An open response from World Sports Exchange . . .

Bucky · Jul 7, 2003

Great Thread! Maybe, this is my opportunity to discuss the profitability of 20 cent baseball lines or money lines in general with large gaps.

Too big of a gap would result in low volume, right? Any big bets would come in only if a side developed value.

So, in 20 cent baseball - isn't it possible for the book to be a victim of anti-selection and only get volume when a number has value and otherwise really no volume at all? Doesn't this result in the 20 cent baseball book getting one sided a lot on bad numbers for them? Then, they either hold it or have to ask for buyback to break even or lay it off to break even. So, is that really 20 cents juice?

PatrickMcIrish · Jul 7, 2003

Bucky - you might be on to something, makes sense to me. I would guess a lot too depends on what kind of customer base you have. If you are lucky enough to have a big portion of "one out Charley's" playing through you that may make a difference as well. Some books enjoy a big base of squares so maybe they get away with having plenty of action on both sides.

BTW I know a whale who plays into a shop with 20 cent lines and it is his only out. No matter how much I talk to him he doesn't get it. "I don't sweat the little things in life Patrick, you should know that by now". LOL. He doesn't either. If traffic is bad he will rent a helicopter to take him to 7-11 for a gallon of milk. The milk cost $3 but the chopper cost $1800 for a half hour.

Sodium Pentethol V · Jul 7, 2003

Why the association between being public and having financial clout to stay open? Being public only means you have to answer to know nothing stock holders.

Canbet only been in business 7 years and is still losing money,

sportingbet is under such a mountain of debt, your kid's kids may see them turn a profit.

wwts just sold for 10million dollars,I'm guessing that works out to about $800 a player after taking out the infrastructure of the company.

money safer at BET365, but what is the point of having money there?

you can't quantify the professionalism of WSEX in dollars and cents, but it is needless to say they can weather a storm, think your debt ridden public companies can?

Sodium Pentethol V · Jul 7, 2003

BTW as far as advancing too,

I just looked up all the public sports gambling companies and most are trading at or near multi year lows, so who exactly is moving ahead?

Bucky · Jul 7, 2003

Would it be fair to say the easy money has been sucked out of the gambling public? As far as moving ahead. The strong will find a way to survive.

Railbird · Jul 8, 2003

These guys only use a 10 cent baseball line up to 145, infact when the dog is 145 the favorite is 160. They need to start realizing its not 1998 anymore and lower the vig already.

DarrylParsons · Jul 8, 2003

Bucky, you are right in that anti-selection is the key. It is the single reason why 6% juice becomes a 3% hold. It is also why it is so critically important to have lines which respond quickly to new market information, especially if you are offering low juice. It takes quite a bit of insight to see this clearly but it only takes respect for others with insight to avoid the pitfalls. Some bookies think just having lots of customers is the guaranteed way to riches.

Their grandma probably instilled the idea into their heads that if you gamble you will certainly lose so the converse must also be true, ie. that if you are the bookie you will certainly win. These guys will only realize the truth when it's too late (if at all) and they have to go bankrupt and screw some people along the way. You have to either have the vision yourself or at least recognize others who have the vision and pay them well to be on your side, or you will get eaten alive by the sharks.

In your 20c example you are right in that you could easily lose money if your lines are totally static. If they are just a bit dynamic, you might have a decent hold %age but probably on low volume since even the polyunsophisticates know that a 20c line for baseball is high compared to the market.

The way I see it Pinnacle has super-dynamic lines and huge volume so they can probably get away with the low juice. Canbet is not dynamic enough so I see trouble for them ahead, unless of course they smarten up. WSEX is medium in both the juice and the dynamism departments and with their long history and reputation they should be fine.

Bucky · Jul 8, 2003

Daryl - thanks for the discussion. I guess the big picture is what accounts - how to make steady income without big risk.

batistuta · Jul 8, 2003

bump in hopes of a response from wsex

Guest · Jul 8, 2003

Sodium P-

I know you know better than what your reply misrepresented. Ask yourself why you come here to say things even you don't agree with?

