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My 3 cents on Aces Gold

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  • My 3 cents on Aces Gold

    Aces Gold,

    My opinion

    What killed them?


    Books can not continue to give out reload bonuses and make money. It has been stated that Aces average bonus is 11%. I think it was probably higher but I will take that number. It has been stated that the rollover requirement was 3 times the deposit plus the bonus. (Someone else stated that it was only 2 times but I will be conservative and go with 3 times rollover.

    Here is the bonus math that I have presented many times before, hopefully this will be the last time but I am sure it won't be.

    A player deposits $1,000, the bonus is $110, so the total in the account is now $1,110. The player must put the money into play three times, a total of $3,330. The house hold is 5%. (Books in Vegas and offshore hold between 3% and 7 % year after year. This includes parlays, straights, high hold futures, and low hold events such as baseball) When you add it up you get 5% in the long run. Anyway 5% of $3,330 is $166.50. When you subtract the $110 bonus you get $56.50. So th house is making $56.50 per $1,000 deposited. This is a gross figure before you account for expenses. If the book covers money transfers in and/or out this $56.50 could be eaten up in a flash. If the money is deposited via credit card the house can take a hit from 2%-5% depending on their merchant agreement. I haven't even addressed other common expenses such as office, computers, telecommunications, payroll, and marketing. Also note that if the amount sent is less and the house is picking up transfer fees the cost per dollar deposited goes up. But let's stick to the $1,000 for now.

    But people argue the bonus is just the cost of doing business. If it is only paid to a new customer and you retain that customer to play and send deposits without bonuses it can be justified. If you have to keep buying the same customer over and over again with reload bonuses the house is doomed. And please don't tell me the squares lose in the long run. They do lose, 5% as a group. For every square that wipes out his balance there is another that doubled his less 5% of the two initial deposits. Otherwise books would hold more than 5% every year but they don't.

    So Aces probably lost money with each new deposit, maybe not a lot but their expenses per deposit were higher than their revenue per deposit.

    And bonus shoppers are not the best customers, odds are they are there for the bonus and they will leave you when there is a better bonus down the street. So the house never really acquires the customer and gets to enjoy the benefit of calling a customer one of their own. The house is only renting that customer.

    Now Aces further exacerbated a vicious bonus cycle with other promotions.

    No juice Fridays, books don't make any money without juice in the long run. Add up all of the Fridays and I am sure the house comes up with a big zero. To make the bonus situation worse it has been stated that "No juice" plays were counted towards rollover requirements. (See above)

    Cheap buys off of 3 in football, it has been stated that Aces had problems because so many games landed on 3 this year. This is not why they had problems, they had problems because letting people buy off of 3 for only 10 cents is a bad bet for the house. It will lose in the long run. It didn't matter if the same customer was getting them on both sides or if they were two different customers on opposite sides of the globe.

    Opinionated lines, a half point here or there is one thing but taking a stand the way they did is another. They did cross the line between betting and booking at some point. The culmination was their Superbowl "airport" bet. You place the bet and wait for the results at the airport, you get the picture. It's ok to have an opinion but once the market is open you have to move with the forces of supply and demand.

    So many people say they did fine for years with the above policies. We don't know that. W e know they were open for years. The market was growing every year. More people playing offshore and many recommending Aces Gold. WHO KNOWS EXACTLY WHEN THEY STOPPED TAKING THE LOSSES OUT OF THEIR OWN CAPITAL AND BEGAN DIPPING INTO CUSTOMER DEPOSITS? One of Aces biggest sales pitches was their bonuses. This year so many places offered ridiculous bonuses and there were more books than ever before splitting up only a slightly larger pie than last year. Like any pyramid they were constantly dependent on fresh capital to funnel the money up to the top of the pyramid. Also, as the pyramid grows it takes more and more sign ups to keep it going. Remember, with every new customer they were losing money whether they knew it or not.

    At some point the writing had to be on the wall to the people at Aces. The could have secured new financing and changed their policies at the time, closed their doors and paid out players at least a certain percentage on their deposits, or option three. Option three was the airport bet. They would bet the future of their firm on the Rams. They knew if the Rams failed to cover they would be in trouble but they made the bet anyway. (It may have also been on a couple of other games as well) The total liability of bets booked were larger than their capital base, which was negative at the time, could cover.

