Off Shore Gaming Association

It’s been known for some time that World Sports Exchange was having payment issues but they always seemed to find a way to get financing to keep the company in business. Since its inception, the website was always stock full of betting options, particular in game markets for major games and tournaments but lately that changed. Starting about 2010, long term markets were discontinued for many sports and in game markets were becoming less available. Still major events always had markets open. It thus seemed quite odd when there was no Masters market last week. Looking into it I also determined that there were other issues as well. The live support is no longer functional and upon calling the company on the 1-888 numbers I received a message “your call is now first in line and will be answered by the next available representative.” After 20 minutes it became quite clear that no one was going to pick up the phone. Emails also went unanswered. I spoke to numerous other WSEX customers who have had the same experience lately and by all accounts no payouts are being sent. As a result the only logical conclusion is that the company is probably in the process of closing shop.

WSEX began operation in 1997 when three members of the Pacific Stock Exchange joined forces and decided that a sports betting website could offer the same type of day trading and long term markets that a traditional stock market could. Setting up shop on the island of Antigua, World Sports Exchange became an immediate favorite for remote bettors who loved to bet on long term markets for events like the NFL and NCAA championship or live betting on events like football games and golf tournaments. Traditional betting options were also available with competitive lines. Moreover, the company offered betting on the next at bat for select baseball games. I recall one of the owners telling me that someone had bet $100 on Brett Boone to hit a triple at 100/1 odds for a Sunday night game and they probably soiled themselves when Boone hit the ball to the wall in his first at bat and despite considering going for 3rd decided to hold up at second base. WSEX advertised at all the big U.S. based posting forums and in newspapers and was a favorite of almost all bettors who had an account with them. Their customer service was among the best and payouts were immediate. The company made headlines in the late 1990s when the company’s CEO, Jay Cohen, returned to the U.S. to face charges that he was violating the Wire Act. Cohen hired the best attorneys and made the case that as a company licensed in Antigua, WSEX was not violating the law since bets were received and processed on the small island so the laws of Antigua should apply. By all accounts the jury was prepared to side with Cohen but instead found him guilty after the judge told the jury that the evidence he presented was without foundation. Cohen spent 3 years in prison and returned to Antigua after his release.

WSEX continued to operate successfully but was under the watchful eye of the DoJ as a result of Cohen’s decision to challenge them as well as the company’s involvement in the WTO case where Antigua took the USTR to the WTO courts and won. It was a major victory for the country but it also clearly upset the U.S. government who put the country’s banking system on its rogue list.

WSEX first found itself in financial trouble after the passing of the UIGEA. It’s not quite certain what precipitated the cash flow issues although there is no question that the shutting down of NETeller to American customers was a major reason. After NETeller cut off American and Canadians, customers found it difficult to get payments to the company and more importantly found it very difficult to get payments from the company. Almost all of WSEX’s clients were located in North America so NETeller was the preferred method for payments in and out. But after NETeller no longer became an option, U.S. customers were essentially left with checks as the only option for withdrawals. WSEX’s real financial woes started in 2009 when Antiguan banks were targeted by many U.S. institutions for various reasons (the Stanford Bank scandal and the UIGEA implementation being the main ones). So U.S. banks started to refuse checks and bank wires from Antiguan banks leaving WSEX to rely on 3rd party processors to process the payments. And many in the industry told me that some of those processors were less than reputable likely stealing money from the company before they disappeared. As well, WSEX’s ventures into a fantasy sports exchange, their no commission poker room, and their partnership in a P2P betting exchange all cost the company dearly. As a result the company ended up with cash flow issues and a backlog of payment requests since processors couldn’t keep up with the payment requests. WSEX was quickly downgraded by sports betting rating companies precipitating more clients to request payouts and the cycle continued. By many accounts WSEX still owes somewhere north of $250,000 to clients.

At some point WSEX was saved from bankruptcy by investors who changed the structure of the company somewhat but it never fully got WSEX out of debt. The company gave up its Antiguan betting license (likely due to the $100,000 annual licensing fee) and got a license in Cyprus instead although their physical location is still in Antigua. According to the website the company is incorporated in Nicosia, Cyprus and is owned and operated by Euro Sports Exchange Limited in London England.

OSGA continues to contact owners of WSEX and we hope that this once proud and reputable sportsbook can still provide proof that the company is a going concern. But for us to believe that we need some proof, like actually picking up the phone and offering markets on major events . . . and paying customers.

—- UPDATE —-

About four hours after this was posted, WSEX updated their website. It now has a statement where their home page had been for over 15 years.