As you know, about sbt, in the event they falter Pat c. picks them up. Their debt is completely tied to him, and he either pays bettors, or sbt survives intact and they pay off bettors. They have $20mil on account right now. That is absolute security.

Canbet. Please quit playing with the numbers, as the Actuary you can read better. Steady increases in volume and hold, have turned cash flow positive and profitable. Why you would possibly impune the integrity of their financial situation I have no idea.

WWTS. what you said is just an outright fabrication. wwts sold for $10 million? Perhaps you'd like to wager a dime or 2 on that statement. You are not even close.

But their sale really has little to do with the safety of their buyer does it? All you really need to know is wwts is so profitable their buyers are able to pay off the purchase in 2 years, and their buyers fall under the strictest regulation in the world, having to put players money in an escrow account which is regularly monitored..

One thing we can agree on is the fact a company being public has no bearing on its safety. But we definitely diverge there, companies which are public must submit financial documents which I can peruse to see if their house is in order, and do those documents tell the truth as I know it.

That's what leads me to include both canbet and sbt in the top 6. I've seen financial information I can't get from a company like wsex.

And btw, canbet has been around longer than wsex.

Need I say once again, I have been a long time customer of wsex, I supported them when they were down, just hoping they move forward.

WalkofLife · Jul 8, 2003

First of all, I'd like to thank the guys that are having a discussion here, you guys have made for a nice thread.

Bucky and Darryl Parsons:

I tend to agree with you guys about 20 cent lines shops getting one sided action. As we have seen in this last few weeks, favourites are taking the money home. But the dogs are showing a trend to becoming more profitable. From a book standpoint, getting one sided is always a nightmare. No doubt about it, because then you're gambling not booking, and your profits will depend solely on the outcome of a game, not on the volume of action you write.

People in this forum have constantly discussed about finding value in a 20 cents line, but the reality is that these shops are most likely to get sided on the dog action, what would happen if the dogs started to win, as they are doing as of late? How will these shops find the counterweight to make up for their losses? More great bonuses? If more post-up money is rolling in just to pay out winners, isn't that similar to a Ponze scheme? I won't name shops, but why is it that people can realize this? It's right there in the numbers.

And now for the rest of the gentlemen posting in this thread:

I'd like to retake part of Haden's post ( which I have highlighted previously):

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Originally posted by Haden:
Of course, some may point to deep-discount books that post numbers like –275/+265 on the Wimbledon final as an example that most books can do a little more. But you do the math: that’s booking at a 0.7% holdthat’s booking at a 0.7% hold, which after the transaction costs, bonuses, etc., is booking for free or even at a slight loss. If the question is Why doesn’t World Sports Exchange book bets at a 0% hold, the answer is because there’s only one way for a book to do this and stay in business: gamble. That’s either directly, by using the house money to bet into other books, or indirectly, by posting extremely aggressive lines <HR></BLOCKQUOTE>

I'd like to ask a couple of questions and since my questions will involve the very essence of a model business, I will not be specific with the names. My interest is not to bash any book, I'm here to learn.

99% of the posters here love these aggresive type of lines. Some lose, some win. But if we're to trust the numbers presented to us by experts like Haden (just assuming he is one), we can certainly say that ANY shop that does betting on the side might get to have their exposure increased when they stop winning.

Many will argue the difference lays in how sharp the lines are, for they will be unbeatable; but we all know nobody can beat the odds in the long run. It's mathematically no feasible.

When does a sharp betting shop cease being the icon to emolate and becomes the place everybody wants to run away from? Where is that line? When Aces Gold was doomed, then it became obvious for the sharpies first, the square post-up dude found out he had lost his money when it was too late to do anything about it.

The Aces Gold model is proven wrong, what will make a difference between Sports Market and this other top book?

It seems to me the big sharp guys are engaged in a process where they need to attract more and more square money to be able to collect their profit. So they allure players into sending funds into those places they need to get paid from.

One more breakdown, and we will all be past history. NOBODY will ever send a buck offshore if one of this icons fall.

