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If you didn't catch this the 1st time around, it's worth reading. Actually it's worth reading even if you DID read it the first time!
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From Buzz Daly’s Players’ Guide to Sports Books, 2001 Football Edition
Confidential Look at Offshore Gaming
From the Ultimate Insider: Carib’s William J. Caesar
With interest in offshore gaming growing from a trickle a few years ago to today’s roaring cascade, it seems that everyone with $1 million in their poke is looking to start a sportsbook/casino. A lot of prospective operators and investors read glowing reports in the media and are dazzled by the hype. But reality is a much different story.
Contrary to popular opinion, bookmakers do not always win, are not guaranteed to win, and the well-publicized shops that have gone under should be a cautionary tale for newbies to heed.
All that notwithstanding, offshore gaming is attractive for many reasons, including the profit potential and the opportunity to be involved in a business that offers frequent adrenaline rushes.
Players’ Guide has spoken with many prospective owners and realizes that they are exposed to an abundance of promotional material and sales pitches that paint a rosy, albeit one dimensional, picture of the business.
Short of a trip to the Caribbean or Costa Rica, entrepreneurs and investors rarely are privy to the kinds of straight talk and specific information that will help them make an informed decision.
In order to fill the void, Players’ Guide went to one of the industry’s most successful and respected individuals, William J. Caesar, managing director of Carib Sportsbook, based in Belize.
Founded in 1993 in Antigua, Carib has grown from a small toll-free telephone sportsbook into a full-scale corporation whose business is global gaming operations including Internet and phone sportsbooks, a virtual casino, a proprietary software company, with more divisions on the drawing board – all headquartered in Belize and all using state-of-the-art technology.
Players’ Guide (PG): Offshore gaming has captured the interest of a lot of people who want to go into it for the much ballyhooed unlimited profits which admittedly is very appealing. Prevailing opinion is that a well financed company is guaranteed profits. Is it really that easy?
William Caesar (WC): I’ve spoken with a lot of people who thought this was an easy business. A lot of them found out the hard way that whatever offshore gaming is, it’s not easy.
Most of the people who start a sportsbook simply aren’t going to succeed. The biggest reason for failure is not understanding what is really necessary to make it work, and being naïve about the economics.
You know, 85 percent of the startup businesses in the U.S. go belly up within the first six months. While there are no documented statistics showing the failure rate for offshore sportsbooks, a lot of them just don’t make it.
Since Carib Sportsbook started in 1993, we were always optimistic about our ability to make it into a world-class gaming operation. But we learned a lot of hard lessons along the way.
I’d like to share what we found out through trial and error with those looking to get into the business. Any failure is a black eye for all of us. Conversely, the more first class companies that give customers what they want, the better it is for all of us.
PG: Assuming that someone has enough funding to get started, what are the fundamental elements that must be in place?
WC: They need a plan. That is absolutely crucial. They must realize that you don’t just open your doors, start taking deposits and automatically you will be profitable.
Do a cost analysis – put a piece of paper and pen to it in order to get a real idea of your bottom line – and I’ll give out some numbers that should be used.
Let’s say we’re starting up a sportsbook and have a deep marketing budget. We are shooting for 2,000 customers.
That’s a pretty good number for a new book, but attainable. In order to achieve that goal, you are going to have to spend $600,000. That’s right. The average cost to get players through advertising is $300 per customer.
Years ago, that figure was $150, and it just kept rising over the years. The number of productive advertising venues that exist is known to everyone in the industry. There is a lot of clutter in the gaming publications, websites and radio stations. Also, prices have escalated dramatically, with some books spending outrageous amounts of money for new business.
PG: After you get them, how much do they sign up for?
WC: The average deposit from a customer is $250. So, with 2,000 customers averaging $250 per deposit, if you can get them to deposit 20 times, you are home free. But the average customer makes only 10 deposits.
For argument’s sake, let’s say you get $10 million in deposits that first year. Do you have any idea of how much of that the book will win? How much goes back to the players?
Carib has that data, which we have been collecting since the beginning. Of the money deposited, we win 40 percent. That is a reliable ballpark figure for most well-managed books.
The casino does slightly better, holding 50 percent of all deposits. So, of the $10 million in deposits you take in, you’re going to win about $4 million and out of that comes all your expenses. What is left over is your profits.
