams like Italy, Brazil, Argentina and Spain also have a large amount for futures for winning the Cup.

We also have heard the ‘live’ betting or ‘in-game’ betting has been a big draw. BetED mentioned that the “highest growth we have seen is in our World Cup InPlay” (their brand of live betting). Not surprising from U.S.-based players who can bet on quarters in basketball, first 5-innings in baseball and instant-gratifying props galore during the NFL season.

As expected, the Spain upset proved profitable offshore. WagerWeb commented, “obviously the match with Spain vs Switzerland was a HUGE decision for us.” The 1-0 upset for the Swiss has been the biggest shocker so far. Not to mention that the inordinate amount of ties and low scoring in the first several days of competition also increased bettors woes. The biggest match on the board so far ended in a bookies dream decision. When the U.S./England match ended in a tie, offshore operators were dancing in the street. Surprisingly, BetED and several other books had a large decision fall their way when the host country South Africa drew against Mexico, who were the favorites going into the match.

However, the tournament has not been all peaches and cream for the bookmakers. Sportsbooks across the board got hammered in the Germany vs. Australia match. The spread was between -1.0 and -0.5,-1.0 goals while the action was all on Germany. The emphatic 4-0 win took much of the profits made in early matches off of the table.

It looks like we finally will get to see some scoring and most likely some increased action as the weaker teams get weeded out. Every sportsbook we spoke to expects to see increased handle as the competition becomes better and the odds grow tighter. If some of the more powerful teams like England and Spain can get back into form, bettors can expect a wild ride in what has been a muddled start to the World Cup.

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I guess that gambling on sports is OK after all. At least as long as the proceeds can be used to help fill State coffers. We attended the recent sports betting hearing in Atlantic City and I gave a presentation to eight New Jersey senators who are looking to add sports betting at Atlantic City casinos and racetracks in an effort to prop up both faltering industries. The meeting emphasized one thing for sure, New Jersey is going full bore after this one and any opposition had better have thick skin.

The NJ Senate held a public hearing on Monday that was, as expected, lightly attended. After all it was the day after Easter Sunday AND it the eve of the NCAA Championship game. Neither of those conditions are going to get gamblers out of bed at 11AM to listen and add their views.

Still, in addition to our testimony, the side for adding sports betting was well represented. Industry advocates included Joe Brennan from the Interactive Media Entertainment and Gaming Association (iMEGA), the Atlantic City Chamber of Commerce, the local unions and the New Jersey Thoroughbred Horseman’s Association. All testimony was well received by the Senators, who all appeared in favor of the bill.

Though our own testimony revolved around the fact that the government should be insuring the safety of its citizens and offer regulated Internet Gaming and sports betting, the bulk of the testimony went after two things that are certainly hot button items in any state – jobs and revenue.

It appears that several other states are hopping on the sports betting and Internet gambling bandwagons. Now that New Jersey is making waves with its potential law changes, Pennsylvania, New Hampshire, Massachusetts and other states have bandied about the idea that all of this gambling is not bad, but instead is a revenue source. Washington Democrat Jim McDermott has brought the Internet Gambling Regulation and Tax Enforcement Act (HR 4976) back with several new amendments and the American Gaming Association (AGA) has even changed its stance. The AGA has now come out publicly this week with the statement that it is “open to the concept of legalized US gambling sites.”

Perhaps, as I stated in Atlantic City, it is because the Internet gambling industries in many of these remote places are big business for those areas. In some countries, such as Costa Rica, Malta and Antigua, online gambling companies employ thousands of people and are actual industries, contributing to the country’s GDP. And, in places that do real regulation, a huge tax revenue is generated from online gambling companies.

Apparently, Senator Ray Lesniak has made the leap from the current prohibitions to the realization that, since New Jersey is already the Vegas of the East Coast, this industry would fit all of the necessary criteria for moving his agenda forward. Lesniak said at the hearing: “I continue to find it ridiculous that adults in New Jersey and 45 other states cannot legally bet on sporting events, while citizens in four states essentially maintain a monopoly on legal sports betting.”

