The year is ending on a sour note for sports bettors who had money on Costa Rica-based online betting site BetIslands.ag (BI). After weeks of rumors, Bill Dozer of sports betting forum SportsBookReview (SBR) posted the following on Tuesday morning: “We finally talked with everyone involved. Unfortunately this looks like it is about to end badly for players. This came to be because BI lost it’s financial backer and the people left could not make it work.” Estimates of the total amount lost by players are in the $1.3m-$1.5m range. Despite this news, the BI site remains online.
Several hours after Dozer’s announcement, BI’s former GM ‘Jon’ posted to SBR, claiming the site’s “financial backing pulled out unexpectedly.” Jon himself claims to have left the site weeks earlier, a statement that was immediately pounced on by forum members, who recalled Jon’s post on Dec. 6 describing BI’s slow-pay problems as “just a banking hurdle.” Jon has vehemently denied being BI’s owner, yet a post by SBR’s Justin7 in July referred to Jon as “the owner of BetIslands.” So was Jon the owner, or just some tattooed twenty-something with a customer list having fun fun fun in the Costa Rican sun until Daddy Warbucks took the bankroll away? Either way, while Jon offered BI’s former players his apologies, the only hope he had to offer was that “some of the larger shops that have the financial prowlness [sic] will come in and help players out for the good of the industry in general.”
Concern has now spread to the future of two other sportsbooks, 7RedSports and EZStreetSports, that have been linked to BI in the past. 7Red issued a statement denying any affiliation with BI and saying it “has in no way been affected” by BI’s implosion. “Betislands and Jon approached us about a potential merger but as you can see he had no money to run his business let alone buy ours.”
BI was hardly an industry giant, and its US focus meant it was subjected to the same rough treatment that has beat up virtually every sportsbook taking wagers on the National Football League this season. BI was also known to offer overly generous bonus schemes and rebates, which, while enticing, are rarely a sign of long-term financial health. Throw in the fact that US-facing books pay a small fortune for payment processing and there’s little margin for error. It’s yet another expensive lesson for gamblers to trust their online wagers with companies that have withstood both the test of time as well as the serious bouts of hiccups that periodically strike this industry. As investment titan Warren Buffet once observed, “only when the tide goes out do you find out who is not wearing a bathing suit.”
BetIslands’ failure is particularly galling for the SBR brain trust, who are being called every name in the book by irate bettors left holding empty stockings this Christmas, especially since SBR upgraded the sportsbook to a ‘B’ rating in November 2011 after BetIslands “verified their backing,” which SBR argued was proof of their “financial security.” For the record, there’s no evidence to suggest anything like the BetED/Covers fiasco, in which BetEd took the fall even through the Covers’ boys are widely presumed to have been BetEd’s beneficial owners via a lucrative revenue sharing deal with their former #1 recommended sportsbook. Regardless, it’s a sobering reminder that trust is that rarest of commodities, difficult to obtain and even harder to regain once it’s been lost.