    For example, let's guess that they had $3.5 million in customer deposits on their books before the Superbowl but they only had $2 million in the bank. Now let's guess that they lost $3 million on the Superbowl. Now they have $6.5 million in customer deposits but the same $2 million in the bank, leaving them insolvent by $4.5 million. They went from $1.5 million in the hole to $4.5 million in the hole. And it doesn't matter if it is credit or post up. Once a credit player is up money he becomes a post up player. If the credit player settles with an agent then you have a post up agent who is due.

    Whatever the figures are people started feeling uneasy after the Superbowl. And the bank account began to drain and drain until there was nothing left. The only open question is how much did the owners siphon off for themselves over the life of this enterprise and in particular over the last two months? Did they take $1 million, $100,000, or nothing? Who knows?

    Who is Charlie? I have no idea. Does anyone know his last name or his background? Does the government of Curacao know anything about him? Where is Charlie? Is he still on the island?
    I first heard his name in the past couple of months when I got a message from him through an intermediary that he wanted to get a coalition together to do away with bonuses. This was in December or January. I relayed to him I wasn't the one to speak to but he should call one of my former associates. Something tells me he was finally figuring it out.

    Why couldn't they sell? They probably could have in January but they probably wanted too much money. If they were already insolvent they shouldn't have been worth much at all. Any legitimate buyer should have had to put up the cash to back the customer deposit deficit and then money of they agreed could go to the owners. Frome Devil's post it sounds like Charlie had an inflated view of the value of his company. After the Superbowl the customer deficit probably put them out of reach for most potential suitors. If not out of reach, a poor business decision. What are they really buying other than a customer database that is filled with people who have been scarred even though they would be grateful for a buy out. You would also have to discount customer overlap between the buyer and the seller of which there is a lot with Aces Gold. After all, many people were laying off those "great" numbers elsewhere. After that the database is filled with bonus junkies and wiseguys by all accounts. So what are you really buying?

    Royal's offer to the smaller players. I find Royal's offer to be very noble. There are those that claim that it is "only" a 25% bonus with a 6 times rollover. That should be considered great but it just goes to show you how out of wack people are with these bonuses. They should become a thing of the past and Royal's offer should be considered generous.

    It does seem that Royal is very hot to get the customer database of Aces. What should happen to it? If it is the property of the book and all info is confidential then it should be part of the bankruptcy if it is transferrable and has value. If it has value, it should be auctioned off and the funds distributed to Ace's creditors. If it has no commercial value it should only be used by the court to help resolve any claims in the case that funds are recovered. But, like I said before, that list has a lot of angry people on it. And there would be Royal with the same license that Aces had asking people to send money after they have been burned or were well aware of what happened with Aces.

    The Prescription article, there are those that claim that the article caused all of the problems. Others realize that it may have only sped up the inevitable. I think the article was legitimate, I think the retraction was wrong. And that was part of the problem. I like Ken persoanally but his reputation has been tarnished over the years by a series of events that I won't get into in this writing. So, while some took the warning, others dismissed it as some kind of personal vendetta of Ken against Aces. A legitimate book should never worry about a "run on the bank." Books need a capital base beyond their customers deposits. And the bigger the book, the bigger that capital base needs to be. Too many places open up some with too little capital, some with none, and think it is ol to dip into customer funds. Books are not banks and they should find other sources to finance their operations than the customer deposits. So I don't blame Ken. Ken, whether you like him or not probably did save the deposits of those who listened to his original article. Some people think if it wasn't for Ken's original article Aces would have pulled out of this. I disagree.

    What to do now? Players should get together and see if there are any assets left in this bankruptcy. They should also lobby the government of Curacao to make good on their licensee.

    What is the obligation of other books? They should not be on the hook for this. Hopefully they will get smarter from this event. Math is math and customer money is customer money.

  • #2
    I was under the impression that Aces had probably the largest amount of horse players of all the offshores. Is that not true? And if it is true then doesn't that throw your math askew?


    • #3
      Once again mr jc himself knows it all!!! dude, yea 10% bonus made them go broke(no way)!! if you did get a bonus it had to stay in your account 30 days!!!!

      RAMS - 14 1/2 is why they went broke Jc!!