He was quite vehement to opposition presentations and at one point made every head in the room turn. That was when he stoically questioned Joseph Tyrell, representing Harrah’s. Tyrell said that Harrah’s was in opposition to the bill! He claimed that this bill would give voters ‘false hope’ and that they would be voting for something that is currently illegal. Lesniak hit the roof raising his voice, while causing quite a stir during the otherwise subdued proceedings. “Are you saying that I have introduced legislation that is illegal?”, Lesniak asked. He went on to say that the voters of New Jersey are ‘not stupid’.

If you use your corporate BS to reality translator, you can see that Harrah’s is basically saying that they do not want to extend any of their vast political capital when NJ still has to defeat the Federal Government in a PASPA suit. The Professional and Amateur Sports Protection Act (PASPA) is really at the crux of the entire sports betting legal situation. As recently as last year, the court upheld PASPA, even restricting it further in the case against Delaware. If Senator Lesniak is successful in overturning PASPA, you can guarantee that Harrah’s will suddenly jump on the bandwagon.

The NFL, as expected, played the PASPA card. In addition, Representative Tim McDonough offered up the usual rhetoric on ‘integrity of the game’. He went on to say that the game of football was not created for betting purposes and that this would do nothing to ‘take street level bookies off the street’. He went so far as to tell the panel that they would not be willing to spend the time, effort and money to fight PASPA.

Lesniak bellowed out “What Cost?”, turning the spokesman for the league into a retreating safety on a Tom Brady/Randy Moss bomb. Again, Lesniak hammered him adding in that he is willing to do the legal work for the suit pro-bono and, similar to Delaware, the casinos would be paying costs, not the state. “There is no cost to us”, stated Lesniak firing a salvo that the NFL would be the ones who are going to have to work hard and pay to stop his legal efforts.

The rest of the panel of Senators took shot at the NFL saying that professional sports are already tainted with the off-the-field problems of star athletes, doping and even the NFL’s involvement in lotteries. I am 100% sure that Mr. McDonough wished he had stayed in bed. Still, having attended several of the Delaware hearings last year this is not their best effort. With each subsequent hearing in Delaware more, and more powerful, attorneys showed up for the NFL. If the bandwagon continued to fill, tell the high-profile lawyers to fire up their first-class plane tickets and head to Washington.

Senator Lesniak does appear to be on a mission and is unyielding in his efforts. He fiercely attacked opponents’ arguments and the Federal Government for controlling what can and cannot be done in New Jersey. It about time that the other 46 states in the Union to stand up and ask why sports betting is allowed in the other four. I am sure that if New Jersey gains traction against PASPA and Senator Lesniak’s legislation makes the ballot in November, many other states and probably even gaming companies will follow his lead and jump on the bandwagon.

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The NFL is sure going to be busy in 2010. And not promoting its product outside the United States or ramping up its fledgling TV network. No, the NFL, or should I say the NFL’s lawyers, are going to be busy fighting new legislation introduced this week from several states and a Supreme Court fight.

Last year, the tiny state of Delaware spent over $600,000 in legal fees to ensure passage of a very watered-down version of a sports betting bill. However, by providing just multi-game betting (parlay and teaser cards), the state still turned a profit. Now, Delaware Gov. Jack Markell has announced a decision to appeal an August ruling, by the 3rd circuit U.S. Court of Appeals, to the Supreme Court! That’s gonna incur some legal fees. Still, the state has to convince the court to hear the argument, thus, expanded sports betting in the 1st State is still a long shot.

The NFL and other sports leagues were able to convince the Third Circuit Court that Delaware should only be allowed to offer sports betting in the fashion that it was offered before the passage of the Professional and Amateur Sports Protection Act (PASPA) that was passed in 1992. The federal law includes a partial exemption for Delaware, Nevada, Montana and Oregon, allowing them to have sports betting “to the extent” it was “conducted” previously. PASPA is really the one piece of legislation that is stunting any hope for the growth of sports betting in the U.S. If the case does get heard by the land’s highest court, it will be, as far as I know, the first time the Supreme Court has heard a challenge to the federal law.

However, help may be on the horizon in other cases that are sure to be heard throughout the land. Perhaps on the success of Delaware, the State’s lawyers may be getting assistance from newly sponsored legislation in two states to void PASPA.