"Do NOT get GREEDY", used to be the golden rule. Now it looks more like "Feast upon it and cash out as long as you can". There's no equlibruum anymore, we're heading towards a viral pattern of behaviour in the betting market. And all viral patterns collapse.

Am I alone here? Am I on crack?

[This message was edited by Walk of Life on July 08, 2003 at 04:56 PM.]

corey · Jul 8, 2003

My thoughts exactly.

WalkofLife · Jul 8, 2003

That I'm on crack, those are your thoughts nanuk?

batistuta · Jul 8, 2003

Walk - I read and reread your post - im trying to understand what you are saying.

Maybe you can summarize because I am very interested in understanding and learning too.

I think the whole thing falls back to the original question: Why should I bet at WSEX? Im hoping that Haden comes back and addresses these questions because after the initial satisfaction wore off that he did respond - in the end he really didnt give me a reason to bet there. I think what he was saying is that they are going to be around and will never stiff a player - and he cant guarantee the other cut rate shops (Pinnacle). But this is a vague statement and im not sure that Pinnacle would agree on this issue.

Im still not willing to pay tons extra juice (other than football) for the implied security. Even that is an intangible because we have no proof of anything - everything is on faith. I hope Haden comes back and addresses these issues directly.

corey · Jul 8, 2003

Could be...

More likely I was refering to your analysis of the offshore situation.

DarrylParsons · Jul 8, 2003

batistuta - I think Haden did give you a reason to consider staying -- he said he's thinking of reducing the juice in exchange for charging transaction fees. I'd give them until NFL starts, say, to see if they go anywhere with that idea. You can't really expect them to react instantly, can you? If they don't cut the juice by NFL time, then you at least gave them a chance and you would probably be right to switch to another book at that point.

Walk - I'm having trouble understanding your last paragraph. Is that from a player's point of view? And what is a viral pattern? I see a Darwinian process which is kind of nice -- the smart ones prosper and the dumb ones go by the wayside on both the bookies' and players' sides. This seems to be consistent with the grand order of things.

megladon - I agree about making financial information public. It would be nice if the USA allowed and regulated online sports wagering sites so the good shops could be more easily distinguished from the bandits. And thanks for posting the info about the UK books.

Haden@WSEX · Jul 8, 2003

Sorry for the delay in responding to many of your posts.

Let me start with Batistuta’s question, which he has summed up as, Why play at World Sports Exchange? The answer is pretty simple: no two books offer the same product mix of odds, event coverage, bet types, transaction costs, customer service, and safety, and there isn’t a single book out there that has an exact overlap with our particular mix.

Of course, if you’re just asking where you can get the lowest vig, the answer is slightly different: the lowest vig never exists in any one place. Some days the best price will turn up at Book A, and other days at Books B or C. Even the odds at so-called “square books” will get driven out of line, providing value to the sharp player. In other words, the truly lowest vig is a synthesis of the odds from a broad cross-section of books or betting exchanges.

But that wasn’t really the focus of my initial post. The point I was trying to make was that bookmaking, contrary to the common perception, is a low-margin business, and after you take operational expenses and transaction costs into consideration, the pie is only so big. Thus, for World Sports Exchange—or any book—to reduce its vig, it either has to (a) adopt a much higher risk profile or (b) make up for the lost revenue by some other means.

To give you some examples, we could move to a less regulated jurisdiction in order to save on licensing fees or taxes. We could pull our lobbying efforts in Washington, and simply cross our fingers and hope that the anti-gambling legislation doesn't pass. We could reduce our support staff and force customers to make all their plays over the Internet. Or, in the example we posed to the forum, we could stop picking up all the transaction costs generated by our customers. This is a change we are considering implementing, as it would enable us to tighten our lines by about a percentage point. Based on the comments above, this would go over pretty well with most of you.

As for the question about why a book can’t just make things up on volume, I think the answer is that transaction costs with credit card companies and banks run almost directly parallel to a shop’s handle. So if you increase your handle by 10%, your banking costs increase by 10% as well. Of course, there are other expenses that don't increase in proportion to your handle, such as website costs, licensing costs, and rent. But basically, with banking costs being as high as they are, even a cut-rate shop can only go so low without having to pass most of those transaction costs back to their customers.

