SERIOUS ?/SERIOUS ANSWERS

[thedevil]

Cons

I'm throwing out a idea to get the feedback.
What your saying makes sense. Have a meeting at 2 PM EST with an insurance exec to get his feelings and possible wording on contracts etc.

Will be back later to answer all questions.
Again this is only in the startup segment, have a long way to go.

Thanks for the replys

The Devil

[Hamhog]

Great idea.

You could even have different rates for different books.

A book like the one that gave Boomer problems might cost $850 per K per year.

Olympic/WWTS/CRIS/Etc might only cost $0.50 per K per year.

Even better, a player could get coverage on book that offers 25%+ signup bonuses even if they don't have an account there. Who would know? Johnny D with all of his connections could tout books about to fold.

[j]

Devil,

My gut on this is that you would have to know a heck of a lot about the internal operating procedures of each insured book to work with them and they might be reluctent and even unable to give you the information you'd need to stay on top of relavent policies and gross balances You'd also need a staff to adjudicate a lot of bull**** claims.

Also, I would think it would take your company quite a while to gain credibility—especially since I imagine you would have to set up shop offshore.

And would the charge be 1.4% of all moneys deposited? If you're account grew, would 1.4% get taken out of your new capital? Think of the screaming that went on on the raise from the dime to the wide line, given that, 1.4% (although not unreasonable) seems like it might put a significant dent into the margins we all work on.

[thedevil]

J

First, I've been in the business over thirty years, have a good working relationship with many of the owners of many of the books. some worked as clerks for me. I would have a network of players reporting to me on a daily basis and would hear of many of the problems as they arose. Hopefully I would be able to protect my company and clients before there was a major crisis.

As far as the books opening up their books that would never happen, but there is enough scuttlebutt going around that if you listen and have some insight you can protect your assets.

Yes, it would have to be set up offshore because of our aiding and abeting laws.

I wouldn't have anything to do with BS claims. If the customer said he had the Giants and the book said he had the Jets that wouldn't fall under the guidelines of the policy.

The amount charged would not increase if your balance went up or down.
All you would be paying for would be a little piece of mind. You would be paying for an amount you would like to get back if a book had problems and couldn't pay.
If you had a 8,000 policy and lost 6,200 in a no pay situation you would get 6,200 not 8,000. If the problem arose and you lost 15,000 you would get 8,000 the amount of your policy.

Devil

[This message has been edited by thedevil (edited 05-30-2000).]

[ShiftySheik]

devil, I like the idea but I doubt it would work with a book like Action Sports. The insurance company would never issue a policy for a book that was in trouble...unless they could charge a higher premium. 1.4% would be a bargain at some shops and too high at others. You'll have to charge more than 1.4% for the less solid books.

[This message has been edited by ShiftySheik (edited 05-30-2000).]

[thedevil]

Shiek

One policy, one price would cover all books that were listed by the company. Action Sports was relatively safe until the Boomer incident. They wouldn't be on the list now but they would have been last year.

Devil

[Bette Midler]

Hamhog...

Why not have the book giving the bonus offer to pay the insurance premium instead? This may be worth more to some players than the bonus itself. If a book offered me a 5% or 10% reload bonus on my next deposit, having an insurance option to cover my deposits for the whole year would be a nice alternative to consider.

[j]

Devil,

Without telling us too much, what did the insurance exec have to say?

[bgeorgia]

Devil,

please shoot me an email. thanks

Brian

[thedevil]

the insurance guy (a personal friend) liked the idea and would help me draft a policy.

[auspice]

let me play the part of the devil's advocate here....and please don't take it personal...i certainly don't mean anything ...... First off....who in their right mind would want to insure a business that has no physical assets that can't be carried off, no financial data whatsoever, and no controls which wouldn't allow the owner to walk away with all the cash at any given time? Am i missing anything? or yeah....the owner probably won't allow any kind of third party audit to attest to any financial data and is probably operating in Antiqua or Costa Rica which means hiring an astute outside professional to insure proper money management controls are in place is next to impossible. None of the sportsbooks which are operating today have or want meaningful financial statements as their cost is extremely expensive and probably can't be justified. What sportsbook owner is going to want financial controls established which would prevent him from instant access to all the cash? again....who would want to insure a business that wants no controls or audits?

[thedevil]

Auspice

As far as having assets that can't be carried away I've been in some of the stores that have millions of dollors worth of equipment. Muxors, satalite dishes, pbx's, dictaphone recorders and servers that are all very expensive. I wouldn't offer backing to a company that was writing tickets and was recording the calls on a Radio Shack tape recorder.

Antigua will soon be keeping track of the plays and profits and Curacao now charges 5% tax on profits. There are more regulations than most people think.

[auspice]

you stated that there are more regulations than most people are aware of. i strongly disagree. The regulation that Antiqua and Costa Rica requires at present is fill out a form, pay the fees and have a pulse. There is no effort by either government to check the financial statements to insure that the players monies are not being used. They require no audits whatsoever. The owners of books in these companies are not audited to insure that the players monies are kept on deposit somewhere. Without this simple "audit" of telephone accounts....there really are no meaningful regulations. don't you remember gary austin's place? would you want to insure it too? it was regulated by the state of nevada. Strange word "regulation". It seems to mean something different to so many people. and how could you audit or verify how much money was supposed to be on account to insure it? Again....without a third party attesting to the data it's meaningless

[JohnnyDeMarco]

Devil,
What happens if a major book closes, one with let's say 25 million on deposit?. How much jack are you going to start with? You would have to prove that you have the ability to pay. This sounds good in theory, but in the long run you could get absolutely demolished.

[thedevil]

Agree 1000% JD but I would only be insuring a small percentage of that 25 mill. Like I said earlier expect to start with capitalization of about 1.5 mill. Sounds like a lot but really isn't that much.