Costa Rican officials are ambivalent about the dozens of on-line sports
betting operations that sprang up here before they even knew it, disguised
as data processing centers.
They don't want to lose some 10,000 to 15,000 decent-paying jobs that
are helping many a university student pay tuition.
But they are not happy the companies pay no licensing fees and few
taxes. And they are not sure unregulated gambling, an industry notorious
for sheltering dirty money, is good for Costa Rica's image as an
eco-tourism destination.
"We don't want to drive them away. We are proposing regulation
that would allow the state access to information and clearly guarantee
that the funds in these places come from legal sources," said
Security Minister Rogelio Ramos, adding that he is aware of several
outstanding U.S. arrest warrants for people involved in sports books here.
Some Costa Rica legal experts say sports books are legal because there
is no law expressly prohibiting them.
Other experts say sports books violate a law that says gambling is
allowed only in casinos inside big hotels, but they skirt the rules by
registering themselves as data processors.
Sports books don't pay taxes on earnings in Costa Rica, since the money
is handled off shore, in accounts that bettors set up in tax havens like
the Cayman Islands.
Costa Ricans may be ambivalent, but U.S. officials are not. Phone and
Internet betting are illegal in the U.S., even via international call, and
sport bets are allowed only in Nevada.
Prosecutors have charged people in the United States with running
illegal gambling operations because they directed bettors to phone Costa
Rican sports books.
Earlier this month in a mass arrest of alleged mobsters in New York,
three reputed members of the Luchese crime family were indicted for
illegal gambling for providing access to a sports betting office in Costa
Rica through a toll-free number.
And in June in New York, seven alleged members of the Gambino crime
family were indicted for running an illegal sports-betting operation using
phone rooms in Costa Rica.
Prosecutors said they could not give out the names of the Costa Rican
sports books linked to the Gambino and Luchese families.
Two sports book managers interviewed by Reuters in Costa Rica said
their operations were not mob-linked and scoffed at the notion there is
money laundering in the industry.
A GOOD THING GOING
The government -- desperate to narrow its widening budget deficit --
keeps changing its mind on how to tax bookies. At first, Congress pondered
a yearly tax per computer terminal, but that was scrapped in the face of
loud industry protest.
"Costa Rica has a really good thing going. They want their piece
of the pie. Not a single person in the industry would fight that (but) we
can't exist under what they propose," said Dalton Wagner, who runs
V.O. Group, a cluster of Web-based casinos, sports books, race books and
bingo parlors with 300 employees and 20,000 off-shore bettor accounts.
Wagner, a former Texas corporate head hunter who set up V.O. Group with
two partners in 1998, said he would be willing to pay a yearly fee if it
brought benefits like legal status, but other bookies disagreed.
Finance Minister Jorge Walter Bolanos told Reuters he met recently with
industry representatives and struck a deal to charge a flat one-time fee
next year of $20,000 for small companies, $60,000 for mid-sized, and
$100,000 for big ones.
"He's sadly mistaken," said the Diamond manager, who said he
has 4,000 bettor accounts. "We're not going to accept the deal."
Michael Randles, a sports book software consultant, said even if Costa
Rica backs down on new fees, the damage is done.
"There's a loss of faith in the government here. The deal was
'leave us alone.' The government is going to be the loser because of the
jobs that will go. There's not going to be a mass exodus, but there will
be a trickle out."
