Wednesday, February 4, 2004
Sportsbook targets college football fans
By Shaun Assael ESPN The Magazine
As Adrian McPherson was being tried on gambling charges in Tallahassee last summer, Eduardo Agami sat in his palm-tree shaded office in Costa Rica, wondering how the case would affect his Internet betting company, SBG Global.
Agami's satellite didn't pick up Court TV, which was carrying live coverage of the trial of the ex-Florida State quarterback. So he couldn't see that his company was playing a prominent role in the proceeding, or that the testimony showed his advertising on college campuses was paying off. McPherson was reportedly enticed to the site by a local bartender who used it to take bets from students. All he knew was that, "in this business, nothing good comes from having your name in the papers."
An ESPN investigation has revealed that Robert Dellimuti, an admitted gambler and self-described "father figure" to Ohio State's Maurice Clarett, made at least 27 calls to SBG Global during the 2002 championship season.
This is a different company than it was five years ago. We're not looking to work in the shadows. We want to go from the back room to the board room. ”
— Sportsbook owner Eduardo Agami
"We're very concerned about all Internet sports betting sites," NCAA spokesperson Kay Hawes said, "but this one in particular has been involved in alleged violations of our rules more than once."
The online betting industry is a multi-billion dollar thorn to U.S. authorities. In 1998, federal prosecutors indicted Miami gambler David Budin and his son, Steven, for running SDB Global, which later became SBG. Federal authorities prosecuted Budin under federal anti-gambling statutes because, while SDB Global was incorporated in Costa Rice, it was based in Miami. He pleaded guilty and was fined $750,000.
The original SDB was one of the first sites to do business in Costa Rica and the Budins were high fliers, taking big action and cutting big figures. But the Clinton Administration was determined to make an example of them. After David pleaded guilty to violating a 1961 Wire Communcations Act that bars using wire communications to place bets, Attorney General Janet Reno declared, "The Internet is not an electronic sanctuary for electronic betting."
Trouble is, no one seems to have gotten the e-mail.
Scores of sites, many owned by foreign nationals beyond Reno's reach, sprouted up in the Costa Rican capitol of San Jose. Today, most operate from smoked glass office buildings across from the University of Costa Rica and gladly pay taxes to the government in exchange for the aura of legitimacy.
Even nominal reforms haven't slowed them much. Florida has a voluntary agreement with Western Union to not wire money directly to offshore books. But McPherson reputedly had little trouble using a Tallahassee depot to send money to a friend's SBG account. According to testimony at McPherson's trial, an SBG operator gave him the name of a middleman in Panama who routed the money to SBG once it arrived in Latin America.
Posing as a prospective customer, a Florida Department of Law Enforcement agent asked an SBG operator why the company required customers to call before wiring each new deposit. In a tape played for the McPherson jury, the operator replied that it was "because we change the names and the countries [of middle-men] all the time." When the agent suggested that process made her uneasy, the SBG employee replied, "You don't have to worry about it. Lots of people do it."
A spokesperson for Western Union, Danielle Jimenez, says that her company "attempts to call law enforcement if we detect a business that is using our service for illegal purposes."
In a pastel office patrolled by armed guards in an industrial park near the airport, the debonair 52-year-old Agami balled up his hand an exclusive interview with ESPN last summer. "It's not pleasant to be thought of as a criminal," he said. Waving his hand at "all this"-by which he meant a suite of offices with accountants and lawyers-he continued, "This is a different company than it was five years ago. We're not looking to work in the shadows. We want to go from the back room to the board room."
Agami spent more than a decade working in New York's garment district, and becomes defensive when pressed for details about what happened in that back room. There was, for instance, a suit that the NCAA filed against SBG in March 2001 for improperly using the agency's trademark in its ads. The SBG "agent" -representative-listed in the suit was Jeffrey Postal, a Fort Lauderdale dentist. Agami says that they no longer have a relationship.
And there was a subsequent feud that Postal had with Ken "The Shrink" Weitzner, a self-appointed watchdog who runs a popular Web site called ThePrescription.com. After Weitzner accused SBG of mishandling his personal gambling account in 2001, Postal sued Weitzner for libel. In a settlement last year, Weitzner agreed to apologize directly to Postal after getting a partial refund of the disputed funds.
Preferring to be seen as a statesman for an industry that moves more than $6 billion a year, Agami dismisses these as mere growing pains. "We're not like the bookie working in the shadows," he says. "We verify that our customers have identified themselves correctly and that they are legally depositing money."
Frank Catania, a former New Jersey gaming regulator who now consults for the industry, says that this is an important point. "Doing business online creates a full record," he says. "There's tracking that can be very helpful to law enforcement."
According to the FSU task force report, McPherson ran up an $8,000 debt using a bookie during his freshman season at FSU. But it wasn't until that bookie cut him off-and McPherson reportedly turned to SBG-that he created the paper trail that would come back to haunt him.
Since SBG doesn't extend its customers credit, they have to pay for their wagering up front. That meant investigators were able to snare a Western Union receipt with the signature of McPherson's roommate. The receipt was for an Oct. 21, 2002 wire transfer to Panama. They also got records from McPherson's cell phone that showed two calls were made to SBG immediately before and after that wire transfer.
While SBG assures its customers that it "does not report any client information to any governmental agencies," Tallahassee cops were able to seize the laptop computer that McPherson's buddy, Melvin Capers, said they'd jointly used to access SBG.
At least 57 betting receipts were found on its hard drive, including one for the Oct. 21 match-up between the Colts and Steelers. Among the ones that landed McPherson in trouble with the NCAA were receipts that showed bets were placed on FSU to beat Miami and Notre Dame. McPherson, who played against Notre Dame and started the following two games, did not testify. Ultimately, the jury deadlocked on the question of his guilt. Later, he plead no contest to a misdemeanor charge.
Shortly after the trial ended, Agami offered an olive branch to the NCAA. "I'd love to find a middle ground with them," he said. "I'd love to have them come here so we can talk and find a comfort level with them."
Shaun Assael is a senior writer for ESPN The Magazine