This story appeared in the January/February 2005 issue of Web Host Industry Review magazine. Click here to subscribe for free.
February 21, 2005 -- (WEB HOST INDUSTRY REVIEW) -- The NFL has always had the special attention of the gambling community. With the rise of fantasy football leagues and online sportsbooks, betting often seems like a fundamental part of football fandom.
Every year Super Bowl attracts the largest television audience of any sporting event in the world. It also draws the largest crowd of gamblers. And it's a safe bet that Super Bowl XXXIX in Jacksonville, Florida, on February 6, 2005 will be no exception.
When the two conference champions line up in Jacksonville, up to $750 million could be riding on the outcome of the game. And that's just money bet with online sportsbooks. There's also $80 million-plus in legal wagers placed in Las Vegas and untold illegal millions bet with neighborhood bookies in cities across America.
"There is no single way of counting all of the money that comes in on the Super Bowl," says Buzz Daly, the Las Vegas-based publisher of www.buzzdaly.com (buzzdaly.com), a sportsbook and gaming information site, "because it's done online and there is no reporting bureau."
Daly started writing about offshore gambling in 1994 when casinos, set up in Costa Rica, Antigua, Dominican Republic and other places to avoid US laws, still took bets over the telephone. He says he was deeply involved with the sportsbook scene when Internet technology gave rise to online gambling.
Daly says all the numbers for online betting are based on estimates. "I am aware of how the industry has grown and the amount of money that is wagered online," he says. "I would say between $500 million to $750 million is bet online or offshore on the Super Bowl."
The use of the Internet for sports betting has reached critical mass. With offshore casinos numbering an estimated 1,500, there seems to be no ceiling in sight for the gaming business that has been banned in 49 of the 50 US states. Only Nevada licenses and controls sportsbooks, and that activity plays a distant second to games of chance like poker, craps and slots.
At the moment, US laws involving Internet gambling remain somewhat gray. The accepted thinking is it's not illegal to place a bet, but it is illegal to take a bet.
As a result, the Internet-based sportsbooks are fast becoming nearly the only game in most towns. And the Super Bowl is their biggest single play. With the supply of US bettors demanding gambling outlets for the mega-event, the online sportsbooks' biggest challenge is one of mastering and securing their technology.
"It demands an amazing amount of process architecture and security features. We are like the financial services industry or a major travel network," says David Carruthers, CEO of BetonSports.com (betonsports.com). "We have millions of people looking at our Web site across the world every day of the year. We have to have the appropriate defenses and controls to ensure that our systems are not compromised."
BetonSports.com is the world's largest online wagering company with headquarters in San Jose, Costa Rica, according to the International Sports Book Council. The company, which claims the largest site on the Internet, has revenues of $1.25 billion and has been in business for 14 years.
Carruthers declined to enumerate what was bet with his company on the 2004 Super Bowl, but says BetonSports.com offered its customers 753 ways to bet on that game. "We fully intend to increase that this year. You can bet from the length of the national anthem, to what will be the most popular advertisement during the TV show, to who will win the game, to the coin toss."
At the end of his last financial year, which was the day after the 2004 Super Bowl, BetonSports.com had handled more than 33 million wagers in 12 months, says Carruthers, who employs more than 1,100 multi-lingual customer service representatives to man 2,000 inbound telephone lines. He has 1.2 million registered customers from North America.
At NewBodog.com (Newbodog.com), another large sportsbook based in San Jose, Costa Rica, president Rob Gillespie says the Super Bowl is the "largest single game of the year in terms of betting handle [money wagered]." "We are expecting 50,000 to 60,000 people to place wagers on the game this year," says Gillespie, who joined Bodog Entertainment Group in 1999. The company is licensed by the Costa Rican government.
Despite the popularity of the Super Bowl among bettors, Gillespie says the game doesn't create an adverse technical load on his site. "The load on the system is heavier between the AFC and NFC Championship games and between the first two games of the Final Four," he says. "In both of those cases, you have a huge event being settled up just prior to another huge event starting. That concentrates an incredible amount of wagering into a short period of time."
The big-event atmosphere surrounding the Super Bowl means that many of its viewers make special plans to watch the game at Super Bowl parties, often placing their bets earlier in the day, rather than just before kickoff. Carruthers says the betting load is helped because there are no games played the week before.
"The betting activity builds up over an extended period of time, so we don't see the peaks in traffic that we would see on a normal NFL Sunday. People bet early, they get into the Super Bowl party atmosphere. On a normal Sunday when you see 11 games going off at the same time, that's when you see exponential traffic for that 45 minutes before kickoff time."
Like any other IT enterprise, online sportsbooks are at risk of malicious attacks against their sites. But unlike other businesses, betting sites do such volumes of business at such specific times that cyber-criminals have been known to target gambling sites, seeking to extort money with threats of denial of service attacks. Bodog.com experienced an attempted denial of service attack last year, says Gillespie, but the site was not affected. "We have invested a lot into site security and are confident we could handle an attack again this year if it happened."
Because of the sensitivity of the traffic they handle, and the enhanced threat of attack, betting sites are hesitant to reveal specific details about their hosting relationships. Neither Gillespie nor Carruthers would say who hosts their sites. Carruthers would only say "we have a multi-hosting strategy that involves several countries."
Online sportsbooks got a philosophical "legal" boost in November when the World Trade Organization ruled that the United States is in violation of its international trade obligations because it bans online gambling within its borders while American-owned companies operate offshore. While the United States is expected to vigorously appeal the ruling, it could be a predictor of efforts to eventually legalize online gambling in the United States.
For now, Carruthers sees no evidence of the US government trying to intervene in his business and offers a solution for online gambling.
"I believe it is time for the United States regulators to grasp the problem of online gaming and bring forth sensible, responsible regulation that will provide consumer protection, certainty for the operator and generate revenues for the authorities. This way, everybody is a winner and everybody can get on with pursuing their leisure activities with confidence and care."