New Jersey made a bit of a play last year as State Sen. Raymond Lesniak introduced legislation to allow sports betting in Atlantic City, mainly as a way to bolster the dying casino town’s revenue stream. He was able to garner support from then-governor John Corzine and had the assistance of iMEGA, but his bill did not gain much traction. Just two weeks into the New Year and Leasniak is already making another play. He has introduced an act “permitting wagering at casinos in-person and through an account wagering system using telephone, Internet and other means on the results of professional and collegiate sport or athletic events”. Talk about going for the gusto! Lesniak is not only including sports betting, but, in the face of certain litigation by the NFL and NCAA, he is also adding in the Internet. Yes, internet wagering has made it into his 2010 version of the bill. So, the Justice Department will most likely also have something to say about this piece of legislation.

But Lesniak is serious, already ramping-up the rhetoric. He has been quoted as saying, “People are doing it. They’re doing it every day. They’re doing it for the NCAA tournament. They’re doing it for the Super Bowl and professional football. But we can’t regulate it and run it in the state of New Jersey.” Finally, someone who gets it - gamblers are gonna gamble. In fact, I just got doing it, and I want to do it again! Lesniak is also considering suing the Federal Government to overturn the PASA law.

Also this week, out of left-field, came a House Resolution from legislators in Missouri, of all places. Can it be that Gary Kaplan and David Carruthers are working their St. Louis jailers over to have their lawmakers allow sports betting? After all, the state probably owns the URL betonsports.com after taking down one of the largest sports gambling houses on the Internet. Was this really the whole reason that BOS was indicted and convicted - to pave the way for legal sports betting in the state?

The piece of legislation, House Concurrent Resolution No. 22 urges the United States Congress to remove the federal ban on sports wagering. The best line in the document is when the State legislators declare, I guess after the demise of BOS and little or no change in the gaming landscape, that “the federal sports wagering ban is not effective in curbing illegal sports gambling.” I wonder when the light bulb went on to figure that out? But cynicism aside, this resolution is being sent to the Majority and Minority Leaders of the United States Congress and to each member of the Missouri Congressional delegation. Hopefully, it will have some impact.

So, all of this legislation and legal wrangling could be a perfect storm for the NFL, NCAA and other sports leagues. PASPA was passed nearly two decades ago and all that has happened since then is the explosion of the multi-billion dollar Internet gambling industry and the continued expansion of gambling throughout the country. Following the success that Delaware has seen with just multi-game wagering, in just their first year of operation, and with states looking for any way to generate revenue, perhaps this is just the leading edge of the PASAP perfect storm. Next week Florida is going to discuss Internet wagering in the state capitol and Indian tribes in California are attempting to build a consensus on Internet poker issues. Perhaps we are approaching a perfect storm for Internet wagering as well.

My prediction for all of this for 2010? If states continue to struggle to find revenue, PASAP will have a tough time continuing to be the law of the land. I expect to see other states put pressure on the Federal government as well. And, oh, yeah, a whole bunch of lawyers are going to make a whole bunch of money!

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We posted a report on Thursday from the Queens County District Attorney’s Office in New York stating that law enforcement officials throughout the country organized to bust a huge gambling ring and had some 27 of thirty defendants in custody. The operation called “Operation Betting It All” apparently had been ongoing for 38 months – more than three years! This story hit the newswires and almost every news outlet on TV and print, as well as Internet pundits, latched onto it.

Why? Because the government is continuing its scare tactics, so that gamblers will not play offshore or with online bookies. And, what better way to spread the word of the evils of Internet gambling than to have a headline that includes the words multi-million dollar, Internet gambling and the coup de grace, organized crime.

Every report we found, from this one at NY1 to the Associated Press, loves to say a ‘half a billion dollar’ operation and feels the need to indentify Joe Fafone as a Gambino associate. The government claims to have already seized 3 million in assets and are looking for $125 million more from the defendants. Pretty good haul for New York’s coffers if it really pans out! The government has already gotten huge amounts of money from some of their strong arm tactics and recent arrests just this year – $34 million from ex-BETonSPORTS headman Gary Kaplan and $105 million from PartyGaming, the online poker and casino operator, who agreed in April to pay a penalty as part of a “non-prosecution agreement”. In addition, the government is not done shaking down foreign corporations as Sportingbet PLC believes that it will also reach a settlement with the U.S. DOJ this year.

