This week saw a book that was highly touted by just about everyone go belly up. Hundreds of players at BetIslands are on the verge of getting stiffed and another black eye is about to be given to the offshore wagering industry. BetIslands came into being over the summer in 2011. The betislands.com URL was
This week saw a book that was highly touted by just about everyone go belly up. Hundreds of players at BetIslands are on the verge of getting stiffed and another black eye is about to be given to the offshore wagering industry.
BetIslands came into being over the summer in 2011. The betislands.com URL was then owned by Jazz Sports who sold it to Jon Kreta and his investors. Jon was well known in the industry having worked at several sportsbooks before becoming the front man for WagerChief. After a parting of the ways with the BetPhoenix-backed WagerChief, Jon moved on. He found backers and used a business model that featured reduced juice and free half points to get BetIslands off the ground. Jon ran the shop but did most of his work in the PR and marketing of BetIslands.
He pushed the free half point and the reduced juice hard. Posting regularly in popular gambling forums, mining his WagerChief customer list and hitting up every contact he had in the industry, Jon took BetIslands from a dead URL to a legitimate sportsbook in less than a year. This year he made a big push with giant bonuses and looked to be getting BetIslands into the same class as many of the 2nd tier of reputable small to mid-size sportsbooks. Unfortunately, it looks like the same offerings that got BetIslands going were also its downfall.
Free half-points, giant bonuses and reduced juice can only be offered to a) recreational bettors or b) if a book has thousands of customers (see 5Dimes). Maybe it was greed or maybe it was stupidity but Betislands let players fire away, much to the detriment of their bottom line. Offers that should have been out there for only recreational players were extended to many very sharp players. We had one caller, who was obviously not a recreational player, tell us that he only played there on free half point days. Many of the calls, chats and emails ask about other reduced juice outlets. Apparently there was no risk management at BetIslands, otherwise how could a book with around 500 active players allegedly be more than 1.5 million in the hole.
Players have repeated to us that Jon skimmed the money from the sportsbook and took off. “Jon ran with my money” is something that we have heard over and over again. But the most likely reality is that the book did well in the first month or two of the NFL season and then November came. The backers who had taken profits in September and October suddenly got buried. And probably looked at Jon and said “What happened here?” Instead of getting the ship righted, a weak December took the book even further into the red.
The real disbelief for us here at OSGA is this came on BetIslands so quickly; we were almost as stunned as the rest of the betting public when BetIslands closed up shop. Up until December, everybody got paid! The first complaint that we saw on slow pay, giving us an inkling that something was going on, hit our inbox on 12/4. Unfortunately, by the first week of December, it was already too late.
Players are asking, “What can be done?” We have been asked who in the Costa Rican government players can contact. This is a problem as companies are not issued a gaming license in Costa Rica. The license for offshore gaming operators is referred to as a data processing license. And due to the lack of legislation, most companies are self-regulated. Gaming companies in Costa Rica are not subjected to the regulations, monitoring and testing in the same way as they would be in other jurisdictions. Players really have nowhere to turn. They stand to be stiffed or bailed out at this point.
BetIslands has reported that they have explored the bailout option throughout the indusry and could find no takers. We did hear back from Ryan at BetIslands who is still working on behalf of the players. “There have been efforts to obtain secondary financial backing since the closing.” The email went on to say that negotiations were continuing. We are not holding our breath, but do remain optimistic, providing that this is not just another smoke screen from BetIslands.
In the old days when there were seemingly hundreds of sportsbooks and the money flowed freely, the industry giants would laugh when a book went under and say “shame on those players for gambling there, they should have played where they KNOW their money is safe”. This is a solid business practice; let players get burned, and then scrape them off the floor. Or maybe it was a good axiom when business was booming. But enough is enough. Hundreds of players got burned when Covers-backed BetED went AWOL last year and now several hundred more are victims to the ‘Running Man’ at the helm of a sportsbook.
It’s time to get a little creative. Another black eye means more players fleeing from the offshore industry that should only be growing every year, not regressing. Here is a solution that might be worth exploring.
Players who are owed money could recoup it on a sliding scale with a minimum required deposit. For example players owed under $5000 would be entitled to 100% reimbursement, players with balance between 5 and 10 thousand would get 100% on the first 5K and then 50% on the remaining amount. Player with a balance in excess of 10K get 25% on the amount over 10K. To get this, players would have to deposit 50% of the amount claimed. I know it sounds complicated but it’s not.
Let’s say Joe is owed $1000 from BetIslands. He would get the $1000 in his account and have to deposit $500. Simple. Let’s say Bob is owed 7K. Bob sends in $3500 and get the first 5K in free play at 100% + 50 % of the remaining 2K or $1000 as additional free play. Bob is not made whole, but he does end up with $6000 of his original 7K.
There are ceratinly more creative ideas that the sportsbook establishment could come up with to save the industry from another black eye. The goodwill brought on by saving hundreds of bilked players can’t be bought with a banner ad. It is time for somebody in this industry to do what is good for everyone.3 comments