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Two Top Sportsbooks Go Belly Up

The parent company of two leading offshore books - which heretofore had been highly respected, trusted, and conducted business since 1996 - "has been declared insolvent and has been taken into bankruptcy proceedings ." according to an email announcement.

Aces Gold Casino and its sister company, Sports-Market, are the two subsidiaries of Seinpost Holding in Curacao that have failed, owing bettors millions of dollars.

Incredibly, for just the briefest period, there was a red flag raised about the situation. In January, The Shrink, on his website The Prescription, warned that "Sports-Market/Aces Gold is in deep financial distress".

Apparently, in response to strong pressure, much of his original remarks, which proved to be deadly accurate, were subsequently recanted. And due in no small part to AG's then-good reputation the issue receded, as many people offered well-intentioned endorsements of the book.

A poster on Bettorsworld wondered, unfairly, if The Shrink helped start a run on Aces Gold. The Oddswiz, who co-manages the site, stepped up and said, "I doubt it". A refreshing response in view of the fact that the two sites are not best buds.

Meanwhile, Major Wager is providing a measure of succor for Aces Gold customers who registered with that site for a secured account. Eligible players with an account at securebuxx.com will receive up to $500.

The issue of the "watchdog" sites' responsibility and culpability has been a hot button topic among offshore industry posting forums. What got our attention is the diversity of opinions, and the gap between those who offer insightful, practical observations and those who are in way over their heads.

There has been speculation that some sort of bailout might be possible, but that would appear to be wishful thinking. The failed books not only dealt large post-up business, but handled millions and millions of dollars in credit customers.

The only book thus far to take action has been Curacao-based Royal Sports, which says it, "will offer a stable beacon of light to those who find themselves lost at sea."

Called the Royal Salvation Plan, it, "is based upon the sound business planning and risk management principles Royal is famous for. We will never offer more than we can afford. We will never follow another man's path to ruin."

We know some of the principals at Royal, and while they are frisky, fun-loving folks, they are not cowboys who gamble with their business. Marketing director Marty Monroe is as delightful an individual as you will find in this industry, but he is also thoroughly grounded in the bookmaking business.

In offering its Salvation Plan, Royal stresses it, "is in the global entertainment business and not interested in wiseguy action.

"We are not interested in competing in the never-ending bonus merry-go-round. Sooner or later, it has to stop, and in a free market condition . will settle at a fiscally responsible level.

"We have done the math and we are there now."

Despite this stern-sounding language, it should be noted that Royal is among those books offering the dime line in baseball.

Anyone who had an account with AG/SM can contact Royal Sports or call 1-877-681-8744 for more information or to apply for the program.

Another top offshore manager, Mickey from CRIS, weighed in with relevant comments that should be taken to heart by bettors.

He cited greed, on the part of both the players and the bookmakers, as the crux of the problem facing the offshore industry. And we feel he identified the salient issue in what has become a ruthlessly competitive business. Some books are willing to sell their souls to the devil to get fresh blood.

"Anyone with common sense knows you can't operate a business without profit," explained Mickey, noting that players in search of bigger and better bonuses act as if offshore books are "the goose that laid the golden egg".

Some offshore BMs are driven by greed, "with the ingenious idea of giving away the store to get their share of customers, after all they are all going to lose anyway . after we give away free money and the till starts to run dry, we can just take a shot on a couple of games and jump right out of the trap," Mickey added.

He summed up the problem with this succinct gem: "The bookmaker offers something outrageous to get business, and the players come to expect it."

Like so many businesses before them, who have also failed by overpaying to get customers, offshore books have set up their own syndrome for disaster. Who is to blame, the bettor or the bookmaker?

We believe they share guilt equally. And in the worse-case scenario, both suffer the ultimate consequences, getting wiped out. We realize that some players refuse to acknowledge this responsibility. They are known within the industry as bonus jumpers, and assiduously practice short-term thinking. "It's not our fault if a book doesn't know where its bottom line is," they assert. But when the book goes belly up, they're the first to excoriate management.

When we saw Mickey cite greed as the essence of the problem, we were reminded that we, too, recently used the same terminology to illustrate the current offshore situation. In an article written for the current issue of Gambling Times (Winter 2001), we referenced Michael Douglas in the film Wall Street, where he said, "Greed is good. Greed works."

Not if you're an offshore bettor, enticed by overly generous signup incentives to open an account with a book that runs itself into the ground by giving away the store.

However, let's be clear about what are the main factors in the demise of Aces Gold. Sure, promotions like juice-free action on the Super Bowl which, incidentally, we posted on our website, and other profit-inhibiting practices were to blame. But many sources feel its practice of booking large limits to sharps and syndicates, both post-up and credit, was what finally toppled the shop.

Can the books figure out a way to attract new business without being irresponsible? Not all of them are guilty of succumbing to the blatant practice of buying customers. While they need to curb their new customer promotions, look for a significant move toward bookmaking practices that reflect a more conservative approach.

The AG/SM disaster is a wakeup call for an industry that needs to revamp its approach to growth. But the negative publicity resulting from this bankruptcy makes it just that much more difficult to attract new players to offshore books.

We will be in Costa Rica this week visiting a few books to discuss marketing. Among the areas we'll cover will be the idea of finding some practical solutions to their ongoing need to constantly replenish their customer base.

We'll sign off on this positive note. Dominican Republic-based Grande, a shop that has earned an impeccable reputation, will soon be another option for post-up players. In a recent post on The Prescription, Grande said, "We will be opening our doors to post-up players for online wagering on sports and casino, as well as phone wagering."

Buzz Daly can be heard live every Friday here on Audio Vegas.com.

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