PG: That sounds promising.
WC: Yeah, well just remember, gross is not net. Your operational costs are higher than you might think.
We’ve accounted for $600,000 in advertising costs. Most deposits today are coming in via credit cards. To clear $10 million through credit cards is going to cost $500,000. The book pays those charges.
Staffing up with good clerks, you’ll need about 50 in a medium-size office at a cost of $200 to $250 per week per clerk. That’s going to cost $500,000 to $600,000 per year.
When you add on skilled technicians to have on hand, rent, telecommunications, just basic stuff, the cost is $1.7 million annually.
Operating like this will net you about $1 million profit, if you know what you are doing.
PG: A $1 million profit on $10 million deposits is not a bad business.
WC: That’s true, but I’m not finished. Everybody who comes into the business now, as well as many established companies, is giving away signup incentives. We haven’t looked at how those giveaways nibble away at your bottom line. Using the same figures that we started with, a 10 percent bonus will cost you $1 million. That’s your profit.
But maybe we’ve been conservative in what you can win from your customers? Absolutely not. Anyone who thinks they will win all the money that is deposited into the book will not last long. Today’s customers are depositing with credit cards just enough to fund a single bet. For instance, we have customers who use their credit cards up to five times a day for $100 bets.
If you’re starting a sportsbook from scratch, you can add about $1.3 million to get it all set up with computers, software, licensing and Internet work.
PG: Hmmm, it’s starting to sound like a breakeven proposition, not a profitable business.
WC: That’s right. In order to squeeze out the profit, you must know bookmaking, customer service, marketing, and more. And you must have well-trained employees to represent the book, or you’ll lose more business than you get.
We welcome fresh blood in this industry. But we know that competing based on offering the highest signup bonus to attract customers is a blueprint for disaster.
PG: So, what do you tell players to make us more alert and less likely to deposit with a book that will go belly up one day?
WC: Okay, this class is for bettors, not bookmakers. It has already happened.
Those who chase bonuses are not going to get paid a lot of the time. It is impossible. When the books finally realize that they have no chance of staying in business as a profitable company, they just grab whatever deposit money is still left and they’re gone. The responsibility for avoiding this is on the player. You’ve been forewarned.
PG: What does Carib do differently?
WC: At Carib, we give continuous bonuses that don’t jeopardize our financial stability.
On Tuesdays, you lay 1.02 on pro football, and that works out in our favor. On Wednesday, in our casino, four players will get a piece of $2,000. Thursdays, you get a three percent rebate on daily action on numbers, squares, parlay cards, horses and 10 percent of your casino losses for the week. On Fridays, we offer a free half-point on football games. This is available as an incentive for our players to continue to bet with us.
That’s a pretty fair variety of incentives, but we are not going to play, “Can You Top This?” with customers. We know the cost of each program and how it affects our bottom line.
PG: What other ways do you differ from offshore books?
WC: Unlike a lot of books that feel compelled to go on posting forums and to get one or two people well known, Carib avoids that sort of activity.
If William J. Caesar gets hit by a truck, the only thing that would change would be a little less noise in Belize. But the corporation would continue to function without missing a beat.
PG: But you’re still a bookmaker. How does Carib, whose numbers are pretty well respected, adjust its lines?
WC: We post our opening numbers, then our customers change the lines. Carib is constantly tweaking the lines, fine-tuning them, but it is being orchestrated by our customers.
We just let players bet. Each sport and individual has different limits.
Carib also puts up overnight lines on baskets and baseball, and we probably do more business from 9 PM to 11 AM than most books do all day.
The top betting syndicates all play with us. One of the most notorious originators, the guy from Las Vegas, didn’t like it when I cut his limits from five dimes to three dimes. He likes to use a Darth Vader voice over the phone to throw off the books. But every time he pauses, you can hear all the beards in the background making bets.
If he comes and bets a game at three dimes, I’ll move it a point. That way, we get other action at $5,000 and $10,000, and can get someone to take back the other side.
We have never thrown anybody out for beating us, but we give them a limit we can live with and so can they.
PG: Why the move to Belize? You had such a comfortable situation in Antigua. Belize is definitely uncharted territory.
WC: We’re not trying to be pioneers. We’re concerned with being in the right place at the right time.
