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Costa Rica May Make Online Sports Books Pay Serious Licensing Fees

The Tico Times, Costa Rica's largest English-language newspaper, reported last week that Costa Rican legislators are set to introduce a bill that will not only require online and telephone sports books to each pay $150,000 for an operating license, but will also require them to pay previously-unrequired sales and luxury taxes.

The proposed legislation also permits the Costa Rican government to monitor the volume of betting action each sports book takes in, so a tax based on percentage of volume can also be levied, the Tico Times reported. All told, the Costa Rican government hopes to raise as much as $4 million annually from the sports book fees and taxes, the newspaper said.

In addition, sports book operators will be required to finance Interpol investigations of themselves and their operations to prove they are not involved in money laundering, the newspaper reported.

Two weeks ago, the Miami Herald and then La Nacion, a Costa Rican Spanish-language newspaper, reported that Costa Rican sports books pay $50 for a license while those in Antigua pay $100,000.

In actuality, Antiguan sports books pay $75,000 for a license --- Antiguan online casinos pay $100,000 --- but the message taken from the news articles by the Costa Rican government was clear: We've got a golden goose we didn't know about, so let's start collecting those golden eggs!

The Herald and La Nacion also reported that at least one owner of a Costa Rican sports book --- Frank Masterana of Caribbean Sports --- has ties to organized crime in the U.S.

After these and other revelations were reported, the President of Costa Rica immediately began a probe of the nation's sports book industry.

One Costa Rican sports book operator, American Sonny Roberts of Jaguar Sports (www.jagbets.com), told RGT Online that he welcomes the proposed legislation.

"I think it will be a good thing, because it will force competitors who are not financially sound to go out of business," Roberts, a Brooklyn, N.Y., native, said. "Sports books like that give the whole industry a bad name."

Masterana, for example, owes bettors hundreds of thousands of dollars but claims he can't afford to pay them.

"If a guy can't pay off his winners, then he won't be able to pay $150,000 for a license and he'll be out of business," Roberts said. "The $150,000 license fee will help clean up the industry, that's for sure."

How the Costa Rican government will monitor the volume of bets each sports book takes in was not disclosed.

But if the sports book operators react the same way operators of Antiguan sports books and online casinos reacted when the Antiguan government proposed such monitoring, Costa Rica may have another revolution on its hands.

Earlier this year, the Antiguan government announced a plan whereby so-called "black boxes" would be placed on the computers of all Antiguan online gaming sites, so the government could monitor bet volume for tax purposes.

The operators opposed the plan, banded together and threatened en masse to leave Antigua and move elsewhere if the "black boxes" were installed.

Perhaps fearing the loss of jobs that online gaming provides for the poor country, or perhaps because of the political/financial influence of the gaming site operators, the Antiguan government backed down and nixed the "black box" idea.

Ironically, the only person to lose a job over the fiasco was the Antiguan government official, Gyneth McAllister, who proposed the "black box" monitoring system.

Shortly after her idea was shot down, she "resigned" from office.

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