Canbet Shutdown may be the Final Nail in the Coffin for Storied Sportsbook

Canbet has been slow paying players and by last count owes players upwards of a quarter of a million dollars. Their recent shutdown puts player funds in jeopardy.

Many offshore bettors will recall the sports betting site which started in the late 1990s in Canberra Australia before moving to the United Kingdom. The company operated in Australia and took wagers from players in all countries. In the early 2000s Canbet began concentrating on the United States and in an attempt to set up a niche in the fast growing and highly competitive U.S. facing market offered -107 on NFL point spreads and was the first offshore sportsbook to provide reduced vig betting. The idea worked and the company built up a large American customer base. Canbet was valued at over USD$20 million and David De Campo, the CEO of the company at the time, was considered by many to be a genius. Canbet feeling confident with its success believed that if low vig betting could work for U.S. clients it could work in Europe as well, and hence made the decision to move the operations to the UK and acquire a UK betting license.

It was a mistake.

While low vig betting worked with U.S. sports it failed miserably with European sports and the company began to lose money. Moreover they began to have server problems and a DDOS attack put them offline for almost a week. It was clear that Canbet was a shell of its former self. The final nail in the coffin, however, happened when it became apparent that the United States would soon pass a law to make online gambling illegal and Canbet knew it couldn't survive without the U.S. customers, nor could it violate U.S. law as a publicly traded company. So in 2004 Canbet sold its operations to International All Sports (IAS), one of the largest betting shops in Australia for just over $1 million. Mark Read, the owner of IAS hoped that the speculated U.S. law would never pass both houses and Canbet could continue to operate its U.S. facing business. Even if they had to drop the U.S. clients he valued the UK license (something he had been trying to acquire for some time) at more than a million dollars.

Read was successful in turning Canbet's fortunes around for a short time and the purchase seemed to be working perfectly until the UIGEA passed in the U.S. in October of 2006. Since IAS was a publicly traded company, management at IAS had no choice but to block customers in the U.S. from betting at Canbet and in November 2006 the company made the announcement that American players were no longer welcome, effectively killing all of their business. Canbet lost over $8 million in the 2007-2008 financial year and was on pace to lose about the same in the next financial year. The failing operation was hurting IAS's bottom line and Read decided that a UK license wasn't worth the hassle, so in 2009 IAS dumped Canbet, selling it to Singapore-based Yin Khing Investments for the same $1 million Read paid for the company years earlier. Meanwhile, Irish based Paddy Power, had an interest in expanding in Australia and in 2009 purchased 51% of Sportsbet, an Australian sports and horse racing firm, and later used Sportsbet to purchase 100% of IAS for approximately 22 million Euros.

Yin Kingh clearly was just a venture capital company with no real insight in sports betting and Canbet was never able to become profitable. The company not only continued to lose money but the new management at Canbet started to cancel winning wagers and made other similar decisions that convinced online watchdog groups to downgrade them with each complaint, eventually bottoming out under Yin Kingh's ownership. In 2012 Canbet was acquired by Interactive Gaming and Sports (iGAS Group) who according to their web site is:

"Operated by a management team with over 50 years combined history in gaming and wagering from jurisdictions all over the world, iGAS aims to be the premier online gaming and wagering product provider that specifically services the Asian markets."

One can only assume that iGAS's purchase of Canbet was to focus the company on Asia based on their statement above but that clearly never materialized. iGAS recently told SBR that they were hoping to rebuild Canbet by reconnecting with former players and one can only assume that means that the new owners plan to try and win back American players although whether they can do that with a UK license is uncertain.

Regardless of the plans of iGAS, the company has been slow paying players since almost the beginning of 2013 and by last count owes players upwards of a quarter of a million dollars. The company blames the payment problem on a technical issue with their system but those who held WSEX accounts know full well that these type of excuses almost invariably lead to insolvency. As a result of the myriad of complaints to the UK Gaming Commission, Canbet has been forbidden from accepting any deposits or take any bets as of January 1st 2014. The UK Gambling Commission hasn't given any further update on the situation other than to post a link to a FAQ which clearly states that they do not guarantee payments and can not be held responsible if a company goes under.

I tried to contact iGAS at the email address and phone number on their sites but the email bounced back and the phone number never connected.

Let's hope this isn't the end of Canbet and players receive their funds back but it doesn't look promising. Affected players are urged to contact the UK Gambling Comission and file a complaint.

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

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To read an updated article from Hearald click here

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