PG: What tipped the scales in favor of Belize?
WC: We were in Antigua since July 1993, and it’s sort of like being with an old girlfriend. You get comfortable and don’t really appreciate her anymore. That’s how we felt the government had become towards us.
Carib was a pretty good employer. We promoted the island, never asked for anything, and did a lot of positive things for eight years. I like the island and the people but, for instance, we never got any perks, like a duty-free vehicle which we get here on Belize.
But the biggest factor was the threat of hurricanes every football season. It was something you had to be aware of and concerned about, being hit by a hurricane and having the business go down.
Belize really wanted to get us over here. They are trying to build something long term for the future, and offshore gaming is a nice, clean industry to bring over. Plus, the workforce here is educated and we’ve hired some excellent staff.
Carib doesn’t do anything without considering all the options. The move took us a year, but we decided to relocate everything over here.
PG: We’ve covered offshore since 1995, and Carib is a very solid citizen. You’ve grown into one of the industry’s most successful and respected operations. But you don’t do a lot of self promotion.
WC: Carib is careful how it portrays itself and with whom we do business. We don’t build ourselves up to be bigger than we are. We don’t talk to everybody. We’re fairly quiet, but we know the players. And all the right people are happy to do business with Carib.
The best way to describe how we operate is that we’re a big grind joint. We get in there and mix it up with everybody, and then we just grind away. We realize that with 10 percent of the people, you’re not going to make them happy no matter what you do.
Unlike many operations, Carib is very liquid. Only Carib holds $2 million on hand over the deposit money, which is secure in CDs. And that’s just what is on hand.
PG: So, what does the future hold for Carib?
WC: Our corporation believes this business will be taken seriously by the American government some day and, when that happens, very large amounts of venture capital will be poured into offshore gaming.
When that happens, Carib will be ready. We’ve had our books in order for the last five years. We monitor consistently and run the operation just like a bank. We’re never out of kilter.
We’ve been audited and feel that Carib is a jewel in the crown of the offshore industry.
PG: How would you like us to summarize Carib Sports?
WC: Our customers sleep well knowing their money is with Carib.
For more information on Carib Sports, go to www.caribsports.com or call 1-800-WIN A LOT (1-800-946-2568).
*******************************
From Buzz Daly’s Players’ Guide to Sports Books, 2001 Football Edition
Confidential Look at Offshore Gaming
From the Ultimate Insider: Carib’s William J. Caesar
With interest in offshore gaming growing from a trickle a few years ago to today’s roaring cascade, it seems that everyone with $1 million in their poke is looking to start a sportsbook/casino. A lot of prospective operators and investors read glowing reports in the media and are dazzled by the hype. But reality is a much different story.
Contrary to popular opinion, bookmakers do not always win, are not guaranteed to win, and the well-publicized shops that have gone under should be a cautionary tale for newbies to heed.
All that notwithstanding, offshore gaming is attractive for many reasons, including the profit potential and the opportunity to be involved in a business that offers frequent adrenaline rushes.
Players’ Guide has spoken with many prospective owners and realizes that they are exposed to an abundance of promotional material and sales pitches that paint a rosy, albeit one dimensional, picture of the business.
Short of a trip to the Caribbean or Costa Rica, entrepreneurs and investors rarely are privy to the kinds of straight talk and specific information that will help them make an informed decision.
In order to fill the void, Players’ Guide went to one of the industry’s most successful and respected individuals, William J. Caesar, managing director of Carib Sportsbook, based in Belize.
Founded in 1993 in Antigua, Carib has grown from a small toll-free telephone sportsbook into a full-scale corporation whose business is global gaming operations including Internet and phone sportsbooks, a virtual casino, a proprietary software company, with more divisions on the drawing board – all headquartered in Belize and all using state-of-the-art technology.
Players’ Guide (PG): Offshore gaming has captured the interest of a lot of people who want to go into it for the much ballyhooed unlimited profits which admittedly is very appealing. Prevailing opinion is that a well financed company is guaranteed profits. Is it really that easy?
William Caesar (WC): I’ve spoken with a lot of people who thought this was an easy business. A lot of them found out the hard way that whatever offshore gaming is, it’s not easy.
Most of the people who start a sportsbook simply aren’t going to succeed. The biggest reason for failure is not understanding what is really necessary to make it work, and being naïve about the economics.
