Founded by Jay Cohen and Steve Schillinger way back in 1997, it was one of the most reputed online sports books in the online sports betting industry, until things went horribly wrong with Jay Cohen’s indictment in the year 1998. He was prosecuted by the US Government for violating the Wire Act of 1961. Here is a link to an article that will give you an insight into the whole affair: The Remarkable Jay Cohen Story by Gary Ilines.
The World Sports Exchange operated under licenses from the Government of Antigua, where a sport betting is legal. According to legal advice received by WSEX, their business was legal as long as players placed their bets in a licensed jurisdiction. Jay Cohen believed that since his business was not based in the US, he was not subject to the laws that forbid sports bets made through any sort of communications device. He however decided to fight the charges, but he lost the case and was convicted in 2000, sentenced to 21 months in prison with a fine of $5000. Jay Cohen was released from prison in 2004 with orders not to participate in any type of gambling business related to the US. Check out http://www.onlinepokersites.co.uk/warnings/wsex and http://www.onlinebetting.com/wsex/ where you can read detailed articles about Jay Cohen’s trial and the death of World Sports Exchange.
The Effect of UIGEA on WSEX
On October 13, 2006, President George Bush passed the Safe Port Act of which UIGEA (Unlawful Internet Gambling Enforcement Act) was a part. The UIGEA deemed it illegal for banking institutions to handle gambling related transactions. As a result, a number of payment processors stopped servicing the US markets; notable among them was Neteller which was indicted and pulled out abruptly in 2007.
After the UIGEA, many banking processors were not willing to handle American gambling related transactions. As a result, WSEX began facing processing issues. Additionally, Jay Cohen’s case showed that online sports betting were illegal in the United States, so WSEX had major problems in dealing with payments to their customers. They had to make do with very few payment processors and pay high processing fees. They also faced problems with processors defaulting on payments or inexperienced in fighting fraudulent players.
WSEX now appointed an electronic check processor to deal with US players. Players could directly deposit funds via the e-checks. The arrangement continued for a few months but soon it failed. WSEX was left holding the e-checks because the deposits could never be collected from the failed processor. This was the beginning of the end for WSEX.
Rake-Back Poker at WSEX
In 2006, WSEX launched rake-back scheme in their poker room known as the World Poker Exchange (WPEX). The idea was to attract customers to their poker room and ultimately popularize the WSEX brand. WPEX offered 100% rake-back of the entire rake contributed to the pot from Monday to Sunday. In other words, the site offered rake free poker. The poker software however was incapable of handling the rush of players; there were problems with bots and collusion while players experienced crashes and slow performing computers.
In 2007, WSEX decided to stop the rake free poker and by 2008 was again functioning as a full rake poker room. There was hardly any traffic and they failed to bring in the money and the action into the sportsbook though the poker rake-back offer.
Payment Slowdown at WSEX
In 2008, the payouts to the winners began slowing down. WSEX said they were facing problems due to lack of payment processors. Payments to players got extremely delayed and everyone realized that WSEX had liquidity issues. Until February 2009, WSEX had an A+ rating. Sportsbookreview.com, an industry watchdog site downgraded WSEX from A+ rating to A- and continued downgrading it further. By the close of 2009, WSEX’s rating came down to C. There were many complaints of non payment of winnings, poor customer service, etc. against the sportsbook. You can read the complete history and financial status and what is happening at WSEX here: http://www.sportsbookreview.com/forum/wsex/ .
WSEX Current Status
By 2010, payments were being delayed by more than six months and WSEX now owed millions of dollars to their players. Sportsbookreview.com now grades WSEX at D-. Another watchdog site, sportsbookadvisor.com has downgraded it to F grade, effectively blacklisting it. Currently, WSEX owes more than $700,000 to players. WSEX did not apply for the renewal of its Antigua gaming license when it expired in 2010. So, presently, it is an unlicensed sportsbook rumored to be operating underground from Antigua. The site however, claims to be licensed in Cyprus with a London postal address.
Although the once renowned World Sports Exchange is now completely bankrupt, they are still making attempts to make good on their promises. In November 2011, one player with a withdrawal request of $60,000 pending for more than a year was paid out $6,000, a partial payment. It is a fact though that none of the sportsbook review sites are recommending WSEX while industry watchdogs are blacklisting it.
In February 2012, WSEX has announced that it is closing down the poker room which has seen hardly any traffic since the past five years. You can read a report about it here: http://pokerfuse.com/news/poker-room-news/wsex-closes-poker-room/ .
Alternatives to WSEX
There are hundreds of online sportsbooks that are reputed, trustworthy and legitimate where your money will be safe. There is no reason to join shady and illegal sports betting sites to satisfy your gambling urge. Although there may be few sports books that accept US players, there still are a decent number that you can trust with your money. Check out Bookmakernews for the best odds on a variety of sporting events. There is also the Bovada.lv sportsbook that accepts only US sports bettors – the site is meant exclusively for US citizens and offers US friendly payment options.
More resources for reading:
Curtains for Jay Cohen by Steven Stradbrooke
Man Jailed in 1st U.S. Online Gambling Conviction – April 2000 NY Times Article