The story of WSEX, The World Sports Exchange is one of triumph at times but ultimately of failure. WSEX to this day, still champions the idea that they were the first online sportsbook. It is hard to say who was the first but WSEX was certainly a pioneer in the online sportsbook industry. WSEX founder, Jay Cohen rose to the top of the offshore sportsbook industry, fought against the Department of Justice and led a crusade for the right of US bettors to place bets online. Today’s WSEX has been marred by the UIGEA and is known as a slow-pay or no-pay sportsbook.
Jay Cohen was an options trader in San Francisco before he decided to head offshore to start WSEX.com. He and his trading partner, Steve Schillinger formed the site and decided on the name because of the prominence of sports betting at their trading offices at the Pacific Stock Exchange. They saw a massive market for American online betting and formed www.wsex.com in 1997. The site was licensed and regulated in the Caribbean island of Antigua, where running a sportsbook was legal.
Rise to Prominence
WSEX quickly rose in popularity. Along with Pinnacle Sportsbook, anyone who bet on sports knew the WSEX name. WSEX was featured on HBO and other media outlets as a worldwide sensation. The Wall Street journal featured an article on Jay Cohen and the success of WSEX.com. They were featured nearly everywhere including, The New York Times, The Los Angeles Times, Newsday, Sports Illustrated and even 60 Minutes. They spent millions in print and radio ads and were enjoying an amazing amount of success.
WSEX were one of the first to introduce live betting, an interactive system in which sports bettors could bet on each play live in-running, and have new, updated odds every few seconds. They had an extremely successful futures market and took some of the largest wagers online. Their parlay and teaser odds were better than Pinnacles and they were one of the first to offer reverse teasers, called pleaser bets.
Fall from Grace
In March of 1998, Cohen was indicted along with many other offshore sportsbook owners. Cohen’s partner Steve Schillinger never returned to the United States and therefore never faced charges. At the time of his indictment, WSEX had only been operational for just over 4 years.
Cohen faced the charges head on and truly believed he was not committing a crime because his business was completely out of US jurisdiction. The Feds went after him under the 1961 Wire Act, which prevented intrastate sports betting over phone lines.
The infraction by the offshore owners was a legal grey area at best. In addition, Cohen’s legal teams for years had advised him that he was not committing a crime. In fact, Cohen demanded a trial and tried to take on the Department of Justice for the entire offshore industry.
Cohen’s trial dragged out for almost another 3 years, in the end he faced 21 months in prison and a 5,000 fine. The US Attorney’s office released a statement slamming sportsbook operators who took American bets over the internet. The case set a precedent and offshore operators realized if they stepped foot on US soil, they may be subject to trial and most likely imprisonment.
While Cohen spent time in a Federal prison, WSEX continued operations at full capacity. Mr. Cohen was the first sports book operator imprisoned under the wire act for offering sports betting online. After serving 18 months of his 21 month sentence he was released. He was ordered by the Department Of Justice never to operate an offshore sports book or online gambling entity that took American bets ever again. Though Jay Cohen denied that he went back to manage WSEX after he left prison, it was later discovered he immediately retook the position after he finished his probation in the US.
UIGEA and Hard Times
After the US passed the Unlawful Internet Gambling Enforcement Act of 2006, many online sportsbooks and poker rooms left the US market. The move forced major e-wallet Neteller to leave the US market as well and made it much harder to deposit and receive money via gambling websites.
WSEX started a no rake poker room in attempt to attract players to their site. The hope was that the poker players would flock to a site with no rake paid and venture into the sportsbook and casino areas. This may have worked to a certain extent but WSEX’s management was unable to adequately police the room, which lead to collusion and the use of poker bots. Players quickly got fed up with the “wild west” atmosphere and the room never really fully took off.
WSEX soon faced more trouble, due to regulations and debt, they soon fell behind on making payments to players. In 2008, SportsBook Review began to downgrade their rating. Within a year, WSEX had gone from an A+ SBR Rating to C. WSEX checks were taking four to six weeks and there were complaints of over $30,000 in slow pays. The situation continued to deteriorate, by April of 2010, WSEX owed at least $150,000 in slow pays to their customers. Customers were told they would receive their payouts on time and when that didn’t happen, WSEX said they would get it to them within a week. Weeks become months and then, months became years.
In late October of 2011, SBR reported that WSEX slow pays had gone beyond the $500,000 mark. This number is just the amount reported by players to SBR, so the full amount owed may be a much larger figure. WSEX continue to use the “bad payment processors” excuse but no one was buying that anymore. Many other US facing poker rooms and sportsbooks were paying players in under a week. WSEX was simply broke.
WSEX has sporadically made payments to players with the last batch coming on the 25th of February 2012. WSEX also has let their Antiguan gaming license expire, which is just a formality because they would not have had it’s renewal approved, based on how they were operating their business. Most players now knew the state of this book but some did not. WSEX is still going after players through email and promos, acting as if things are normal. As of now, WSEX at minimum has over $750,000 (likely even more that is undocumented) in slow pays and that number continues to grow.
WSEX’s site still looks great and one could easily be fooled into thinking this was a legitimate online bookmaker. Their new deposits only help them pay older debts, some going back as far as 3 years. They closed their poker room a few months ago and are running out of options. It is unfortunate to see this once great sportsbook be relegated to scam book status but this is the sad reality. Avoid WSEX at all costs.