Finally, someone was asking about the impact of proposition bets on a book. The truth is that most books take losses on their proposition bets, but feel it’s a good way to attract customers who will eventually bet into their more solid lines. I’ve seen some comments suggesting that we rake it in with prop bets because they’re 30-cents wide, but essentially they’re just treated as loss leaders.

Regards,

Haden

WORLD SPORTS EXCHANGE

[This message was edited by Haden on July 09, 2003 at 03:13 AM.]

batistuta · Jul 8, 2003

Haden - thanks again for your response.

I see much more clearly your point of view now. As a gambler, I appreciate the information and feel like I have learned something about the challenges you face.

If these transaction costs are constant with volume I just guess I cant comprehend how there is no third party service or just a way to make moving money easier. Could a book survive just doing cashiers checks via fedex (basically no fees)? I would gladly play at a book that offered security, reduced juice, but required money to be transferred via free vehicles. As a player - the bottom line is I want to get paid and I want the best shot at winning via low vig. Thats it. Customer service is great if it is good, but only needed if there are problems.

Maybe I am in the minority - you would know much better than I - but isnt there a market out there for us squares that take it more seriously than impulse? I have been guilty of making a cc deposit 10 minutes before gametime but only do it because it is an option to me and would be glad to plan better if I knew I needed to fedex a cashiers check ahead of time.

Another option that I have thought of is an escrow account type of service where no charges are made until wins or losses happen in an account. Kind of a pay as you play type of thing where I leave a cc on deposit at an escrow service and nothing is charged to the card until I lose. I know this is close to extending credit as a book but not quite. It is not credit - it is just a delay in charges. That way you do not absorb the cost. Just a thought and not very well thought out but maybe a start.

Thanks again Haden - I have the utmost respect for talking about this in an open forum. And most importantly - I learned something and hope others have as well.

lander · Jul 8, 2003

Haden,
As always - great post. Hearing the book's perspective from gentlemen such as yourself is always enlightening & reassuring to us punters.

Could you elaborate on this ?

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR> We could pull our lobbying efforts in Washington, and simply cross our fingers and hope that the anti-gambling legislation doesn't pass. <HR></BLOCKQUOTE>

Specifically, what is the general feeling regarding the likelihood of the "Unlawful ... blah blah ... Internet Funding Act" passing through Senate?

Sodium Pentethol V · Jul 8, 2003

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>As you know, about sbt, in the event they falter Pat c. picks them up. Their debt is completely tied to him, and he either pays bettors, or sbt survives intact and they pay off bettors. They have $20mil on account right now. That is absolute security.<HR></BLOCKQUOTE>

Here's what I know and it's the same in regards to Canbet, the goal of any company is to increase shareholder value, not one single one of these companies has done that with any degree of success, all are in alot of debt, and unless you can come up with some reasons why none of this matters, I am all ears.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Canbet. Please quit playing with the numbers, as the Actuary you can read better. Steady increases in volume and hold, have turned cash flow positive and profitable. Why you would possibly impune the integrity of their financial situation I have no idea.<HR></BLOCKQUOTE>

I'm not playing with any numbers, they have been in business seven years and their cap value is near as low as it's ever been, remember the goal here is to increase shareholder value.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>WWTS. what you said is just an outright fabrication. wwts sold for $10 million? Perhaps you'd like to wager a dime or 2 on that statement. You are not even close.<HR></BLOCKQUOTE>

I believe they were bought by a public company and even you can search and find the details of the sale and the stats. regarding their current business.

Outright fabrication=readily available public information.

Here donate the two dimes to a worthwhile charity,

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>The Directors of Consolidated Gaming Corporation Limited (CGC) are
pleased to announce that CGC has entered into a Share Sale Agreement
with the shareholders of Tasman Investments Inc (Tasman) to acquire
all the issued shares in Tasman.

Tasman, which is located in Antigua, West Indies, has entered into an
agreement to acquire the business of World Wide TeleSports (WWTS, and
www.betWWTS.com), which is one of the world's oldest, largest and
most respected sportsbooks, offering online and telephone services to
its extensive client base on a multitude of global sporting events.
wwts is fully licensed and regulated by the government of Antigua.