      • #4
        Try to imagine the time and effort required for both JC's and Go Go Man's posts and that ratio is coincidentally similar to the one measuring how useful they are.


        • #5
          There are dozens of books that are and have done well with bonuses equal or in some cases even more then what Aces offered. Aces had these bonuses in place for years and did well so why the sudden change? Besides if you are a business and feel that a certain perk is unprofitable, then don't offer it! No one is forcing you. I think Aces went under because they became wild degnerate gamblers the past couple of months. The way they hung some of the numbers and took incredible amounts of ONE-SIDED action on games such as NE/OAK, Mia FL/NEB, NE/STL, etc, was NOTHING SHORT OF INCREDIBLE IRRESPONSIBILITY! They must have lost millions on those games alone! They were no longer even booking. They were gambling without money management. Anyone who does this, player or book is guaranteed to lose it all. In hindsight one has to wonder if they (Jerry, JR, Charlie) became addicts on crack, heroin, or something the way they gambled and lied near the end. It has happened to other bookmakers in the past. Remember Monty and Caribi?


          • #6
            What was the deal with Caribi - here one day and gone the next?

            Anyone consider the deal with full track odds and Aces?

            Local books usually cap the payout at 20-1, as do most books online.

            Maybe I saw the "Grifters" once too often, but bookies do employ players to knock down the track odds as far as I know.

            Suppose I was to play horses that were 30-1 at a shop like Aces for large $. They play wouldn't affect track odds, as it would if you had made it at the track.

            Add to this the propensity of individuals to make targets of the soft spots and you have the makings of a huge scam that could take down any book.

            Don't forget horse races aren't that hard to fix and how many 30-1 shots can you sustain before you're making "airport" bets?

            For what it's worth Jay, I don't see how the bonus program sank them. I mean look at all the other books that are offering 10% and more. WSEX offers 10% on wire transfers.

            Are you saying that all books offering a 10% bonus may become insolvent because of it?

            As always - Good Luck,


            [ 02-18-2002: Message edited by: stardust ]

            As Always - Good Luck,



            • #7
              Nice call on the Grifters reference Stardust.

              Of course bonuses and no juice cuts into the profit margin but, as others have said...other books have similar programs and they have survived.

              Here, I think, we have a case of both dumb bookmakers (balance the action fellas) and crooks who saw an opportunity to take the money and run.

              Hopefully they will get what is coming to them.


              • #8
                Hi everyone,

                I'll address a few people herein no particular order.

                Sonny (Stardust),

                WSEX doesn't offer 10% on bank wires, it is 5% and to the best of my knowledge it is the least popular method of deposit. It is better to pay a customer a 5% bonus on a bank wire deposit than take a 5% hit on a credit card deposit or other methos of deposit. Other methods cost between 2 and 5 percent. other books are offering a bonus on top of credit card deposits which I reference in my original post. And with a bank wire there is no chance of chargeback or waiting for the monsy, it is there.

                Caribi, pure gambling. He booked over his bankroll and lost.

                Horse racing, another possible soft spot of Aces I hadn't consiedered. I was actually going to mention that could have been in their favor, the higher hold, but as you point out there is a downside.

                Do I think books that offer 10% bonuses to new customers are doomed? No. I think books that offer endless RELOAD bonuses are doomed. Let me qualify that by saying it also depends on the rollover requirements.

                To bullseye and azbob,

                bullseye says "There are dozens of books that are and have done well with bonuses equal or in some cases even more then what Aces offered. "

                How do you know they have done well? If I had asked you about Aces prior to the Rx article you probably would have said they do well. The reload bonuses are the problem, paying for the same customer over and over again. Until these books are tested you may never know their financial situation. Aces was tested after the Rx article, paid out but was probably insolvent at the time. Less in the bank then player deposits. Do I know this for sure? No this is my opinion. And then came the big bets, the big stands on the huge games. That was the Coup de Gras. (I think that's the term)


                yes, if they had a high horse percentage that would bring the hold up slightly. It would depend on what the blend is but see Stardust's post above. It could have also burned them.


                • #9
                  Aces lost gambling on one side of heavily bet games. They went from a top book to that crap in a short time. I have heard that the owners had a drug problem. Might explain the reckless gambling and lies. Clear signs of an addict. Perhaps the industry needs to drug test the people running these places to make sure the stay clean.