Alderney Adopts Changes, Sportingbet Leaves

Sportingbet plc is no longer accepting sports bets under its Alderney license, a move that one British newspaper says follows Alderney's decision to forbid licensees to accept bets from Americans.

In July Sportingbet relocated its European operations to London from Alderney and since then all of the bets it accepts from Europe are being taken under its U.K. license with tax payable in the United Kingdom.

Andre Wilsenach, commissioner of the Alderney Gaming Control Board, said the report in The Independent tries to create the impression that Sportingbet moved its betting operations to London because Alderney gaming regulators changed the rules governing online betting licensees at a meeting on July 2.

Included among the amended licensee rules is a stipulation that sports betting licensees no longer accept bets that originate in the United States. Wilsenach said the change followed the June announcement by the U.S. Supreme Court not to review the decision made in a New York federal court to convict Jay Cohen, an American, on charges connected to Internet gambling.

"Sportingbet has in July taken a decision to move its business, betting business, away from Alderney," Wilsenach told IGN. "It still has a license in Alderney, but it's not accepting any bets from Alderney at the moment, basically since July. The reason for it is difficult for me to comment on. I think they are probably in the best position to indicate that."

A press spokesman for Sportingbet said the only comment the company would make about the move was a prepared statement. In the statement, Sportingbet writes that as indicated in its first quarter results for 2002, following the company's acquisition of Sporting Odds, it decided to increase its presence in the U.K. market since 100,000 of its 136,568 European customers are located there.

In July, Sportingbet founder and executive vice chairman Mark Blandford said that 55 percent of Sportingbet users are from the United States.

"Strategically the focus on this market will increase over the coming months," the company stated. "In order to maximize the advertising and marketing opportunities into the U.K. market, Sportingbet has relocated its European operations from Alderney to London with all U.K. and European bets now being landed in London with duty payable."

The company said it employs 30 people in Alderney as part of its European customer service and does not plan on "changing this number in the foreseeable future."

Sportingbet said that all of its bets from America are taken in by its American operations center in Costa Rica and under Antiguan and Curacao betting licenses. The company, as it has stated in the past, would like to operate from onshore in America when and if that is ever permitted by the U.S. government.

"Sportingbet's stated strategy has always been to operate onshore wherever possible in order to pay tax, as demonstrated with its Australian operations by the move to Darwin from its offshore base in Vanuatu in January 2002," the company said.

Wilsenach said he could understand why The Independent, which states that Sportingbet "has relocated its business from Alderney after the island clamped down on companies' taking illegal bets from U.S. citizens," would draw the conclusion that Sportingbet's decision was based on its ability to take U.S. bets.

"I can therefore see why The Independent is drawing the link," he said. "I'm just not in the position to confirm that because I didn't [make] the decision."

Wilsenach said that on July 9 Sportingbet announced an agreement with U.K. Customs and Excise that allows it to market Sporting Odds in the United Kingdom. The move could very well be based on a decision to consolidate Sportingbet's activities in the U.K. market, he said.

On July 9, the chief executive of Sportingbet said in a press release that by executing U.K. bets under its U.K. license it will be able to market the Sporting Odds brand to its full potential. The company announced June 26 that it acquired Sporting Odds.

"Alderney has always been an excellent regulatory environment for Sportingbet, and it has served us very well," Nigel Payne said. "We are moving on with some regret. However, when Mark Blandford started Sportingbet four years ago, not even he would have foreseen the scale of our global expansion."

At least one of Alderney's licensees is happy about the change in regulations. Paul Mathews, vice president of government affairs for WagerWorks, said he thinks that barring licensees from taking American bets is a "great thing."

"One of the criteria we set when we look at a jurisdiction is whether or not they have a strong regulatory body, and we think one of the things that makes a regulatory body strong is making sure their licensees don't violate laws in other countries, and clearly when you take a sports wager from the United States, you are violating a federal law there," he said.

WagerWorks is licensed in Alderney along with Surrey Sports, Ritz Interactive and Littlewoods.

Wilsenach said he did not know whether Sportingbet would renew its license in Alderney.

Another change the Alderney Gaming Control Board made on July 3 concerned money laundering. Wilsenach said the board wanted to make it clear in the betting license rules that each betting organization bears the responsibility for monitoring its operations for possible money laundering activity and notifying the proper authorities if such activity is suspected.