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Futurebet sportsbook owner tells story from inside no-pay scam
Futurebet sportsbook owner tells story from inside no-pay scam
Things have taken a turn for the worst for problem-gaming company Futurebet, which now uses the name IGS (IGaming Software) to shield itself from the Futurebet brand's reputation. The company recently lost ownership of its biggest asset, the DGN Poker Network, lost employees it would not pay, and now reports are surfacing from licensee partners that the sportsbook website owners are not receiving their funds and are left holding player debt. Many of these licensees such as USDbet (SBR rating D-) were warned by SBR to avoid partnering with the Vancouver-based operation.
Read horror story from another investor in Futurebet product.
...Later in 2006, we noticed withdrawals were taking over a month. The story from FutureBet at this time was that they had a credit card processor in the Philippines who had stolen $700K of their money and that they were going to pay everyone, but that it would just take time. FutureBet always has a new excuse for problems like this. At this point, our $500K a month handle had dropped like a rock as people were leaving us in droves. We were completely caught between a rock and a hard place. If we paid winners ourselves, we would probably never see the money again. If FutureBet paid our customers, the payments were taking months sometimes, resulting in people never coming back.
Quite Frankly, FutureBet Sucks
My name is ***** ******* and I wanted to share my story regarding FutureBet, located in Vancouver . This story is written for anyone who would be dumb enough to become a FutureBet licensee or gamble on one of their websites. Before we get started, understand this, you will lose EVERY PENNY OF YOUR INVESTMENT if you open a FutureBet site. To the gamblers out there, avoid any FutureBet site, as they don’t pay winners. Quite frankly, FutureBet sucks.
FutureBet provides anyone wanting to run an online casino a turnkey solution to do so. They will build your site, license you the gaming software, act as the payment processor, provide customer support and provide a variety of technology tools such as software to set bonuses, the payout rate on the slots, email utilities to mail all your players, among others. Both the gaming software and the management platform are really good. No problems there. In fact, this is how the get licensees to sign up. Their stuff looks and functions really well.
During the summer of 2003, a friend from the UK called me to discuss starting a new business. We had started a CD ROM programming shop in Manchester during the late 80’s, made a lot of money, and had fun working together. He said that poker was exploding in the UK and wanted my thoughts on starting a gambling website, with the emphasis being on poker.
We spoke with FutureBet in Vancouver and another firm in Central America whose name escapes me as we wanted a turnkey technology solution so we could focus on customer acquisition and relations.
We contacted FutureBet and were called immediately by Mr. Ron Katz, who described his position as Director of Business Development. I flew to Vancouver to check out the operation. This was in late 2003. Ron is likely one of the two owners of FutureBet.
Ron explained that they provided technology for 70 sites. He explained that their poker platform was 3 months from completion and that he would provide us with sports and casino gaming now, and add poker in three months. The monthly fee to us would be 30% of the monthly hold(gross profit)for sports and casino games. We could have anyone build the website, or they would do it for $30K. Since they had no documentation on how to implement their gaming platform and various APIs, we figured it was easier to have them do it, as they had done 70 already. Ron also explained that they would handle all payment processing and withdrawals. The payment processing fees for ************, Neteller, etc would come out of our cut.
Before I met Ron, I did some research and found some negative press on Black Banana Casino, a FutureBet operator who was out of business. I asked about this, and Ron explained that Black Banana had offered no limit gaming, with no real reserves. He said they had some big winners and couldn’t pay and that FB was getting bad press. Ron said that we would have to keep limits to only $500 per bet, or put up a reserve. We said we’d keep it at $500. Today there is a lot of negative press on FutureBet, but back then there was very little, other than the Black Banana stuff. The only other thing would could find negative was that they were spamming all the Usenet groups, trolling for new licensees.
We asked about how much money the other sites were making and Ron said the worst performing sites were making $25K a month, net and that the best were making over $200K+ a month. This is completely untrue. I have heard of one FutureBet site making at most $25K a month. 90% of the sites generate little to no revenue and the reality is that most of them make $0, as FutureBet doesn’t pay the licensee.
We setup the business in the UK . When we got the contract from FutureBet we noticed that the contract was for a Nevis company. This is important to realize, as that makes FutureBet virtually impossible to sue in North America .