Dear WSEX customer,
We have been forced to halt business activities at this time due to inadequate capitol resources.   The financial position of the company is currently under review and we will keep you informed as to the future plans for WSEX and the repayment or transfer of your balances.

We sincerly apologize for this unfortunate situation and will be doing everything we can to rectify it as soon as possible.

-WSEX Management
———————

Contact Hartley via email at Hartley[at]osga[dot]com.

Read insights from Hartley Henderson every week here at OSGA and check out more from Hartley’s RUMOR MILL!

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As the ‘busy’ season for sportsbooks worldwide opens this weekend, we have some books that have had a rough time with payouts over the summer. It seems that every year reputable online sportsbooks that service U.S. customers run into some type of problem with their ability to move money back to the States. There are two usual suspects – Bovada and Sportsbook.com. These two very reputable places have a huge amount of customers and thus have to process a large amount of daily payouts. Both have had issues for the last several summers.

However, as we approach the football season, where a U.S. facing sportsbooks’ customer base will swell by over 50%, Bovada is righting the payout ship. For starters, over the summer Bovada reactively and proactively communicated to players in regards to the delays, kept the estimated timeframes up-to-date on the Bovada website, and compensated players where it was warranted and in circumstances of extreme delays. This is more than most books do when there is a payout delay problem. Keeping players well informed was the key and we will applaud Bovada for their efforts, which after an initial rush in complaints here at OSGA, was instrumental in keeping players up-to-date as to the whereabouts of their payouts.

Keep in mind we are talking about reputable sportsbooks where it is not the money that is an issue or a lack of funds available to be sent, but instead a volume or related problem with a particular money-processing company. Bovada told us that the main source of the issue over the summer was “a necessary restructuring due to processor changes.” It appears that their efforts worked as payout times that ran into weeks over the summer are now down and Bovada is currently processing player payouts within 8 business days.

Processor changes/nightmares are something that we hear over and over again from online gambling houses. Sportsbooks offshore are constantly losing processors (who either run with their funds or go out of business as a matter of course) and getting new ones. The best and most trusted processing companies are starting to charge much higher fees than the customer has come to expect and the best paying outfits with the most solid funding, are beginning to raise costs.

We have had several players contact us regarding new fees on bank wires at industry-giant, Bookmaker. Over the summer Bookmaker began to charge bank wire fees in the hundreds of dollars, based on the amount of the wire. We were told simply that the new fee structure is due to the rising costs of banking. Apparently, the costs involved for large wires and the security that is provided by Bookmaker has their processors charging huge fees. Unfortunately, this cost is passed onto the customer. Still Bookmaker is one of very few places that takes large bets, where you don’t have to worry, at all, about your funds. So, larger players will just have to bite the bullet, until the laws in the U.S. change.

We have also had a large number of complaints on the payouts at BetOnline and their recent acquisition, Sportsbetting. This is another case of a place having plenty of money, but being held captive with processing problems. BetOnline also had the double-whammy because many Sportsbetting customers had been lined up for payouts when the company was purchased. Then, as we mentioned above can happen, they lost their ability to do bank wires when one of their wire and check processors closed up shop. Unfortunately, money processing companies are getting harder to replace and certainly to trust in today’s post-UIGEA climate. Thus, players are left in limbo for their requests and for many, BetOnline/Sportsbetting cannot give them a timeline for when their payouts will arrive, until they increase their payout capacity.

Though this is a mess right now, we were told that they are working diligently to get additional processing and expect to have their ship righted within a few weeks. Unfortunately, this does not do much for players right now. We did receive reports of timely payouts via person-to-person transactions and we will continue to help players get their payouts expedited from BetOnline and Sportsbetting.

Players do have to keep in mind that delays can happen at any time, at any book. With the onslaught of football season, payouts may become even more strained, though we generally see an improvement during the football season. The bottom line with payouts from online sportsbooks in today’s market is to make sure you are with a reputable company. The top-rated sportsbooks are places that have the funds and the backing to withstand the constant bumps in the road that occur currently in the online gambling world.

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WSEX payments are being processed more quickly but the company still owes $653,000

World Sports Exchange (WSEX), one of the most trustworthy offshore sportsbooks for most of the 2000s ran into payment issues not long after the UIGEA was passed. It’s uncertain what led to the payment issues but around 2008 the company found itself unable to pay players in a reasonable amount of time. In fact the slow pay often went to no pay and some customers still claim they are waiting for payments they requested over a year ago.