You know, 85 percent of the startup businesses in the U.S. go belly up within the first six months. While there are no documented statistics showing the failure rate for offshore sportsbooks, a lot of them just don’t make it.
Since Carib Sportsbook started in 1993, we were always optimistic about our ability to make it into a world-class gaming operation. But we learned a lot of hard lessons along the way.
I’d like to share what we found out through trial and error with those looking to get into the business. Any failure is a black eye for all of us. Conversely, the more first class companies that give customers what they want, the better it is for all of us.
PG: Assuming that someone has enough funding to get started, what are the fundamental elements that must be in place?
WC: They need a plan. That is absolutely crucial. They must realize that you don’t just open your doors, start taking deposits and automatically you will be profitable.
Do a cost analysis – put a piece of paper and pen to it in order to get a real idea of your bottom line – and I’ll give out some numbers that should be used.
Let’s say we’re starting up a sportsbook and have a deep marketing budget. We are shooting for 2,000 customers.
That’s a pretty good number for a new book, but attainable. In order to achieve that goal, you are going to have to spend $600,000. That’s right. The average cost to get players through advertising is $300 per customer.
Years ago, that figure was $150, and it just kept rising over the years. The number of productive advertising venues that exist is known to everyone in the industry. There is a lot of clutter in the gaming publications, websites and radio stations. Also, prices have escalated dramatically, with some books spending outrageous amounts of money for new business.
PG: After you get them, how much do they sign up for?
WC: The average deposit from a customer is $250. So, with 2,000 customers averaging $250 per deposit, if you can get them to deposit 20 times, you are home free. But the average customer makes only 10 deposits.
For argument’s sake, let’s say you get $10 million in deposits that first year. Do you have any idea of how much of that the book will win? How much goes back to the players?
Carib has that data, which we have been collecting since the beginning. Of the money deposited, we win 40 percent. That is a reliable ballpark figure for most well-managed books.
The casino does slightly better, holding 50 percent of all deposits. So, of the $10 million in deposits you take in, you’re going to win about $4 million and out of that comes all your expenses. What is left over is your profits.
PG: That sounds promising.
WC: Yeah, well just remember, gross is not net. Your operational costs are higher than you might think.
We’ve accounted for $600,000 in advertising costs. Most deposits today are coming in via credit cards. To clear $10 million through credit cards is going to cost $500,000. The book pays those charges.
Staffing up with good clerks, you’ll need about 50 in a medium-size office at a cost of $200 to $250 per week per clerk. That’s going to cost $500,000 to $600,000 per year.
When you add on skilled technicians to have on hand, rent, telecommunications, just basic stuff, the cost is $1.7 million annually.
Operating like this will net you about $1 million profit, if you know what you are doing.
PG: A $1 million profit on $10 million deposits is not a bad business.
WC: That’s true, but I’m not finished. Everybody who comes into the business now, as well as many established companies, is giving away signup incentives. We haven’t looked at how those giveaways nibble away at your bottom line. Using the same figures that we started with, a 10 percent bonus will cost you $1 million. That’s your profit.
But maybe we’ve been conservative in what you can win from your customers? Absolutely not. Anyone who thinks they will win all the money that is deposited into the book will not last long. Today’s customers are depositing with credit cards just enough to fund a single bet. For instance, we have customers who use their credit cards up to five times a day for $100 bets.
If you’re starting a sportsbook from scratch, you can add about $1.3 million to get it all set up with computers, software, licensing and Internet work.
PG: Hmmm, it’s starting to sound like a breakeven proposition, not a profitable business.
WC: That’s right. In order to squeeze out the profit, you must know bookmaking, customer service, marketing, and more. And you must have well-trained employees to represent the book, or you’ll lose more business than you get.
We welcome fresh blood in this industry. But we know that competing based on offering the highest signup bonus to attract customers is a blueprint for disaster.
PG: So, what do you tell players to make us more alert and less likely to deposit with a book that will go belly up one day?
WC: Okay, this class is for bettors, not bookmakers. It has already happened.
Those who chase bonuses are not going to get paid a lot of the time. It is impossible. When the books finally realize that they have no chance of staying in business as a profitable company, they just grab whatever deposit money is still left and they’re gone. The responsibility for avoiding this is on the player. You’ve been forewarned.