Under the Share Sale Agreement, CGC will acquire 100% of the issued
capital of Tasman. The consideration for the purchase of all the
issued shares in Tasman is the issue by CGC of 61,548,698 fully paid
ordinary shares (post a 1 for 10 consolidation of CGC's share
capital) and the assumption of Tasman's debt relating to its
acquisition of the wwts business, totalling US$17.2m in redeemable
convertible notes, which are exercisable into ordinary shares in CGC
at A$0.44 per share, being the price after the 1 for 10 share capital
consolidation.

The Share Sale Agreement with Tasman is conditional upon:

1. Compliance with the ASX Listing Rules;

2. Due diligence acceptable to both parties being conducted;

3. Receipt of all necessary regulatory approvals including from the
Northern Territory Racing Commission

4. The Best Bets acquisition, previously announced on 19 July 2002,
being approved by CGC shareholders, and the cash consideration of
$1.95m required to complete the transaction, being secured;

5. CGC obtaining a satisfactory Independent Experts Report in respect
of the wwts business;

6. Completion of the Tasman acquisition of the wwts business;

7. A private placement of CGC securities totalling a minimum of A$12m
(which includes the funds required to complete the Best Bets
acquisition) being approved by CGC shareholders, and the Company
receiving binding commitments from placees prior to 31 December 2002
conditional only on completion of the Tasman acquisition.

8. The approval by CGC shareholders of a consolidation of CGC's
issued capital on terms where the holder of 10 (ten) CGC shares
agrees to accept 1 (one) fully paid ordinary share in CGC as part of
a reconstruction of the Company's issued capital;

9. The appointment at completion of the acquisition of Tasman of 3
(three) Tasman nominees to the CGC Board of Directors.

10. A change in the company name of CGC.

The wwts business to be acquired by Tasman has a turnover of in
excess of A$1.0 billion and is profitable, having provided both
telephone and online wagering services to its global database of
clients since 1991. The wwts business is an internationally
recognised wagering service provider offering pricing on a multitude
of worldwide sports. The business primarily operates under the domain
name of www.betWWTS.com.
The Directors have commissioned PKF Corporate Advisers Pty Ltd to
carry out the Independent Experts Report on the acquisition of Tasman
and this, together with a more detailed report on the proposed Tasman
businesses and other information supporting a number of important
shareholder resolutions to approve this, and the Best Bets
acquisition, will be sent to shareholders shortly.

Shaw Corporate Finance has agreed to act as corporate advisors in
respect of the proposed capital raising by way of the placement.

Subject to a number of exceptions, ASX Listing Rule 7.1 prohibits a
company from issuing more than 15% of its capital in any 12 month
period without the approval of shareholders. Accordingly, a meeting
of CGC shareholders will be convened in the near future to consider
the share issue, and the other aspects of the Tasman acquisition.

In the meantime, in the interests of all shareholders and in
maintaining an orderly market and having regard to the conditional
nature of the transaction, the Directors have requested the ASX to
maintain the suspension of the Company's shares from official
quotation. The Directors envisage that this position will prevail
until such time as the market can be more fully informed as to the
status of the conditions of the transaction being satisfied and
compliance with ASX and other regulatory requirements.

Attached is a one page overview of the World Wide TeleSports Inc
WWTS) business.

A Sigalla
MANAGING DIRECTOR

OVERVIEW OF WORLDWIDE TELESPORTS INC ("WWTS")

HISTORY

wwts is a licensed online sportsbetting business located in Antigua,
West Indies. It has been in operation since 1991 and in that time has
grown to become one of the world's largest, and most respected,
offshore sportsbooks.

SPORTS

wwts offers predominantly non-credit based wagers on all of the
following major sports:

* Horse & greyhound racing;
* Golf;
* National Football League;
* National Basketball Association;
* National Hockey League;
* Soccer;
* College Football;
* College Basketball; as well as
* miscellaneous international sporting events; and
* propositions.

wwts also offers sophisticated bet types such as Exotics, Parlays,
Straights, Reverse and Teasers.

