Step One: Raise some money.
Step Two: Move to the tropics.
Step Three: Open a sports book.
Step Four: Make a fortune.

Unfortunately for these entrepreneurs most only got to step three. Operating a sports book is not the gusher of cash that many expected it to be. A great many offshore wagering efforts failed. Businesses fail for a variety of reasons, let’s look at why so many offshore wagering ventures didn’t make it.

Smart Bettors: There are a lot of sharks out there that can devastate a poor sports book. Some are (or employ) sharp handicappers that allow them to spot a weakness in the line. Others are scalpers and middlers, betting both sides of a proposition at different books to take advantage of price differentials. These arbitrageurs team up with the smart bettors to crush sports books that aren’t ready to handle them. There are books that have failed before they knew what hit them due to a razor-sharp clientele.

Clueless Bookies: Bookmaking is an art, a skill, and a pressure-packed job that few are capable of succeeding in. Good bookmakers have an innate feel for a pointspread. They see a number and know what the sharps will play and what the public bettor will play. They know what number all other books are using. They set their number accordingly. Few people have such a feel for the whims of the betting public. Many illegal bookies from the States have been staggered by how woefully unprepared they were to handle a sharp clientele. Poor bookmaking can lead a book to be sided on the wrong side of games at unfavorable numbers. It doesn’t take many of these to fall the wrong way to crush a sports book.

Unrealistic Expectations: Say in 1994 Joe Pharmacist in Suburban Chicago sees an offshore sports book as his one-way ticket from drug store drudgery to financial freedom in a warm tropical paradise. He thinks he can just open up and the money will flow in. In the mid 1990’s it seemed that the top five college football programs won and covered every Saturday. Nebraska, Florida State, Ohio State, and Florida covered with frightening reality. Linemakers just couldn’t set the number high enough. Bookies needed the opposition in every game these clubs played. The dogs seldom barked and the tremendous pointspread success of these popular clubs made things tough on the books. If a sports book operator does not have a substantial bankroll and the patience necessary for a turnaround such streaks can be very damaging to their bankroll. There were many Joe Pharmacists who had to close down due to a lack of true financial backing.

Operational Expenses and Hassles: Many sports book operators didn’t realize how expensive phone service is. He didn’t give much thought to finding quality help in a third world country of modest educational attainment. He isn’t prepared for the “manana” attitude in the Caribbean. He didn’t understand how salespeople whose accented English he can understand in a job interview sound like they are speaking a foreign language to Joe Sixpack in Whitebread, USA. He didn’t realize the cost of banking, insurance, “licensing” (which on some small islands is simply protection money), and security to protect him from local gangs who resent a successful American rolling in. He didn’t realize that there would actually be government compliance and labor laws. He didn’t think much about the local taxes. He didn’t budget for the attorneys to handle many of the previous situations as well as the lawsuit from the employee that was fired with cause but sees the rich gringo as a target. The hassles that make operating a business a difficult task in the US do not disappear when you cross the border.

Fraud: The sports book industry finally seems to be getting more of a handle on the fraud that professional scam artists have foisted upon them. In some instances, it has been difficult to hold people to credit card deposits and card issuers have trusted their customers implicitly. It is not unheard of for someone to set up with $2000 deposits at two sports books, bet both sides of a game, and then collect from the winner while disputing the validity of the losing account. Fortunately for everyone, these kind of situations have been minimized and are closer to being eliminated entirely but there have been reports of organized groups making some big scores with such malfeasance. Another scam is the “weak clerk attack”. I heard the tape of a player who kept calling looking for a clerk who would let him past post some halftime bets. He finally found a timid, unknowledgeable clerk and bullied him into accepting a number of second half parlays in which he had a huge edge due to points already being scored in the third quarter. All sports books have backup systems that will catch something like this but when this gentleman’s (and I use the term “gentleman” liberally here) wagers were cancelled he was not pleased. Despite the timed audio tapes and obvious efforts to past-post, he sued the sports book. Turns out he doesn’t have a job and the sports book says he seems to simply try to rip people off for a living.

A tough business: All this is not to say that operating a sports book is a bad business to be in. Managed well by patient, well-financed businessmen, a sports book can be very lucrative. But as many accountants, podiatrists, car salesmen, and dentists have discovered, it is not a primrose path to Easy Street by any stretch of the imagination.

Stay with the best: The best way to make sure that you are with safe sports books is to stick with those that have a history and are respected in the industry. There is no reason at all to trust your money with an unproven start-up or a book on shaky financial ground. Your hard-earned dollars should always be on a “flight to quality” when selecting a sports book. Quality is the best adjective describing the sports books recommended by ConsumerBet. ConsumerBet books are the most well respected sports books in the industry. Click here to find out who they are and learn more about them.