PG: What does Carib do differently?
WC: At Carib, we give continuous bonuses that don’t jeopardize our financial stability.
On Tuesdays, you lay 1.02 on pro football, and that works out in our favor. On Wednesday, in our casino, four players will get a piece of $2,000. Thursdays, you get a three percent rebate on daily action on numbers, squares, parlay cards, horses and 10 percent of your casino losses for the week. On Fridays, we offer a free half-point on football games. This is available as an incentive for our players to continue to bet with us.
That’s a pretty fair variety of incentives, but we are not going to play, “Can You Top This?” with customers. We know the cost of each program and how it affects our bottom line.
PG: What other ways do you differ from offshore books?
WC: Unlike a lot of books that feel compelled to go on posting forums and to get one or two people well known, Carib avoids that sort of activity.
If William J. Caesar gets hit by a truck, the only thing that would change would be a little less noise in Belize. But the corporation would continue to function without missing a beat.
PG: But you’re still a bookmaker. How does Carib, whose numbers are pretty well respected, adjust its lines?
WC: We post our opening numbers, then our customers change the lines. Carib is constantly tweaking the lines, fine-tuning them, but it is being orchestrated by our customers.
We just let players bet. Each sport and individual has different limits.
Carib also puts up overnight lines on baskets and baseball, and we probably do more business from 9 PM to 11 AM than most books do all day.
The top betting syndicates all play with us. One of the most notorious originators, the guy from Las Vegas, didn’t like it when I cut his limits from five dimes to three dimes. He likes to use a Darth Vader voice over the phone to throw off the books. But every time he pauses, you can hear all the beards in the background making bets.
If he comes and bets a game at three dimes, I’ll move it a point. That way, we get other action at $5,000 and $10,000, and can get someone to take back the other side.
We have never thrown anybody out for beating us, but we give them a limit we can live with and so can they.
PG: Why the move to Belize? You had such a comfortable situation in Antigua. Belize is definitely uncharted territory.
WC: We’re not trying to be pioneers. We’re concerned with being in the right place at the right time.
PG: What tipped the scales in favor of Belize?
WC: We were in Antigua since July 1993, and it’s sort of like being with an old girlfriend. You get comfortable and don’t really appreciate her anymore. That’s how we felt the government had become towards us.
Carib was a pretty good employer. We promoted the island, never asked for anything, and did a lot of positive things for eight years. I like the island and the people but, for instance, we never got any perks, like a duty-free vehicle which we get here on Belize.
But the biggest factor was the threat of hurricanes every football season. It was something you had to be aware of and concerned about, being hit by a hurricane and having the business go down.
Belize really wanted to get us over here. They are trying to build something long term for the future, and offshore gaming is a nice, clean industry to bring over. Plus, the workforce here is educated and we’ve hired some excellent staff.
Carib doesn’t do anything without considering all the options. The move took us a year, but we decided to relocate everything over here.
PG: We’ve covered offshore since 1995, and Carib is a very solid citizen. You’ve grown into one of the industry’s most successful and respected operations. But you don’t do a lot of self promotion.
WC: Carib is careful how it portrays itself and with whom we do business. We don’t build ourselves up to be bigger than we are. We don’t talk to everybody. We’re fairly quiet, but we know the players. And all the right people are happy to do business with Carib.
The best way to describe how we operate is that we’re a big grind joint. We get in there and mix it up with everybody, and then we just grind away. We realize that with 10 percent of the people, you’re not going to make them happy no matter what you do.
Unlike many operations, Carib is very liquid. Only Carib holds $2 million on hand over the deposit money, which is secure in CDs. And that’s just what is on hand.
PG: So, what does the future hold for Carib?
WC: Our corporation believes this business will be taken seriously by the American government some day and, when that happens, very large amounts of venture capital will be poured into offshore gaming.
When that happens, Carib will be ready. We’ve had our books in order for the last five years. We monitor consistently and run the operation just like a bank. We’re never out of kilter.
We’ve been audited and feel that Carib is a jewel in the crown of the offshore industry.
PG: How would you like us to summarize Carib Sports?
WC: Our customers sleep well knowing their money is with Carib.
For more information on Carib Sports, go to www.caribsports.com or call 1-800-WIN A LOT (1-800-946-2568).
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