American Wagering is laying off Mega$ports. Under an agreement with Nevada regulators, the Las Vegas-based company has sold its online sports book to Eurast Ltd. of Perth, Australia.
The divestiture was ordered amidst concern that Mega$ports might accept bets from the United States and other jurisdictions where Internet waging is illegal. To maintain its Nevada license, American Wagering agreed to sell the 3-year-old company.
Though receiving $2.8 million for Mega$ports, American Wagering said it made no profit on the transaction.
"We lost money along the way. We never got the customer base we wanted,’’ explained Tim Lockinger, chief financial officer for American Wagering.
One of the chief stumbling blocks was the time involved in opening an account. Unlike Caribbean-based operations where gamblers can begin placing online wagers within hours, background checks by the Canberra-headquartered Mega$ports would require a week.
Eurast is a newly formed company that emerged from mycasino.com. That firm, based on the Pacific archipelago of Vanuatu, had problems with scam artists who ran a series of credit card frauds on the company.
American Wagering received $300,000 when the sale closed on July 1 and will receive monthly payments until 2003. The divestiture deadline was set for July 25.
Industry observers say American Wagering ”” and every other company ”” courts trouble anytime they take online bets. As one colorfully put it: "You’re walking through a minefield with clown shoes.’’
American Wagering, owned by Vic Salerno, two years ago became the first Nevada licensee to be granted a license to accept bets over the Internet. Even though most Australian jurisdictions are highly regulated and require posting of surety bonds, Nevada officials were able to penetrate the phone account system that was supposed to keep out bettors from improper jurisdictions. That includes the United States, even though it is estimated that more than half the gaming bets on the Internet originate in the United States.