LARCHMONT, N.Y. -- Western Union's recent decision to cut off money transfers to offshore bookmakers - under an agreement with Florida Attorney General Bob Butterworth - could prove to be a serious blow to the Internet gaming industries, affecting millions of dollars in annual transactions, insiders tell Internet Gaming International.
Lawrence S. Fogelson, international chief operating officer for Western Union, signed the agreement to terminate all relationships with 40 offshore sportsbook operators.
What spurred the action remains less clear. While Trisha Spillan, deputy press secretary for the Florida's attorney general's office, told IGI that Butterworth "has been very adamant for some time" about preventing illegal wagering in Florida, the state hasn't been in the vanguard pushing for prosecution of operators.
The move once again "points out the need for an Internet gambling authority to separate the legitimate operators from the disreputable entities," said Dennis LaRochelle, chairman of the International Internet Gaming Association.
But other rumors abound. One leading theory says the deal was brokered after a Florida-based site known as Globalsportsnet allegedly defrauded several bettors. Subsequent pressure on the attorney general's office, the theory goes, led to the agreement.
Similarly, estimates of how much Western Union was taking from offshore operators varied wildly. According to Western Union representative Peter Ziverts, the action is "a negligible hit -- these guys weren't generating the volume to hurt us in any way." Ziverts maintained that the move will mean a loss of less than a tenth of a percent of the firm's transaction volume.
Based on the company's total money transfers in 1996 of $35 million, that means offshore bookmakers account for $35,000 annually.
Operators contacted by IGI scoffed at the figure. One sportsbook operator put the actual figure at $3 million since August of 1997, and stressed that it was a conservative estimate.
Simon Noble, president of Intertops, said that while his company uses Western Union for roughly 10 percent of its transactions, for other sites that figure is 90 percent. "We're not devastated, but it is a preferred method," he said.
Jay Cohen, president of World Sports Exchange -- which does not accept credit cards and therefore relies more heavily on wire transfers -- expressed disappointment. "They just rolled over -- we should fight this together," said Cohen. "Everybody we usually talk to is out until January," he said. "We're hoping it's a mistake."
Assuming it isn't, "this is pretty serious for the industry," said Stanley Collesano, president and general counsel for CCT USA in Buffalo, N.Y. Collesano, who also serves on the board of the International Internet Gaming Association, added that if Western Union continues the policy, action could be taken by Internet sportsbook operators.
"There are some privacy issues and commerce issues," he said, referring to the monitoring and tracking of all Western Union transactions, implied in the voluntary agreement. "Somebody could very well move to get this activity enjoined."