The Aces Gold Fiasco

We regret to inform you that as of today, Feb. 15, 2002, Seinpost Holding, parent company of AcesGoldCasino.com and Sports-Market.com has been declared insolvent and has been taken into bankruptcy proceedings by the Court of Netherlands Antilles in Curacao.

This was the statement that sent dread through the heart of sports bettors and damn near killed the offshore betting industry, and dealt a body blow to the credibility of online gambling.

To the casual observer, the fact that an offshore sportsbook had folded and taken its clients' money with it was something less than an oracular revelation. After all, e-casinos and sportsbooks fold on an almost daily basis.

It also might seem to a casual observer that anyone who signed up with an unregulated offshore operation was a fool parting with his money.

The truth is more complex than that. There was money, serious money, to be made from offshore betting. And this was partly due to Aces Gold. They offered a range of attractive sign-up bonuses and promotions. Chief among these was "no-juice" wagering. The deal was roughly this: the house took no profit on any bet. Normally with a "straight-up" sports wager, the most popular type of bet on U.S. sports, you bet on team A or team B to win at 10 to 11. Usually the teams are not completely evenly matched, so to reflect this the underdog is given a points advantage, or "spread", to even things out. For example, you could bet an underdog at 10 to 11 at -3, which means that if the underdog lost by only 2 points your bet would win. Conversely, if you bet on the favourite and they only win by 2 points your bet would lose. Now, Aces Gold paid even-money, 1 to 1, on straight-up wagers.

This is the sports betting equivalent of a blackjack 2-1 promotion, and effectively it was free money to those in the know, a big secret no one wanted to discuss publicly. Even if you knew nothing about sports, even the rules, you could make money. How? Well, by a method known as "middling". That involves finding bookmakers who disagree on the spread. Say bookmaker A thinks team A is a 2 point favourite and bookmaker B thinks team A is a 4 point favourite. You bet equal amounts on team A with bookmaker A and team B with bookmaker B. If you bet the same amount and the actual result is that that team wins by 3 points you will win BOTH wagers. If you don't the wagers will largely cancel out, but you'll lose 5% in vigorish.

Middling should normally only be attempted by the statistically minded who know the probability of a certain point spread occurring for a given sporting event, because many point spreads don't occur often enough to make middling profitable.

Aces Gold changed all that however. You were taking no risks on their wagers. And, because other sportsbooks, such as Gameday, copied their strategy, you could middle a game and take on absolutely no risk, and still win both wagers if the result should fall between any conflicting point spreads.

This is just a strategy for those who are inexperienced with sports betting. Some handicappers, of course, know enough about sports that they can beat the bookmakers at their own game, even with ordinary "juice". Such gifted individuals obviously made a mint out of the Aces promotion.

This promotion was on top of up to 25% deposit bonuses and other even more exotic offers.

Looking back the whole thing seemed insane, as if Aces were some gigantic philanthropic institution rather than a business. But nobody, not even the consumer watchdogs who exist to prevent this sort of thing, such as sportbookreview, majorwager and the prescription, questioned Aces integrity. They had a very good record of paying quickly, good customer service and general integrity.

Then came the Super Bowl, an event which notoriously precedes sportsbook bankruptcies and closures, partly because of the major liabilities that arise from such a high-profile event, partly because everyone takes money out of sportsbooks when the season ends. And this time, Aces was one of the prominent casualties.

Did I have money in Aces at the time? No.

Am I smug about this? No.

You see, great gambling opportunities tend to arise in unregulated dangerous environments. For example, being a card-counter in post-war Nevada could get you killed by the mob, but it had single-deck blackjack dealt down to the last card (similarly great games currently exist in mob-controlled Moscow). Aces bettors were making money hand over fist until they...weren't. I didn't lose any money at Aces but I didn't make any either.

Mathematically, the chance of being stiffed by a sportsbook is not a complicated factor to deal with. You just factor the overall risk into your equations and bet accordingly. However, the math tends to understate the intense psychological pain Aces bettors felt at being ripped off.

The offshore betting industry may never recover. The obvious solution to the problem would be for the books to agree to bail out any one of their number who went bankrupt in the future, thereby restoring overall faith in the industry. Currently this does not seem likely.