Full History and Start Up of Sportsbook.com
Sportsbook.com is the most well-known gambling site in the US market. In the early Internet days, their advertisements could be found on many mainstream websites. Websites like ESPN.com, Yahoo Sports, and others were never shy about referencing Sportsbook.com in their articles. This company has an amazing history that would take, and also make, a great book to cover. Here we offer a brief summary of their story as an attempt to get it on the web.
The most interesting fact about sportsbook.com is that as a billion dollar gambling site, it has for the most part kept its true ownership well concealed. The desire to do so isn't surprising considering the legality of offering sports betting to the United States. What is surprising is that no one has ever slipped-up or even really questioned the ownership in much detail. We provide some facts below regarding their startup.
In 1996, a tall redheaded Irishman from Canada, 26-years old at the time, landed in Margarita Island (a Venezuela territory) where he started both a bookmaking business and a bar. His name was Patrick Callahan, the bar was Fat Boys, and the bookmaking business was Players (later named PlayersOnly.com).
Mr. Callahan was by no means the first to set up a bookmaking business offshore. In fact, the history of William Hill and bookmaker.eu will show that he was a very late player in this regard. What was unique came in January of 1998 when he became the first to accept credit cards. His competitors relied on mailed postal checks, cash agents, and/or Western Union to settle. He actually not only accepted credit cards, but he also paid via a choice of check or bank transfer.
How did he pull this off? We can't tell you for sure, but Patrick Callahan did surround himself with people experienced in creating shell companies and hiding money. Whether he founded the company or not is unsure, but a well-known investor, John Vipulis, is rumored to have been a major shareholder. There are some connections to point out:
Ameridebit founder Andris Pukke is a long-time family friend of John Vipulis. He was the best man at his wedding, and his father is John Vipulis' godfather. Andris Pukke co-owned Villa C Acquisition Co., LLC ("Villa C") with Patrick Callahan who purchased his share for $2,150,000. The connection goes deeper in an earlier divorce case. Pukke's wife produced a letter signed by Patrick Callahan with a July, 1997 date showing he owned 3.5% interest in Internet Opportunity, a company that owned PlayersOnly. In a January, 2011 confession, which landed him in prison for 18 months, Andris Pukke finally confessed to this ownership.
A quick note on Ameridebt: this was an infamous non-profit credit counseling company. If you lived in the US and had credit card debt, you probably remember their television commercials and Internet advertisements. They promised quick settlement of credit card debt and the end of harassing phone calls, etc. The company collected $172 million in upfront fees from around 300,000 distressed clients, most of which is said to have funded Andris Pukke's lavish lifestyle. They were sued by the Federal Trade Commission (FTC) in 2003 and filed for bankruptcy. From here, Andris Pukke has a long history of legal battles over hiding money, using shells, and similiar actions.
Of course it's mere speculation, but Andris Pukke certainly was experienced with credit card dealings, and John Vipulis had the venture capital background to at least provide tips on the structure needed to pull it all off. In order to be as unique as the first to accept credit cards for US sports betting, one might need to make some questionable contacts. There's no evidence to suggest Andris Pukke was ever more than an early 3% shareholder. Meanwhile, John Vipulis has a very clean track record, and his involvement in this business is also speculative.
The question now goes back to Patrick Callahan. How did a man, who just a couple years earlier was running a bar and a small bookmaking business, grow so fast as to be able to develop a gambling site that was an early entry into online betting, and then obtain the most desirable domain name in the industry (sportsbook.com)? Let's take a look at who owned the domain before the company he managed acquired it.
The original owner of the sportsbook.com domain name was a massive company named SportsLine USA. Back on June 1, 1995, they launched sportsline.com, the first website to cover live scores, sports news, game previews, and so on. (To avoid confusion, while CBS Corporation was once an investor in this site, they've been the full owners since December of 2004.)
The founder of SportsLine USA, Michael Levy of Fort Lauderdale, Florida received initial funding from the kpcb.com group. He then forged alliances with major US sports leagues, player associations, and superstar athletes such as Michael Jordan, Shaquille O'Neal, Tiger Woods, and Wayne Gretzky among others. After lining up additional private investments from Reuters, TCI, US West and NY Life, in 1997 it was taken public after raising $332 million. During the Internet boom from 1998-2000, their market cap routinely exceeded $1 billion.
Steve Budin Offered Sportsbook.com
On October 1, 2007, the book "Bets, Drugs, and Rock & Roll: The Rise and Fall of the World's First Offshore Sports Gambling Empire" was published. The main author is Steven Budin who founded an early offshore Costa Rican Sportsbook called SBD Global. He claims his company's programming, which never made it live, is the basis for all online sports betting sites. Anyone familiar with the history of Intertops.eu will notice that this book contains exaggerations.