WSEX customer service has blamed the slow pay on the inability to secure sufficient payment processors who can issue checks that will be accepted by U.S. banks. As ridiculous as that may sound there may be some merit to their excuse. The country of Antigua effectively became a pariah to the U.S. banking system for 2 main reasons. First, Antigua’s WTO challenge against the U.S. over gambling services caused the USTR to list the country as “rogue” thereby causing U.S. banks to flag transactions from Antigua. Secondly, the failure of Stanford Bank after the SEC charged the company with operating a ponzi scheme had world banks questioning the legitimacy of the Antiguan banking system. Prior to 2007, payments were a fairly moot point to American customers since they predominantly used NETeller for deposits and withdrawals. But once NETeller cut off American customers and once Western Union began to blacklist gambling sites after it was clear the UIGEA was going to demand Western Union to take action, payment options dwindled for American customers to checks cut by 3rd party processors. Not surprisingly those processors could only post so many transactions at a time and some of WSEX’s payment processors, like one in Cyprus ran into trouble with the law, thereby eliminating even more payment options. Moreover, to stave off suspicion the amount for the checks from the processors had to be limited to $3,000.

While that may have accounted for much of the delay there is still suspicion that much of WSEX’s problems lay with bad investments (such as Matchbook and Fantasy Sports Exchange) and there is also speculation that the company lost a lot of money in the Stanford Bank scandal. The company has lowered costs dramatically by cutting staff and consultants and also selling off assets. And there has been a wide spread rumor that customers owed money have become partners in the company in exchange for waving the amounts owed. Many of those partners have also apparently poured money back into WSEX to clear up some of the payments. Sportsbookreview reports that 110 customers are still owed about $653,000 in unprocessed withdrawals but many customers are also saying payments are starting to come in more frequently. In fact one customer owed over $8,000 stated on the posting forums that he received payments for just under $700 each week for the last 2 months. One player that contacted OSGA is approaching a one-year wait on his 2K, but with OSGA involvement, he did get half of that back in November.

Someone close to the company who no longer works there stated that WSEX has set a goal to pay back everyone ASAP. but their primary concern is to ensure that new post-ups get paid first. Consequently newer clients are receiving payments almost immediately while the ones waiting over a year are ‘on the list’ but get delayed if a new post-up requests a payment. Obviously the company realizes that new customers will continue to play and deposit if they’re paid while the ones waiting for months have probably given up on the company and won’t deposit again even if they are paid. The source also said that customers who send requests by other means like NETeller, Moneybookers or Instadebit can get their money quicker since it doesn’t go through 3rd party processors. It’s also an indication those clients aren’t American which could be vital to the company’s future if they ever go the way of The Greek or Pinnacle and cut off American customers.

The news is hardly comforting, and the company surely deserves the D- rating they have currently at SBR and the downgrades from OSGA, but at least there is more hope today than there was even a few months ago.

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This July 17 would have been 5 years. Five long years since the BETonSPORTS corporation was indicted by the U.S. Department of Justice, shut down and ultimately went bankrupt. But players who have been waiting all of this time to recoup a percentage of their money lost in 2006 may only need wait another week or so to finally be paid.

We contacted FRP Advisory in England several times this month to confirm what we had reported back in December was actually going to materialize for players. According to a spokesperson for FRP Advisory, players will receive a portion of their balances refunded beginning next Thursday, June 30th. We were told “A distribution is scheduled to be sent to players that have agreed to their claims on 30 June 2011″. Checks will be sent to players mail addresses that were registered with the now defunct Vantis or FRP Advisory.

The biggest question has always been “How Much?” Well, the final totals are in and players can expect to receive a paltry 4.63 cents on the dollar. For example, a player owed $1,000 will receive $46.30.

Of course this low figure is an outrage to many (including the OSGA). Legitimate players who were owed less than $125 will end up getting nothing after all of this waiting. FRP Advisory told us that the total assets recovered in the period since September 2007 (when the original Vantis company was brought in) have been slightly in excess of three million dollars ($3.03M). The total amount to be distributed to creditors will be roughly $1.3 million.

Less than half is not what anyone wants to hear, but the liquidators have been involved for over four years. Just the costs of making the payouts are eating into player’s returns. Keep in mind the liquidators have put a great deal of time and effort into this case and do deserve to be paid for efforts getting players at least these few dollars. FRPAdvisory told us that a “final report detailing costs, including liquidation fees, legal fees and other costs and expenses will be issued at the time of distribution to creditors.” Liquidators’ costs have been approved by the High Court in Antigua, which is a requirement where the court makes the liquidation appointment.

