The History of Online Casinos: The Wagers of Sin – Part 2
In this second installment of the Wagers of Sin, our resident Bonus Doctor Paul Cullen talks to an as-yet-unnamed industry insider – who dishes the dirt on the iGaming scene in the late nineties to early noughties. Be warned; as you read on, you’ll see why he wants to remain anonymous…
Imagine a business environment, awash with money, only a handful of competitors, located in exotic offshore locations. An untapped market worth billions. Running it: a cast of characters that has spent years dodging the law, keeping a low profile, operating under the radar. Big personalities. Deep pockets. Loose laws. A tidal wave of new money. Gambling has always been one of the best ways to wash money. Hit the casino, get $10,000 worth of chips, have dinner, return to the cashier with $10,000 in ‘winnings’ – money laundered. It’s that simple. Now… move the operation offshore, add the Internet to the equation – fundamentally still just a concept in action, and the process is even more opaque.
By 2000, there were several sportsbooks operating out of Antigua, Curacao, Panama, and Costa Rica. CRIS, BetonSports, BetWWTS, Intertops, Bodog, BetUS, and more. All busy enjoying a slice of the new US-facing online gambling market.
Some were very Las Vegas-style set-ups, with phone operators and managers running the numbers. They would make personal calls, offering high value players the latest lines and odds. Upselling, pushing for business. The old school hustle. “Bobby – have we got a deal for you! A point on the line and $5,000 credit so you can nail down that deal.”
CRIS (Costa Rica International Sports) was run by Ron Sacco – a veteran bookmaker. Wise guys would get the VIP treatment. Joe Square would get rinsed. Harvest the small fry, to feed the whales.
Problem was: Sacco couldn’t resist blowing his horn on a 60 Minutes documentary. His cocky offshore ‘you can’t touch me, whachyagonnadoaboutit’ take immediately making him public enemy #1 for the FBI. Sacco got busted on the border, between Costa Rica and Nicaragua, for a dodgy passport. He decided to turn himself into the US authorities. He got a two-year prison sentence for bookmaking. Sobering stuff for the industry onlookers.
At the other end of the spectrum was a sportsbook like BetonSports. Owner Gary Kaplan was a Brooklyn-born bookie, working out of Costa Rica, from back in the day – pre-Internet. He hired businessman David Carruthers, as CEO, to float the company and make it legit. How big was BOS? In 2002 and 2003, the business booked bets worth $2.5 billion.
Carruthers was a keen advocate for regulated online gaming and was interviewed by the New York Times, the Baltimore Sun, and the Wall Street Journal. Once again: FBI feathers were ruffled by his outspoken attitude. Carruthers was arrested, at Fort Worth Airport, Dallas, whilst in transit, in 2006. He would spend three years on house arrest and probation, before striking a deal and serving a further two years in jail. Take note: don’t fuck with the FBI. Don’t wind the feds up. They don’t dig it and your next airport transfer could be a multi-year layover.
The bust was the beginning of the end for BetonSports. A shame – it was a class act. The office was hidden away on the top floors of the Mall San Pedro, in San Jose, Costa Rica. On the very top floor, a VIP area, with full-size swimming pool and casino, as well as luxury rooms for high rollers and visiting consultants.
Carmen Electra and the Pussycat Dolls were invited to open the VIP area and the annual BetonSports Carnival Party was a classic, attracting Hollywood C-listers like Baywatch’s Traci Bingham, Nick Stahl and Eric Balfour. The actors you kinda recognise but can’t remember their names.
BetonSports founder Gary Kaplan used to keep a loaded gun in his office. If the results were bad, he would walk around the office in a rage and shoot out the monitors. His gun carnage caused such chaos, they created a shooting range in the building. Now, he could blast away at his displeasure.
Security at BOS was very tight. One time, a disgruntled punter turned up with a loaded gun, demanding a refund after a bad run and a savings blow-out. Fortunately, he never got as far as the office. Stopped in the lift. Guns were a necessary evil. Remember kids: guns don’t kill people, people do. Especially, people who have spunked their life savings on a college basketball game.
For the wise guys and ex-mobsters, running some of the books, minor laws were a triviality. In Antigua, one sportsbook owner would park his car in front of the office every single day. And every single day, he would get a ticket. One morning, he spotted the traffic warden writing him up and said: “Honey, you’re gonna run out of paper, before I run out of money.” He left his car where it was and never got another ticket.
Footnote: this is the same guy who once took a few employees out for a post work drink. A nearby steel drum band was playing the restaurant. He went up to the band leader and gave him a fistful of notes, saying: “Great work, guys. Why not take a break. No, really… TAKE A BREAK.” They got the hint, took the money, and left.
The moral compass of many of company high fliers was also set to a different scale. Is it normal to take your staff to a brothel, where the women swim around naked in a giant aquarium? Is it normal, to crack out ounces of cocaine, when it’s time for a little ‘blue sky thinking’ (all the ideas were shit, btw)? Yes: it is normal.
The Internet gambling business was old and new at the same time. For decades, the wise guys had been running sportsbooks and taking bets over the phone. The details recorded in the ‘book’, where all the bets were logged and recorded. The initial bet created far away, in a New York Italian deli. The money wired over.
They wanted to go legit. They looked to the UK for English-speaking consultants who could come and clean the business up. BetonSports Carruthers was at Ladbrokes before he moved to Costa Rica. The UK visitors suddenly found themselves in a moral-free world of slightly shady operations and dodgy business. It was fantastic.
For a while, it was all good; more money than sense. It is reported that – briefly – BetonSports was one of the world’s biggest sportsbook, assimilating thousands of excited, rich, new US gamblers, turning over billions. Note: this was purely a sportsbook. Casino integration was still years away.
Legally, Internet betting baffled. If a sportsbook makes a bet in Costa Rica, where gambling is legal, for a citizen living in Ohio, where gambling is not legal, has a crime been committed? If so, by who? Where did the bet ‘happen’. Is the person in Ohio culpable?
The FBI wanted to close it all down. Betting in the US is tied to organised crime. It may be the case in the UK. We’re just better at hiding it. The Feds did it by picking off employees travelling through the US. Suddenly, everyone was re-routing through Madrid and the Caribbean. Transiting the US suddenly became a game of cat and mouse.
This is why the authorities targeted the movement of funds, using the ancient 1960s Wire Transfer Act as its weapon of choice. The vagueness of the law explains why Carruthers was in legal limbo for so many years. In 2006, the Unlawful Internet Gambling Enforcement Act (UIGEA) would finally close the loopholes.
Nearly two decades later and the US is finally opening up to online gambling. Regulated, taxed, and monitored. In the land of the alleged ‘free’, they are only now allowing their citizens to do what they want with their hard-earned money. You want to blow it all on the big game – go ahead: make a bookie’s day.
As told to Paul Cullen
- 1 Unlawful Internet Gambling Enforcement Act of 2006 - Wikipedia
- 2 BetOnSports Founder Gary Kaplan - Wikipedia
- 3 Arrest of David Carruthers - New York Times
- 4 Ron Sacco Imprisonment - SF Gate
- 5 United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services - WTO
- 6 FTC Warns Consumers about Online Gambling and Children - Federal Trade Commission