To give a little warning, Budin is in the tout business (selling sports picks). He and his partner, Al Demarco (real name All Rolli), own dozens of websites featuring so-called handicappers such as Brandon Lang (real name Brandon Link) who wrote the forward to the book. Brandon is, of course, the handicapper Matthew McConaughey depicted (a Fake/Hollywood done-up version) in the movie Two for the Money (2005). These guys get paid big bucks to appear larger than life, so again, expect exaggerations in the book.
In the book, Budin claims his company, SDB Global was making $20 million a year gross: $10 million a year (net) in gambling profits. Their programmer, William Ramirez, was working on getting the website's online betting functionality ready for a March, 1998 launch when they were offered the chance to purchase the domain name Sportsbook.com for $1,000,000.
Steve Budin explains that the domain was owned by Sportsline USA (sportsline.com) who was negotiating to sell their website to CBS. Owning a gambling domain was a potential hang-up, and they were in a hurry to sell. Budin agreed to the purchase; however, there were logistics to work out. His fear was that SportsLine was a US company and selling a gambling domain for $1 million would draw attention. He suggested he purchase $1 million in advertising and they give him the domain for free.
This deal was pending final approval when Steve Budin was indicted by US authorities on bookmaking charges. He returned to the US where he settled by paying a large fine and agreeing to close the company. Taking advantage of his misfortune, another company started, a not so reputable spinoff called SBG Global, still operational today. Budin left the gambling business for good, missing out on the lucrative sportsbook.com deal.
Sportsbook.com Becomes a Gambling Website
In November 1998, sportsbook.com came online using the same software and having the same banking methods, etc. as PlayersOnly.com, launched in May of 1998. Could this have been the software Steve Budin was speaking of? It would fit the timeline that Budin claims. He had a goal of being live by March, 1998, but this is speculation at best. However, we do know that a Costa Rican programmer had been close to a completed project to be ready when Budin closed SBD Global.
Patrick Callahan & Sportsbook.com / CBS Involvement
In March of 1999, ESPN.com published an article quoting NCAA's executive director Cedric Dempsey. The topic was his concern that the CBS Network, that broadcast their games, had ties to the Sportsbook.com gambling site.
The following day, CBS announced they were unaware of the relationship between SportsLine USA and Sportsbook.com. Meanwhile, Sportsline.com's founder Michael Levy claimed his company was leasing the URL to a company based in Margarita Island, called Global Internet, that was using it to operate a gambling site. He claimed that despite CBS owning 20% of his company, he was unsure if he had informed them of the lease.
It was during the reporting of this situation that the name, Patrick Callahan, first appeared in print next to the sportsbook.com as opposed to PlayersOnly.com. During these 1999 reports, he was mentioned as being a 28-year-old Canadian citizen and the manager of Global Internet. Some interesting facts from the media reports at the time include:
- Sportsline USA was publically-traded, yet no mention of Sportsbook.com, or the revenue generated from the lease, were included on the public financial statement.
- Sportsline USA was operating with a near $1 billion market cap; but their founder, while declining to say how much money they were paid for the lease, said, "We make money on it. It's a nice URL. It's worth our while or we wouldn't go for it."
- Patrick Callahan, then identified as the manager, claimed the company was making considerable profit and had around 50,000 customers at the time.
- Sportsbook.com didn't lease only the domain, but SportsLine USA was also providing personnel and equipment to help manage the site.
- Sportsbook.com was the primary advertiser on other SportsLine USA-owned websites such as Vegas Insider.
Finally, there came the oddest statements: SportsLine USA founder Michael Levy claimed he had many chances to sell the sportsboook.com domain name, but he believed the company would make more money long term by leasing it. Callahan said his company already planned to make another bid to purchase the domain in six more months, when it would be worth much more. This is odd, because it isn't something anyone serious about buying a domain name would casually say to the media. To outsiders, it appears as the start of a cover up of the fact that SportsLine USA was running a gambling site.
Editor's note: A bit off topic, but when the idea of CBS owning a gambling site hit mainstream media, there was a rush of sportsbooks looking to profit from it. In no time at all, there were sites such as CBSSportsbook.com, CBSBetting, etc. The most aggressive one that fooled others into believing it was CBS was a sportsbook called Casablanca, using the URL betCBS.com. It was eventually sued by the CBS Network owner Viacom, and after a legal-battle, they changed their domain name to WagerWeb.com.
The fact is, no one really knows if Patrick Callahan was a manager or shareholder, nor from where he got his money. However, he has been "named" as the man who brought present-day processing to online betting sites. No doubt he did an excellent job managing the company; but how many shares he owned, who else owned shares, and much of the company's remaining early history are, and probably always will be, a mystery to mainstream media.