After reviewing the document from the Queens D.A., which reads more like a feature article than a press release, it appears that the target of the investigation was Joe Fafone and an alleged sports betting credit operation that ran across several states here in the U.S. However, the D.A. appears to have blurred the lines between a long-standing credit operation and the post-up shop in Panama. In addition to identifying several credit shop websites, the press release also mentions industry giant BetOnline.com. The release states that the defendants were unlawfully operating a sports betting enterprise that stretched from Queens County to Nevada and from Rochester to Florida. However, BetOnline is a Panama corporation and does not offer credit to any players.

It also appears that the government has been following the Fafones for some time. A quick search provided “Operation Goodfellas” from 2002 where Joe Fafone and his father were linked to organized crime and an Internet betting operation in Costa Rica. So, it does not appear that the Panamanian sportsbook was being targeted, more like the guy the government claims to be the head man.

There is nothing new or unique about these kinds of indictments. There have been many similar charges and convictions in the past ten years. In 1999, a federal grand jury in Manhattan charged Jay Cohen, one of the owners of World Sports Exchange, with conspiracy to violate the Wire Wager Act and seven other counts. Ronnie Sacco, BetWWTS, Rick from Gold Medal and others have all been caught in the crosshairs of ambitious prosecutors looking to gain publicity in the news. All of these operations either stayed in business or been sold to reputable operators. And of course, the biggest splash ever made by U.S. officials, affecting over 70,000 bettors, was the 2006 arrest of BETonSPORTS CEO David Carruthers and subsequent meltdown of the company.

Though this is a significant arrest, does the government ever hear what they are saying? Queens District Attorney Richard Brown stated at the press conference, “In this case, I believe that we will make a significant dent in the illegal gambling nationwide.”

Really? I would wager that 95% of the players using this operation either 1) have another bookie, 2) have an Internet post-up account or 3) are looking for another bookie to play with . . . right now! The websites mentioned in the press release are all still operating and from what we have found out, will continue to operate; As will the thousands of other gambling sites that U.S. citizens can play at. And, as far as local bookies in NY and FL, I am sure that their services will be offered to any of Fafone’s alleged customers.

The bottom line is that this latest arrest is just another in a long series of government moves to stop something they can’t prevent. Illegal street bookies have been getting busted since the leather helmet days, yet every town nationwide has at least one. The largest U.S.-facing sportsbook was taken down and more sites have continued to pop up and take bets from U.S. players. Someday, we hope that the government realizes that gamblers are going to play, to bet, to wager. The only way for the government to get involved (read tax) other than the occasional arrest, is to regulate and tax the Internet industry and allow sports betting in U.S. land-based casinos. Maybe then, alleged ‘Mob connections’ won’t be booking a half a billion in wagers. But, there would also be no headlines to grab.

Ultimately, we wish all involved the best of luck in facing these charges. And, we expect this situation to play out very similar to the Jay Cohen/WSEX case, where the corporation located in Panama will continue to operate, while the alleged principles wade their way through the U.S. judicial system.

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Yesterday marked the rebirth of sports betting in Delaware. The NFL had their day in court and smoked the smallest state in the Union. The State and three state-approved racinos went ahead anyway. The existing three racinos dumped a reported total of 11 million into the betting facilities and September 10, 2009 may become a day sports bettors remember . . . with Parlay Cards, Teaser Cards, Super Teaser Cards and ‘off the board’ betting.

That’s right, the games are varied in nature. There are the Parlay Cards and Teaser Cards. Parlay Cards will be limited to $2-$100 bets, but the state will also take ‘off the board’ parlays with a $5 minimum and a $3000 max wager. ‘Off the board’ bets use updated lines from the electronic tote board, as opposed to the pre-printed parlay cards, but offer slightly lower payouts. The different types of cards resemble the ones that I saw all throughout my youth, but they all have ½-point spreads – there will be no pushes in Delaware. The Parlay Cards are just like any other and the two Teaser Cards are for either a point differential of 5-7 points or 9-11 points (Super Teaser). Both teaser cards are quite interesting because the points teased are not the same on each game or each card (the Teaser Card uses 12 points total and the Super Teaser , 20 points total). For example: in the Teaser Card for last night’s game (Steelers -6.5, again, there can be no even spreads), the Steelers were teased down to -1.5 (5 points) and the Titans were moved to +13.5 (7 points). The Dolphins/Falcons game is teased at an even 6 points on the Teaser Card but on the Super Teaser Card the Dolphins are given 9 points to leave them at +13.5 while the Falcons were granted 11 point to move their number to +6.5.