FINANCIAL SUMMARY

For the year ended 31 December 2001, wwts produced the following
result:

PRO FORMA PROFIT AND LOSS US$'m A$'m(1)

Turnover (Gross) (US$'m) 562.4 1,029.1
Gross Gaming Revenues % of Turnover (win %) 4.14% 4.14%
Gross Gaming Revenues (GGR) (US$'m) 23.3 42.6
EBITDA (US$'m) 4.6 8.4

(1) USD converted into AUD at US$0.5465; A$1.00.

wwts is currently on budget to produce an EBITDA of US$5.9 million
(A$10.8 million) for the year to 31 December 2002.

HISTORICAL GROWTH

wwts has experienced a compound annual growth rate in turnover of
27.7% over the past five years. This was despite the fact that in
2001, the Company restructured its client database, which resulted in
a slight drop in turnover:

YEAR ENDED 31 DECEMBER
1996 1997 1998 1999 2000 2001 5 yr
GAGR
Turnover (US$'m) 165.5 371.3 419.2 469.0 587.8 562.5 27.7%
Turnover (A$'M) 302.8 679.4 767.1 858.2 1,057.6 1,029.1 27.7%
(1) USD converted into AUD at US$0.5465; AS1.00.

INTERNET VERSUS PHONE WAGERING

wwts was originally a phone betting operation but begun taking bets
over the Internet in 1997. Since then, the Internet based business
has grown to represent > 70% of total wagers.

STAFFING

wwts currently employs 138 staff operating out of the head office in
Antigua. The company has a young, experienced senior management team.

CUSTOMER DATABASE

As at 30 September 2002, wwts had approximately 40,000 customers,
6,000 of which were active in the last 3 months<HR></BLOCKQUOTE>

I believe it was eventually determined that the $17mill was really aussie dollars, so in effect at the time it was around $10mill USD. I readily admit I could be wrong and it was indeed $17mill but I don't just make up numbers and $10mill is the number that stuck in my mind. Perhaps that was the real value of the converted stock that was used as payment at the actual time of the sale. I don;t rmemeber which but of course could find it if absolutely necessary. Which is slightly higher than what would be required to purchase control of Canbet right now.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>But their sale really has little to do with the safety of their buyer does it? All you really need to know is wwts is so profitable their buyers are able to pay off the purchase in 2 years, and their buyers fall under the strictest regulation in the world, having to put players money in an escrow account which is regularly monitored..<HR></BLOCKQUOTE>

Here's what I know, it was available for a while and in the meantime Blue Square sold for around $100mill US.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>One thing we can agree on is the fact a company being public has no bearing on its safety. But we definitely diverge there, companies which are public must submit financial documents which I can peruse to see if their house is in order, and do those documents tell the truth as I know it.<HR></BLOCKQUOTE>

Well here's the challenge you furnish me with accurate balance sheets and income statements and then I'll agree with you till then, I won't. The only advantage I conveniently left out was access to cheaper and greater amounts of capital, of course given the roots of WSEX, I think that edge is nullified to a great degree.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>That's what leads me to include both canbet and sbt in the top 6. I've seen financial information I can't get from a company like wsex.<HR></BLOCKQUOTE>

the only tangible and correct thing that leads to this conclusion is the regulatory enviroment, however you're being silly if you think no UK or Aussie book has ever stiffed anyone.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>And btw, canbet has been around longer than wsex.<HR></BLOCKQUOTE>

Yea I think I'm the one that posted they were in business 7 years now.

<BLOCKQUOTE class="ip-ubbcode-quote">quote:<HR>Need I say once again, I have been a long time customer of wsex, I supported them when they were down, just hoping they move forward.<HR></BLOCKQUOTE>

Moving forward again, every one of your public companies has moved backwards, I would think staying the same puts them ahead of your examples.

[This message was edited by Sodium Pentethol V on July 08, 2003 at 11:42 PM.]

[This message was edited by Sodium Pentethol V on July 08, 2003 at 11:46 PM.]