Sportsbook.com Corporate Years
In case you haven't guessed, we just concluded the early history of Sportsbook.com. From mid-2001 to late-2006, they were owned by a well-known public corporation traded on the London Stock Exchange.
In July 2001, Sportingbet, an Alderney-based gambling company publicly traded on the London Stock Exchange, purchased Internet Opportunity Entertainment Inc., Oak Ventures Corp., and all the sports betting related business of the group. The transaction listed the primary assets as:
The business was described as having recently moved their headquarters from the Caribbean to Gibraltar. The risk management, customer service, and accounting functions took place from Margarita Island, Venezuela, the call center business was in Dublin Ireland, with hosting and licensing operating in Antigua. It was reported that these websites had turnover of $435.4 million, a gross margin of $42.1 million, and a net profit of $4.9 million. The group had 347,650 registered accounts of which approximately 70,000 had placed bets during the most recent three-month period.
The financial aspects of the deal involved an initial consideration of $51.25 million paid in cash, convertible and non-convertible loan notes, and shares (no breakdown provided). There was also a casino licensing deal built in and other potential performance incentives that could cause the amount paid in the future to increase.
Sportsbook.com Thrives Under Sportingbet
Sportsbook.com was already operating with the perfect domain name, and it had a spotless track record for timely payments. It was known as the only site where credit cards were approved nearly 100% of the time. Although their market-share continued to grow during 2002 and 2003, it was the online poker boom that made sportsbook.com the mega gambling site it is today. In 2004, Sportingbet Plc purchased one of the Internet's largest and first online poker sites, ParadisePoker.com. They then integrated this poker room with both sportsbook.com and sportingbet.com, creating one of the Internet's first seamless 3-in-1 gambling sites. At Sportsbook, players could bet sports, play casino games, and enjoy multiplayer poker all from a single gambling website.
In 2005, they did amazing work with branding despite using a generic one-word domain name. Their marketing campaign was called "Everyone Bets." In 2005, this featured Brooke Burke as a celebrity spokesperson, then best known as the former host of Wild On! from the E! Network. In 2006, she was replaced with actress Nikki Cox, currently playing the character Mary Connell on the hit television series Las Vegas.
Sportsbook.com revamped their affiliate program, making it one of the best in the industry. Packed with a long history of timely payouts, great credit card processing, corporate ownership, branding, marketing, and celebrity endorsements, they won numerous industry awards. The most prestigious were most likely their 2005 and 2006 back-to-back wins of "Best U.S. Sportsbook" by industry magazine eGaming Review. Just when it seemed nothing could stop their momentum, the US passed a law that saw publicly-traded companies scramble out of the US market in fear of lawsuits from shareholders.
Sportsbook.com Sold to Jazette Enterprises Limited
On October 12, 2006, Sportingbet PLC sold all their US customers to a then unheard of company, Jazette Enterprises Limited (JEL), for $1.00. This is actually a bit misleading as it involved discharging liabilities amounting to approximately US$13.2 million, which presumably Jazette inherited; it also saved them the cost of shutting down the business. This move was sparked by the passing of the Unlawful Internet Gambling Act.
The terms of the sale stipulated that if President George Bush failed to sign the bill into law, the deal would be rescinded with Jazette receiving $500,000 in consideration. There was a further stipulation that Jazette could not accept non-US players for a period of two years and could not accept players outside North America for an additional year. Included in the sale were all US customers, the domains Sportsbook.com, PlayersOnly.com, and the white label business.
Sportsbook.com Continues to Grow
While many predicted UIGEA would be a huge blow to sportsbook.com, this proved not to be the case. No one is really sure who owns the companies Jazette or Domain Holdings, which now own sportsbook.com and related gambling sites; and even with the loss of Paradise Poker, the company Sportsbook never skipped a beat.
Immediately following the change to a US only brand, Sportsbook partnered with a then relatively unknown poker network called Cake Poker: now owned by Lock Poker and called the Revolution Gaming Network. After taking this network to the top of US poker, they moved to the Merge Network in April of 2010. Although not confirmed, rumor has it that they had purchased this network in late January of 2010.
Today, Sportsbook.com remains one of the most trusted gambling sites in the business. At a time where others have trouble processing credit card payments, they boast of an over 95% acceptance rate and have many other banking options as well. Their poker room is the largest that accepts US players, and they keep a low profile from US authorities by integrating their sportsbook.ag domain into their strategy. If you're looking for a safe and secure site at which to wager, Sportsbook is certainly a solid option to consider.