WSEX – World Sports Exchange Sportsbook
The story of WSEX sportsbook, short for World Sports Exchange is the sad story of one of the world’s biggest sportsbooks and their fall from grace. The company was the gold standard in offshore betting for years and were one of the trailblazers when it came to betting sports online.
The story of WSEX has all the intrigue of a movie, but sadly, the events are all too real. Few sites were hit harder than the US Department of Justice’s crackdown on online sports betting, which resulted in imprisonment for their owner, something their business never recovered from.
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Early Pioneers – WSEX Sportsbook
WSEX was formed by two Americans in 1996. Jay Cohen and Steve Schillinger were both options traders in San Francisco at a company called the Pacific Exchange. The specialized in trading options and derivatives. They along with many of their co-workers bet frequently on sports and they saw an opportunity. They both left their trading days behind and started WSEX.com. In 1997, the online gambling industry was just in its infancy.
Online casinos and poker rooms were still not available to the public. In fact, the first online poker room, Planet Poker, didn’t come along until 1998. WSEX was a quick hit in online betting markets and got plenty of media attention around the world, not just in the United States. They were featured on HBO and a host of other national and international newspapers and magazines. The business was an overnight success.
Jay Cohen’s Indictment
In 1998, Cohen was indicted along with a host of offshore sportsbook operators by the US Department of Juice, out of the Southern District of New York. The same district court that later indicted Full Tilt, Absolute Poker, and PokerStars in the infamous “Black Friday” indictments. His partner, Steve Schillinger was also on the list. As other offshore sportsbooks heard the news of these indictments, they became worried about their involvement in US betting markets. They worried that they would be unable to visit their families in the United States.
Many sold their sportsbook operations to citizens of other countries, and left the industry altogether. Of the twenty people indicted by the DOJ, seven returned to the US or were arrested while inside the country. Schillinger, along with 13 other defendants never returned to the United States. Cohen, however, was not scared of the US government. While the other defendants in the case decided to take a plea deal, which meant a misdemeanor and a small fine – Cohen opted to take his case to trial.
This was long before the UIGEA was passed that brought down the majority of the online poker industry in 2011. Instead, Cohen was being charged with 1961 Wire Act violations. He argued that he did not violate the Wire Act. The general reason being that the Wire Act never specifically mentioned online gambling. He also argued that he didn’t knowingly commit any crimes and was unaware that he may be in violation in Federal law. Cohen argued that since the bets and accounts were being placed on Antiguan servers that his activities were legal. WSEX was also licensed and regulated in the island nation. None of these arguments worked, and Jay Cohen lost his case.
WSEX Owner’s Incarceration
Jay Cohen was sentenced in 2002 to 21 months in prison. He was the first person sentenced to prison time in relation to online gambling. Cohen was released in 2004 after serving 18 months of his 21 month sentence. While he was in prison WSEX was growing and becoming one of the largest sportsbooks in the world. Online gambling, in general, was booming in the United States and it was full-steam ahead for site operators in 2004. As part of Cohen’s release, he agreed to not return to WSEX or operate any online gambling site that serviced US citizens. After he got out of jail and went back to Antigua. Cohen denied going back to WSEX after his jail stint, but later admitted that he began managing the sportsbook when he returned to Antigua.
The Beginning of the End
Though Cohen was out of a jail and back at work at WSEX in 2004, the online betting industry would take a big hit in several years. In 2006, the United States passed the Unlawful Internet Gambling Enforcement Act (UIGEA), which criminalized offshore gambling operators who offered their services to US citizens. Even though the regulations weren’t written for another two years, many sites immediately left the market.
WSEX decided to stay and enjoyed some years of prosperity. At least, it would seem that way. They opened a poker room that gave players 100% rakeback, which management hoped would entice poker players to splash their chips around in the casino and poker room.
This didn’t work out as planned. The room had many issues with allegations of cheating and bot use and the poker players never did seem to venture over to the casino and poker room. The first signs of true trouble came in 2008, when SportsbookReview.com downgraded SBR’s rating from an A+ to C. SBR promoted WSEX for a long time and made plenty of money off their endorsement as a top sportsbook. In retrospect, this initial rating change should have been a serious warning sign.
Checks were taking 5-6 weeks to reach players and they accumulated over $35,000 in slow pays. After promising their customers that they would be on track soon, the slow pays increased to over $150,000 in April, 2010. In June of that year, these debts increased to over $240,000. In December, 2011, WSEX had made little progress on payments and the slow-pay complaints continued to come in to SBR. They owed players at least $653,000 at the end of 2011, and this amount only included complaints sent into SBR, which were likely high balance holders.
While they sporadically made payments, WSEX was doing what we call in the offshore industry as “operating on the float.” This means that they were accepting deposits from newer players to pay off older debts. As WSEX was racking up slow-pays, they continued their normal business. They offered bonuses and promotions, and reload bonuses for big events like the Super Bowl in an effort to entice more deposits.
World Sports Exchange Sportsbook Closure
By the time WSEX closed their doors, players were owed over $1 million. The sportsbook closed its doors in April, 2013. It is also reported that they did not give their employees their final paychecks.
The message left on their homepage of WSEX was this:
“Dear WSEX customer,
We have been forced to halt business activities at this time due to inadequate capitol resources. The financial position of the company is currently under review and we will keep you informed as to the future plans for WSEX and the repayment or transfer of your balances.
We sinisterly apologize for this unfortunate situation and will be doing everything we can to rectify it as soon as possible.
-WSEX Management
Soon after the message was posted, WSEX went completely offline.
WSEX ultimately cost players at least a million dollars. While Jay Cohen’s prison sentence and the crackdown by the US DOJ certainly contributed to their closure – they are still ultimately at fault. Many offshore sportsbooks have operated in the industry for just as long, including Intertops, which opened in 1996 and have never slow-paid nor stiffed a player in their history. There’s no excuse for their actions and theft. They made it even worse by soliciting from unsuspecting players in their final waning years.
What Ever Happened To Schillinger And Cohen?
Schillinger was found with a single gunshot wound to the head in his condominium in Antigua on April, 20th, 2013, shortly after WSEX went out of business. Whether his death was a murder or suicide is still unknown. Although, Antiguan detectives did ultimately rule it was a self-inflicted gunshot wound. Jay Cohen moved back to San Francisco after WSEX failed. It’s unclear of his actual whereabouts in the city, but it’s likely he is keeping a low profile. Many people would love to have a few words with him about the million or so dollars he stiffed from players. One man who is owed $70,000 is looking to sue him.
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