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.
I consider myself lucky. I've gambled online practically from the beginning, from the mid-90s when the whole offshore scene exploded, and have yet to be stuck for a penny, due more to dumb luck and fortunate bailouts than any skillful prognostication on my part. While many disasters such as Aces Gold and BetPanAm might have been anticipated, BetonSports was much more of a surprise, as a well-established, publicly-traded company with a decent reputation in the industry.
In days past, identifying books about to go belly-up was infinitely easier. NETeller requests would be declined, and due to the effortless speed of money transfers back then, the internet forums would be abuzz with slow-pay complaints within hours of the first declined withdrawal. These days, we have to contend with a money-transfer process that takes days to weeks in most cases, creating a significant lag time from when a book starts struggling until their problems are plainly evident to the public. This makes it much harder to keep close tabs on your cash and pull out when a sportsbook (or the industry as a whole) is about to hit a rough patch.
Though the industry is much different (and significantly more consolidated) than just a few years ago, considerable downside risk still exists for offshore gamblers. As with any other kind of "investment", losing your capital is the worst of outcomes. It is hard enough to stay ahead in the gambling game as it is, but when you risk having your money disappear into an offshore Ponzi scheme, profiting becomes near impossible. And until some form of legitimacy is imposed upon the online gambling industry, at least in the States, any form of legal recourse is practically off the table. With that in mind, here are a few tips to minimize risk in today's still-volatile offshore environment.
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.
If you would like to make or read comments about this article, you may do so by visiting the Mess Hall forum at MajorWager where a thread has been started. Please click HERE