BUSINESS

Did online gaming stiff joint Covers.com shut down second US-facing sportsbook?

TAGs: betEd, Blue Monday, Covers.com, Joe MacDonald, Logans.com, Paul Lavers

On Thursday, representatives of the Costa Rican citizens formerly employed by defunct online sportsbook betED met with Costa Rican lawyer Osvaldo Madriz Ramírez of the firm BDS Asesores. At issue was the unpaid severance legally owed to betED’s ex-employees as a result of the company’s abrupt shutdown following the Blue Monday indictments. Ramírez appeared on behalf of betED’s publicity-shy owners. (Ramírez undoubtedly knows exactly who’s paying his retainer, but so far has revealed little to the employees.) A source with knowledge of how the meeting unfolded told CalvinAyre.com that “neither Paul nor Darren nor his assistant showed up.”

covers shut second sportsbook

Covers.com's Paul Lavers and Joe Macdonald

‘Paul’ in this instance, refers to Paul Lavers of sports statistics site Covers.com fame, whom the employees considered to be the one calling the shots at betED. Our source also fingered Paul and Covers co-founder Joe Macdonald as the individuals the employees suspect of possessing the player balances allegedly seized on Blue Monday, as reported by FreedomAtStake (the Covers.com posting identity widely accepted to be the mutual mouthpiece of Lavers and Macdonald) when Covers broke the news that betED was no more. Our source maintains that player balances were not in the small, solely operational accounts that were seized on Blue Monday,

Unfortunately, our source also revealed that, as we expected, the meeting with Ramírez did not go well. However, it did provide further evidence of the cavalier attitude with which betED’s owners regarded their financial obligations. It seems betED’s owners had for some time been dramatically underreporting their payroll to the Costa Rican ministry of labor (a crime in Costa Rica), and have instructed their lawyers to use this artificially low figure as a starting point for negotiations. These ‘negotiations’ amounted to a ‘take it or leave it’ offer of 50% of this lower figure, which equates to around 20% of what the employees should rightfully receive, and even then it may be weeks or months before they see a dime. The employees were told that if they didn’t like the deal they could always try suing the company, assuming they could find someone who’d admit to being the owner.

LET’S MAKE A DoJ DEAL
The two men indicted in connection with betED — Darren Wright and David Parchomchuk ­— have both denied ownership of the company, although sources tell us Wright certainly acted like an owner in his dealings with betED’s CR staff, so we expect him to be at least a minority beneficial owner… say, 20%? The pair is rumored to be heading to Maryland to surrender themselves to US Department of Justice, and their willingness to walk into the lion’s den suggests some kind of deal has been struck. But as the only type of deal the feds would be interested in would be one that allowed them to move up the betED food chain, the real identity of betED’s owners (defined by the Feds as who made all the money, not who signed the share certificates) may soon be in federal hands.

Of course, this site has previously speculated that the identity of betED’s owners is already public knowledge. Sources told us that Lavers and Macdonald were (via a lucrative revenue sharing deal) the beneficial owners of betED, and that it was Lavers himself who gave the order to shut betED down on May 23. Macdonald has since denied the revenue sharing allegation in an interview with Gambling911.com, calling it “total bullshit.” (The article didn’t say whether Macdonald chose to address the issue of Lavers ordering betED’s closure. Lavers and MacDonald have both declined our attempts to get them on the record on this question.)

stab in backDAMN… I CUT MYSELF WHILE STABBING YOU IN THE BACK
Meanwhile, FreedomAtStake has found a new way to deflect mounting criticism of Covers’ public impotence: playing the victim card. On Thursday, Freedom claimed the betED bustout cost Covers “a large chunk of advertising revenues and arrears in this fiasco. Literally hundreds of thousands of dollars. We are reorganizing our future business model because of this. If anybody should be angry at betED, it should be us.”

Even if the above scenario were true, it raises the suggestion that betED was many months behind in its advertising commitments, yet Covers nonetheless continued to list betED as its top sportsbook. For Covers to position itself as a consumer watchdog, while simultaneously neglecting to inform consumers that its #1 sportsbook was having difficulty paying its bills, strikes us as contradictory, if not an outright example of consumer fraud. And it’s not the only aspect of Covers’ existing business model that would allow them to have their cake and eat yours too.

Covers hosts a lot of touts on its site, and tracks which of these touts’ picks bettors are buying before those bettors go on to place wagers with Covers-recommended sportsbooks. If Covers was also secretly in control of one or more of these recommended sportsbooks, they’d have the ability to adjust the betting lines to take advantage of their insider knowledge on how bettors planned to wager. Hang on… Did we just say ‘one or more?’

lavers-macdonald-logans-2LOGANS RUNS FOR THE EXITS
Logans.com, which operates as a white label on Sportsbook.com, recently sent out notices to its players announcing that it was closing. As with betED, many industry insiders have long suspected Lavers and Macdonald of being the prime movers behind the creation and operation of Logans. Like betED, Logans received a disproportionate amount of promotion on Covers relative to its size, rising to a top-three ranking just a year after it opened. As late as last football season, Logans was still in Covers’ top-10. This January, Covers was even pimping Logans’ 100% cash bonus offer, which, ironically, was the same deal betED offered the week before it shut down. Is this the new ‘tell’ of a sportsbook’s imminent demise, or a sign of Lavers and MacDonald’s dearth of imagination when formulating a marketing strategy?

Could shedding their online sportsbook operator clothes be the “reorganizing our future business model” strategy Freedom mentioned above? Logans offered no reason behind its decision to shut down, but we suspect it may have been at the ‘invitation’ of Sportsbook.com’s owners, who might well be looking to distance themselves from any association with betED/Covers, the new white-hot target in the DoJ’s heat-seeking crosshairs.

Paul, Joe and Covers have a long history of bullying tactics and disregard for agreements in our industry. Covers broke agreements at will and, if anyone complained, they would soon find themselves being demonized in Covers’ articles and forums. Now Covers are widely perceived to be the ultimate targets of the DoJ’s betED file and worse, the industry’s largest still-active player stiffs. Everyone believes they have the money, but in classic Covers style, they just don’t want to pay. No reputable industry organization should want to be seen to be in bed with these guys in any way. Indeed, we have seen a lot of reputable brands disassociate themselves from Covers before and after this BetED player/employee nightmare.

In the email Logans.com (Lavers.com must have been taken) sent out last week, players were advised that if they wanted their money, they needed to make a withdrawal request by Friday, June 24, after which, Logans promised the funds “will be sent promptly.” Now that this deadline has arrived, we’ll be watching to see if that promise ultimately results in relevant action. And if it does, we’ll have a whole new set of questions to ask, such as: if Paul/Joe/Covers can make Logans pay what it owes, exactly what (other than greed) is keeping them from paying out the betED players (maybe even using the same bank accounts, etc.)? And will they ever pay their former Costa Rican employees what’s rightfully due for their years of toil? Once a stiff, always a stiff, so everyone better move fast to get your money out of Logans, while and if you can.

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