I have been getting tons of e-mails asking me about the safety of doing business with various online sportsbooks. Although sportsbook scams and cheat operations do not get the online press that poker scams do, believe me, they are prevalent out there in the cyberworld. Not only are there the typical scenarios where online sportsbooks go belly-up and out of business, leaving account-holders holding nothing but air, several sportsbooks operations are set up just to do that: abscond with account-holders´ funds once the accounts are opened, without a first bet even being made.
In additon to these online sportsbook scams, there have been shady individuals involved with online sportsbooks, especially those based in Costa Rica, who have been accused of more widespread criminal activities on several continents.
According to a report filed over a year ago by the U.S. Department of Justice (DOJ), Jaime Ligator, owner of the Horseshoe casino in San José, detained last May 18, contributed financially to the opening a call centre that was presumable used to defraud dozens of Americans with false prizes.
Ligator, when he was arrested, was the president of World Wide Land Investments which had offices on the third floor of Mall San Pedro. This is a firm that specializes in selling lots to North Americans, according to AM Costa Rica.
A former sportsbook owner, Max Allan Stone, was also named in the case and alleged to have been part of the scam that preyed on mostly elderly citizens living in the United States.
The scam artists called people in the United States informing them they had won a lottery. The victim was then supposed to send a “deposit” anywhere from $300 to $4,000 via Western Union, a police spokesman told AM Costa Rica.
Another of those named in the complaint, Severin Marcel Stone, 28, and presumably a relative of Max Allan, is being extradited back to the United States.
Severin Marcel Stone was detained in January in San Rafael de Escazú where he operated a food outlet in a shopping mall.
THE BetOnSports BUSTOUT
The BetOnSports saga continued last week with notification that they "do not anticipate that any distribution to creditors will be any more than a few cents on the dollar". Those players who were left with substantial account balances at the time of BOS's demise are starting to look like they will come away completely empty-handed. Unfortunately this is not the first offshore sportsbook failure, nor will it be the last.
HOW TO AVOID BECOMING A DEFUNCT SPORTSBOOK VICTIM
I would give you these suggestions to avoid losing your funds on account with sportsbooks that either go belly-up or are just plain scam operations:
Avoid credit wagering. While gambling on credit certainly has its place, and its benefits, it often leads into very murky waters. If offered a credit account from someone unknown to you, run, don't walk. This includes "forum personas" - plenty of scam artists have utilized credit offers through internet forums to rip-off unwary players. With no guarantee that you will be paid, you are setting yourself up for disaster. Be especially cautious of operations employing stateside credit agents - even if their intentions are honorable, the high risk of prosecution make this route generally unappealing.
Do business only with the cream of the crop. Appearances can be deceiving, and a well-designed website can easily disguise the fact that some sportsbooks are literally operated out of shacks in 3rd world countries. The biggest factor in sportsbook failure is lack of adequate cash flow, and most start-up operations are vastly undercapitalized. Large sportsbooks in operation for 5 or more years likely have had time to amass a cash reserve, and have a good enough handle on operating costs to keep themselves afloat. The same can't be said for smaller or newer sportsbooks, who represent a much riskier place to park your bankroll.
Stick to books advertising on well-known internet websites and gambling portals. While plenty of pump-and-dump schemes have been propagated through online gambling forums, most website owners will at least go to bat for those who signed up through their referral links if one of their advertisers goes belly-up. This, of course, varies by website owner. Most provide at least some degree of screening of their advertisers, and many have plenty of "inside connections" that can sometimes be used to expedite payments or resolve disputes. While this provides no guarantees of assistance, it at least leaves extra options open in extricating yourself from a sticky situation.
"There's no such thing as a free lunch." Be wary of incentives that seem too good to be true. Sportsbooks on the decline will often attempt to increase operating capital by enticing customers with generous deposit bonuses. In many cases, this is simply a case of robbing Peter to pay Paul as your post-up money goes right back out the door to process backlogged withdrawal requests. Don't get suckered into the tail end of a failing Ponzi scheme. Well-run (and well-capitalized) sportsbooks have no need for eye-popping incentives, which are often signs of desperation.
Diversify. The BetonSports saga has illustrated that no book is absolutely safe, regardless of backing, reputation, or business savvy. No one knows for sure if a book may fold, go bankrupt, or just pick up and walk away with customers' deposits. Spreading yourself out between 5 to 10 independently-run sportsbooks is a nice insurance policy if something unforeseen should happen to one of your standard "outs". Even a complete failure of one of your sportsbooks will only chop off a limited 10-20% of your total bankroll - not an attractive ending, but better than having all your eggs in one basket.
Keep balances low, and make frequent "profit-taking" withdrawals. Keep the minimal amount necessary for your daily betting in each account. The cash you keep offshore should be funds you are willing to lose in a worst-case scenario. Run up the score on one of your books? Take that opportunity to request a payout and preserve your capital - cash in a shoebox under your bed can't fall victim to offshore shenanigans. The goal should be to keep as little of your cash at risk as possible while staying funded well enough to avoid missing any profitable opportunities.
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