Since the arrest of David Carruthers in 2006, the OSGA has been one of the few media sources consistently reporting on the process to pay back players. We published our own form well in advance of Vanits and created a database for players without Internet access or who could not get in touch with the liquidators. We personally verified that over 800 players who had filled out the BETonSPORTS claim form on the OSGA website or contacted us prior to 2011 have all been processed and will be paid.

Though the final payout figure is extremely disappointing for a sportsbook with a market share in excess of $200 million, we are glad that this ordeal will finally come to an end and this dark chapter in the history of Internet gambling will ultimately be closed. The OSGA will exercise due diligence in posting the statement from FRP Advisory, once it becomes available.

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Last week we made mention in our BLOG of a couple of things that have gotten players into trouble with their gambling houses.  And one player, who admitted that he read the BLOG, did not heed our advice and now has a bigger problem. So, we thought it might be useful to outline the top thing NOT to say to an online sportsbook, Internet casino or poker room should a payout problem arise.

Quite often players in the U.S. have trouble getting their money sent in a timely fashion once a request has been put in and accepted. This can happen at just about any outfit offshore, and usually is a just a one-time issue. However, too many players get frustrated and starting popping off at the next available clerk once a payout does not arrive as planned.

The #1 thing NOT to say is that you are thinking of making a charge back on your credit card deposits. Do not even mention the words ‘charge’ and ‘back’ in the same sentence. The word (or words) ‘chargeback’ instantly will get a player into trouble. Even if you are not planning to do the dirty deed, DO NOT mention a charge back. Unfortunately, this week’s case proves this point.

A player called us because he had not received a bank wire from Bodog, who in the past had been very reliable for him with payouts. The player claimed that the wire did not arrive in his account, while Bodog said it had been delivered. This player went round and round with the sportsbook giant and finally resorted to calling OSGA. Once we got involved the wheels started moving. But unfortunately, these types of problems do take some time to sort out. The player got more and more frustrated. Bodog insisted that it was sent. The player got bank records and letters saying it was not sent to his account. Bodog still insisted it was sent to him. Finally, through our involvement, Bodog’s processing company began to make an extra effort to find the wire.

Meanwhile, the player got more furious and more steamed with each passing day. This week he decided to make the ‘chargeback’ threat. And it was a veiled threat at that. He said, “A lawyer friend suggested that I charge back my deposit,” when he was inquiring if there were any updates with the clerk who was handling his issue. The warning bells went off and within a few hours the players’ account was closed.

Credit card charge backs are such a big problem that the mere utterance of the words makes an offshore outfit react or overreact, and not in a positive way. The problem is that too many chargebacks will cause VISA or MasterCard to drop the processing company and thus the gambling house has to find a new credit card processor. This not only affects the book or casino, it affects all of the players at that place and the industry itself. Many new books are not even taking credit cards and most places have lost the ability to accept credit cards at one time during the last few years. We spoke with one operator who recently launched a new shop in Costa Rica. “I am not taking credit cards at this time, it’s just too much of a headache. Credit cards cause nothing but problems,” we were told.

In addition, the sportsbook or casino has a further problem if a chargeback is made – they never collect that player’s deposit money. Years ago when these problems began to surface regularly we, of course, got involved with many disputes. At the time one operator told us that he could NOT pay the player in question because of the threat of a chargeback. Why? “Because, if I pay the guy and then he charges back, I lose twice.” Puzzled, we inquired further. “I lose twice because (one) the player beat me and got paid and then I lose again because I can’t collect his deposit money.”

In recent years, frustrated players have made charging back on a deposit part of their modus opperandi. As soon as a problem occurs, the easiest thing for a player to do to recoup his money is to charge back. However, players need to be aware that this behavior is now being tracked. There is a list, a big list. And the list is being shared amongst all of the major players in the gambling community. One player was recently shut down within hours after depositing at one of the franchises of Sportsbook.com. Of course, we inquired as to why this player was shut down, with bets pending. Here Sportsbook ran him through the list and found a chargeback from 7 years ago!  According to the management at Sportsbook.com, “We caught his account within 2 hours of being created and no actioned all wagers, then credited back the initial deposit.”

This is what all of the sportsbooks, casinos and poker rooms are doing now once a player utters ‘charge back’. If a player threatens to reverse his deposits, the gambling house will cut the alleged offender off at the pass and refund all cards used to deposit, closing the account and keeping all monies. This is the knee-jerk reaction that operators have been forced into in the face of mounting losses and repeat offenders. And once a player says ‘charge back’ our hands are pretty much tied in trying to achieve any type of positive resolution.

