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Where Do We Go From Here? An Overview of the Current State of Offshore Gambling and the Direction It's Heading...By David Stalcup, Editor-in-chief

As I type this article, the World Sports Center (WSC) sportsbook ( is off-line, presumably never to return. The principal of WSC was implicated in Montreal arrests related to organized crime. WSC was a solid offshore book that never had any payout issues that I'm aware of. Betcorp, Canbet, Sportingbet and Bowmans have all stopped taking U.S. customers---solid outs, all. Some smaller books have already found banking too difficult to be worth the trouble and have shut down (some stiffing customers, some not). The stalwart offshore books, the likes of Pinnacle, The Greek, CRIS, WSEX, are all still operating as normal, but surely those books share the same concerns as every other offshore operator.

Frist and company were successful in attaching the online gambling bill to the Safe Port Act leaving financial institutions in the lurch. When the rules and regulations are written to enforce the laws written in this bill, how are the banks going to actually enforce the laws? Will the coffers be funded sufficiently so the banks will actually be able to do as the U.S. Dept. of the Treasury asks? It seems highly unlikely that the financial institutions will be able to put a serious dent in stopping online gambling transactions. This bill seems to be not much more than window dressing, and with the regime change in Congress there seems to be more than a 50% chance that the laws put forth by the Treasury will have no teeth. All the above begs the question: Why are so many offshore operators folding up their tents and leaving the U.S. market?

One reason so many outfits are closing down is fear of reprisal from the U.S. federal government. With the arrests of two principals from prominent offshore sportsbooks (BetOnSports and Sportingbet) many publicly held companies made the move to either go private or vacate the U.S. market. Presumably the sportsbooks did this to protect their employees from incarceration when they had to enter the United States for business or personal reasons. But many people hold the opinion that a vast overreaction is underway by the offshore operators because of the following facts:

1) Offshore bookmakers aren't breaking any laws in the countries in which they reside. Some companies have CHOSEN to make themselves subject to U.S. federal law, but those companies aren't actually subject to U.S. law outside of U.S. soil.

2) No actual regulations have been written by the U.S. Dept. of the Treasury. Why close down your business when no law has been written that you could be held accountable for?

3) Players are still betting. It would be understandable if the offshore books lost a significant portion of their U.S. business after the bill was passed, but there is no evidence to suggest that is the case. So the customers are still offshore, ready to hand over their money---but the books shut down? It all makes little sense.

It's clear that the number of offshore sportsbooks is shrinking and that the bigger books (such as Bodog) will absorb many of the smaller books' customers, now and in the future. This fact makes the betting lines tighter, bonuses/betting limits smaller which affects both the recreational and professional sports bettor. So the above statement begs the question: Where does this leave the professional and recreational gambler?

One has to assume that some recreational bettors have already stopped depositing and betting because they fear they will never get a payout (possible), or that they are breaking a federal law by gambling offshore (they aren't). If the recreational bettors leave in droves it doesn't bode well for the offshore professional. If the pros have to feed off of each other the betting lines get tighter, the number of places to bet shrinks and the betting limits get cut down to unacceptable levels. But there are emerging options: Exchanges like and will play an increasingly larger role in the U.S. market.

Exchanges are attractive to the recreational bettor because he/she feels that an exchange is player-to-player betting and somehow isn't the same as a "real bookie". In one sense that's true because exchanges have no stake whatsoever in the outcome of a wagering event---they just take a commission on the outcome (unlike a bookmaker, who assumes the risk of wins and losses and must pay out accordingly). That fact also makes exchanges attractive to pro bettors because there is no fear of getting shown the door or having limits cut---the exchanges are happy to have (and need) the volume provided by professional market makers. Of course the commission the exchanges take is exponentially lower than the vigorous bookmakers charge, a fact that should be attractive to all bettors.

Considering the uncertainty of the offshore gambling industry, bookmakers and players alike should take a step back at this point and evaluate risk. Bookmakers should be making financial decisions about the direction of their companies and players should be making risk decisions with their bankrolls pertaining to where they are posting up monies to gamble with. But certainly all parties involved should take a deep breath and realize that (at least at this point) nothing has changed concerning the U.S. governments enforcement of offshore betting laws.

David Stalcup, Editor-in-chief

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