02/21/2002 12:00AM

Bankrupt book serves warning


Since their inception in 1996, Aces Gold and Sports-Market had grown to be among the biggest Caribbean bookmakers. They attracted large numbers of customers through lucrative sign-up bonuses and promotions such as "no-juice Fridays."

Well, the two companies, both owned by Seinpost Holding in Curacao, ran out of juice on Feb. 15. They sent out notices to all companies they did business with, telling them to cancel all links to their website and stop all advertisements. They were scheduled to file for bankruptcy Friday morning in Curacao.

There were some warning signs. It often isn't a good sign when a company seems so desperate to attract new money that it seems to be giving away the store with too-good-to-be-true bonuses. In addition, during the bowl season and the NFL playoffs, Aces Gold was slow to move its lines to balance its books.

It may be that the last straw was when Aces Gold had the Rams favored by 14 1/2 over the Patriots in the Super Bowl when nearly every other book in the world was at 14.

Aces Gold got a flood of Patriots money and didn't adjust the line. And it lost big time when the Patriots won the game.

On Jan. 9, Ken Weitzner, a.k.a. The Shrink, wrote a story on his offshore watchdog website, www.theprescription.com about the propensity of some offshore books to fold after the Super Bowl:

"If your money is in one of the bigger sports books in the industry, then the chances are it will be safe, except if it happens to be in Sports-Market/Aces Gold.

"It is our responsibility to warn everyone of one particular bookmaker having serious financial problems.

"SportsMarket/Aces Gold is in deep financial distress."

But Weitzner was threatened with a lawsuit by SportsMarket/Aces Gold. Upon the advice of attorneys he removed the remarks from his website.

I've been asked many times to recommend offshore books. I've never had an account, so I've always been noncommittal in my responses. The best advice I would offer is that it's always a risk to send your money out of the country, so go with established books. Now that such a well-established operation has going under, I won't even go that far in my advice.

In 1985, Gary Austin's, an independent sports book on the Las Vegas Strip, closed its doors after Austin reportedly lost a fortune on the Cardinals-Royals World Series. Austin claimed his place was robbed and closed the doors and left town, leaving a lot of unhappy, unpaid bettors. Austin's book was a stand-alone outfit and not backed by a casino. That was the last case of a Nevada licensee not paying its customers. Nevada's sports books have slowly become more strictly regulated.

In recent years, Vegas has had a lot of consolidation, with smaller casinos going out of business, or being bought out by the larger companies. The Aces Gold bankruptcy could have a similar effect offshore.

Many experts, such as former Vegas bookmaker Jimmy Vaccaro, have predicted the big fish will swallow up the small fish and consolidation will decrease the number of betting sites to about a dozen offshore. The Aces Gold bankruptcy may accelerate that.

Novice bettors are generally reluctant to send their money offshore, and that will only intensify now. And people who do bet offshore will probably deposit less in their accounts and withdraw more when they win. Big players, who previously thought nothing of keeping tens or hundreds of thousands of dollars in offshore accounts, will also probably pull out whatever they don't need.

Off-shore bookmakers hope that bettors see this as an isolated case, but that's not likely. People signing up for an account will be asking more probing questions so they feel safe. And the first sign of trouble at a book may cause a run on the bank, perhaps putting some books out of business.

Despite all the negative publicity, bookmakers don't expect the market to dry up anytime soon. The Aces Gold story hasn't been widely reported in the general media, so a lot of people will send their money offshore without knowing about this incident.

But even so, those new bettors won't be getting the big sign-up bonuses that offshore players have come to expect. The offshore industry will start moving closer to the more fiscally responsible position that the Nevada books have adopted.

So offshore books, who have always prided themselves in being more aggressive than their Nevada counterparts, now find themselves looking to Nevada as a model.