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
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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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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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