Players should remember that if they are playing a reputable house (rated Elite or Premier) they should not sweat whether or not they are going to be paid; maybe ‘when’, but not ‘if’. Quite often complaint resolution takes far longer than anyone wants and due to the murky world of money processing, missing wires and delayed checks are particularly frustrating. Players should use the chargeback only as a last resort, as a virtual ace-in-the-hole to use after all other means of resolution have been exhausted.

Saying chargeback is like going ‘all in’. It’s a last ditch effort to get the money sitting in the pot. And who goes all in announcing what is in their hand? You would get creamed doing that. And most players who utter the word charge and back together end up getting screwed too.

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Over the last few weeks we have gotten complaints on many different sportsbooks regarding payout delays. Unfortunately, in today’s world of offshore wagering, slow payout complaints have become quite commonplace.

The large number of recent complaints has run the gamut of payout methods. Reports of problems with bank wires, checks and even ACH payments have filled our inbox and caused our phones to ring off the hook for days on end. Many of these problems were reported at very legitimate outfits, place that we have rated highly, like YouWager, BetUS and industry giant Bodog. The problems are not isolated to just sportsbooks. We have heard of the exact same problem with online poker rooms, like Full Tilt.

One of the biggest problems is player expectations. Players who have been online for years can remember just a few years back when money moved seamlessly with same day payouts offered at almost every outlet. Players could deposit or withdraw with a simple mouse click via NeTeller, MoneyBookers and other online payment processors. However, since the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, payments have gotten tougher and tougher to send back to US players.

The UIGEA was not written to make US players internet betting illegal, instead it makes it illegal for any company to move money for the purpose of internet gambling. This caused initial problems  in ’06 and ’07 that have come and gone sporadically for the last few years. And yet players still don’t seem to understand the difficulties that the UIGEA has presented.

Reputable houses like all of the ones mentioned above want nothing more than to pay players quickly.  To do this, online operators will work with just about any establishment that will move the money for them back to the US. These companies quite often are less scrupulous than anyone running a mutli-million dollar operation would want to do business with, but online gambling houses that service US players are left with few options. And quite often, player complaints really lie with these third-party processing companies.

As we have stated in this space before, the biggest complaint is that players feel like they are getting the runaround when they inquire about a late payment. We have seen some of the correspondence and this is a legitimate gripe. But unfortunately, many books are at the mercy of their processor. The check or bank wire do not come from Bodog or BetUS; they can’t simply walk to another department in the building and find out where a payment is. Operators must  contact their processors, who will then look into the issue, when they have time,  and get back to the operator. Regrettably, there is a bit of a delay in this process and some books can take up to a week or more to find a lost payment. 

We have gotten involved in several of these slow pay complaints over the last few weeks. What we have found is very angry players and very frustrated operators. Many of the operators that we have spoken with regarding the recent rash of slow pay reports have told us that quite often, they do not even know that there is a problem until it gets to be a BIG problem. “With wires, we can’t even tell for a week what was sent and what was held up, and check are worse,” reported one operator. OSGA involvement has expedited a handful of claims and players did receive their payouts much more timely once OSGA got involved. But, the anger from players is still significant and does not appear to be going away any time soon.

Threats will not help to get a payout sent any faster. Thought it may be difficult, a player (or an operator) losing their temper does no good in helping to resolve the situation. The #1 thing NOT TO DO is to threaten a charge back. Credit card charge backs are the scourge of the online gaming industry and the mere mention of one will often turn a give-and-take relationship between player and operator into an adversarial one. In addition, threats of posts or reports to local law enforcement will not get a payout sent more quickly. Instead, they make operators very wary of the customer. Another thing not to do is to scream and yell, especially profanities. Good players can easily become ‘problem players’ by venting frustration using four letter words and ethnic slurs.

Players also need to know that it is not necessarily a particular dollar figure that slows down a payment. Commonly we hear “well it’s only $1500 bucks” coupled with “that’s nothing to these guys (offshore).” Volume can be a problem and five or ten $1500 check payouts may become an issue with certain processing companies.

Players who feel that they have exhausted every conventional means of resolution are urged to contact us, BEFORE doing something foolish to further jeopardize a late payout.

We urge players to have a bit of patience. Any place that is rated Premier or Elite by OSGA certainly has the money and the motivation to pay. But, due to the fallout from the UIGEA, now over four years old, paying out and, more importantly, rectifying payout problems, continues to become increasingly difficult for offshore operators.

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