This is not the case on every game, but for certain games (especially those revolving around 3 or 7) it looks like the house is hedging a bit. After all, does anyone think that the Fins are going to lose by more than two touchdowns or that the Titans were going to get pasted last night? Obviously not Brandywine Gaming, who runs the backend lines and systmes forDelaware.

An example where the mighty number 3 comes into play reveals a bit more how Delaware is playing the game this time around. The line on the Parlay Card for the upcoming Rams/Seahawks snooze-fest is Seahawks -8.5. A six point teaser would bring the Seahawks margin of victory under the magic 3. The state apparently will have none of that type of advantage to the player and thus moved Seattle to -3.5 and the Redskins to +13.5 ( 7 points). In a bold showing, the Super Teaser will only allow the Chargers to be teased on Monday night down to -1.5, a mere 8 points. But, that does open the door a bit for Raiders bettors who are now getting 21.5 points on the Super Teaser card.

The bottom line is that each game must be looked at to play the teaser cards. It’s not as simple as putting in a 6 point teaser on the Internet and having every game calculated to 6 points right before your eyes. It also may give the Internet player an advantage seeing how the house is shading the line on a particular wager. One thing is for sure, the favorites are almost always going to be a bit pricier in Delaware.

We were particularly interested in the odds that the State was going to offer to gamblers. We figured to insure that the state would fill the coffers, players were looking at 5-1 or worse 3 team parlays. But the state can say they offer the highest parlay odds in the world – at least on three team parlays. The printed payout odds on the back of the card are 6.5 -1 for a 3-team parlay, 11-1 for a four teamer and 20-1 for five correct. The State offers all the way up to 10 team parlays, and these pay 800-1. Shocked, I knew immediately that the three team parlay were at very competitive odds. In fact, as-high-as-you-can-find odds. Offshore, only two outfits offer 6.5-1 on 3 teamers, BetOnline and Payoffs Plus. Interestingly, both used to offer 7-1 but those days are gone. Delaware even has very competitive odds the whole way up the board. Still, most offshore outfits will beat the odds offered by Delaware for 4, 5, 6 and even up to nine by a few bucks (12-1 on a 4 team parlay offshore vs, 11-1 in DE.). But if you play 10-team parlays, the Delaware Racinos would be heaven. No book on the Internet, comes close to 800-1 on a 10 teamer. I may just play one every week for two bucks…..at 800-1, as that is damn close to true odds. The highest we could find on this wager offshore is 642-1.

I once spoke with a book owner offshore after a weekend where the books went a bit sideways – some made a few bucks and some lost a few bucks. This particular owner sounded quite depressed on the phone. I said, “You sound down, from what I understand it was a pretty even weekend for everyone. Did you get creamed?” He replied in a montone voice – “10 team parlay” . . . But, Delaware does have a bit of a buffer. On the rules of the card it states that there is a maximum aggregate payout of $100,000 plus two times that handle for that week. By only offering parlays, I doubt that there will ever have to be some type of pari-mutuel payoff to players.

The teaser payouts in Delaware are also giving offshore books a run for the money. At 13 to 5 or +260 for a three-team 6-point teaser, those odds are really high. Offshore books generally pay anywhere from 3-2 to +180 for this same wager. And, they offer up to 12 team teasers in Delaware! And they pay out at 65-1! Again, as with parlays, the 4-8 team teaser can be gotten for a better price offshore. But, players who buy computer generated tickets looking to hit the big one, because that what this is all about, being a ‘lottery’, will have a shot at a pretty big payday on a similar type of longshot low money wager. And, I think the odds of hitting a 12-team teaser are better than hitting the daily number.

On Sunday, Delaware is giving it a go and so will we. I will be in front of the tote board in less than 48 hours. I will also be stepping outside the racino/sportsbook to provide live updates via our Facebook site. Feel free to check it out and get involved in the first legal sports betting east of the desert since the 70’s.…..perhaps a Facebooker will have a 10 teamer up their sleeve….

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