Business exploded at first. A bookie in NYC knew one of the partners in the business and sent us all his action, in exchange for a 50/50 cut, as he was tired of taking phone calls. Within a month we had hundreds of big players. I think by the second month of football that year, the handle(i.e. amount wagered) on the site crossed over $500K.
We had a few big winners. One player won $10K in one month and a few others in the low thousands. We had not been in communication much with FutureBet but we wanted to make sure they were going to pay the big winner his $10K. Because we were negative that month, they said no. If they really had 70 sites all making over $25K a month, I wouldn’t think this float would be a big deal for them, but the partnership was new so went ahead and paid the guy out of our own bank account.
We had other winners too of course and we would occasionally check the system to monitor withdrawals. We seemed to hit spots where things would slow down and start taking weeks, which was odd as we all bet on Pinnacle and that only took a couple days. When pressed, FutureBet blamed one of their payment processors for not paying them. We were then forced to pay big winners out of our own bank account, for fear of pissing them off. We were simply digging a bigger and bigger hole for ourselves.
Fast forward to 2006, we stopped paying the winners out of our own pocket by this time, as FutureBet was rarely paying us. This really hurt our business as by now the NYC crowd was getting very angry regarding slow payments, and word spread around their group that our site was paying slow. They also complained daily about the poor customer support which FutureBet provides via phone or online chat. They said the people were clueless and would never give straight answers regarding their withdrawal status.
Later in 2006, we noticed withdrawals were taking over a month. The story from FutureBet at this time was that they had a credit card processor in the Philippines who had stolen $700K of their money and that they were going to pay everyone, but that it would just take time. FutureBet always has a new excuse for problems like this. At this point, our $500K a month handle had dropped like a rock as people were leaving us in droves. We were completely caught between a rock and a hard place. If we paid winners ourselves, we would probably never see the money again. If FutureBet paid our customers, the payments were taking months sometimes, resulting in people never coming back.
One thing a prospective licensee should realize is that FutureBet takes well over two-thirds of the money the site generates. First, there is the 30%(sports and casino) to 40%(poker) on the gross. Then, they charge approx 10% per deposit for processing, which they claim to be a pass through. Then they make you hold 10% of all deposits in an escrow account as your reserve, which you don’t see for six months. Then there are hosting fees and free money charges, where they calculate their commission on free money lost by the player.
The bottom line is that you really have no money left for marketing, once you give up about over two thirds of your gross margin to FutureBet. The business model doesn’t work, except for FutureBet.
A summary of how FutureBet makes money
• Fees for building FutureBet websites($30K is usual)
• Royalties on all profits(30% of hold on sports and casino and 40% royalty on Poker)
• Processing Fees, and Reserves. They claim this is a path through, but there is margin in all of this.
• Not paying winners. They take deposits but don’t pay winners.
• Not paying licensees. Licensees have not seen a dime in 2007.
As of March 2007, we couldn’t find a single licensee who has been paid a dime in 2007. We shut down our site in March, as it seemed hopeless.
You can’t run a site like this without a good amount of marketing, but who would pony up money for marketing expenses when FutureBet will never pay you? What’s really troubling is that players are simply not being paid. If you deposit a dollar into a FutureBet site today, you are basically giving it to FutureBet.
We tried to run an honest book! We paid people out of our own pockets, many, many times. Our total investment of $100K, when you include marketing and other expenses, is down the toilet. The site is now run by FutureBet completely and we have nothing to do with it anymore. If you want to figure out if an online site is run by FutureBet, look at at sportsbookusa.com – the same sportsbook betting card and casino games are used at all the sites. SportsbookUSA is actually owned by FutureBet, not a licensee.
One humorous aspect of FutureBet is that the “management team” seems to change every six months. The CFO changes, the licensee VP changes, etc. I think FutureBet actually talks legitimate business people into taking jobs there, but they all bail when the figure out the deal. Ron Katz is the only constant over the past three years, and he hides from the licensees as much as possible.
The thing I still do not understand is this. Why are they crooks? All FutureBet licensees ask themselves this daily. “Are they crooks, or just really stupid”. To me, if they just paid winners fast, they might actually have 200 sites today making a lot of money. Their business model was infinitely scalable, and could have given Vegas a run for its money by basically allowing others to create skins for their platform and centralizing payment processing and customer support. The whole thing should have worked, but that’s what happens when you get into business with crooks.
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Originally Posted by NeedProtection
