5Dimes is walking the road toward the legal sports betting market in the US after announcing a $46 million settlement with the authorities.
The settlement clears 5Dimes’ assets of legal restrictions after a year-long federal investigation of the former offshore company. The US authorities had been probing into 5Dimes for its illegal gambling activities, including wire fraud and money laundering, in the US.
Now, the company plans to start with a new CEO. According to Jeff Ifrah, attorney for 5Dimes owner Laura Varela, discussions were already underway with a few candidates. “There are not many people who understand the US market, its customers, the regulatory issues, digital marketing…,” Ifrah noted. “It’s a very narrow pool of people, and we’re talking to them now.”
More importantly, US regulators must also approve any candidate before they are deemed suitable.
Can 5Dimes Obtain a US Legal Betting License?
Licensing is the first step upon which everything depends. Currently, 5Dimes is discussing procedural aspects of obtaining a license with the New Jersey Division of Gaming Enforcement. However, it is yet to see if the Costa Rica-based company can get licensed on a state level.
Ifrah said they are in talks with the DGE, adding that they are not sure about the outcome. However, he expressed optimism that “they create a pathway to licensing and we are planning for that.” He added, “Our focus is on launching a US brand with a US management team, and we will follow any guidelines they give us.”
The company had around 270 staff members in Costa Rica, including an operations and trading team that could be essential for US operation, but it is not known whether the staff would be licensed. While speaking to the media, Varela said, “We’ll wait and watch what regulators require before we work out our plans.” However, when asked to comment it further, a DGE spokesperson declined to comment on the development.
Should US Regulators Allow Offshore Companies?
This issue has divided many experts, and there are different opinions regarding it.
Some suggest it is a welcoming sign to absorb the offshore market into the legal zone. According to Eilers & Krejcik Gaming, legal US sports betting revenue was worth around $920 million last year, compared to $6.5 billion offshore. Eilers also claimed that the influx of legal betting ads is benefiting offshore books.
“We need to figure out a way to bring the offshore firm into US markets as we can’t rely on law enforcement, they can’t really stop it,” Ifrah said. “Despite the AGA talking all day long about offshore operators, nothing has changed. This is an opportunity to do something.”
The AGA did not respond to the comment.
How Would it Work?
The attorney said that offshore brands could follow the pathway 5Dimes trod into the legal US betting market if they plan to change the management team or sell off assets to licensed entities. 5Dimes’ transition was facilitated primarily because Varela was not involved in the business before her husband’s killing.
On the other hand, some argue that offshore sportsbooks shouldn’t be rewarded for breaking the federal laws for decades and extracting hundreds of millions of dollars. Some legal operators will likely pressurize state regulators to block offshore sportsbooks.
5Dimes Seeking Partners
For now, the Costa Rican sportsbook is looking for partners to allow it to expand in a flourishing legal market.
“We’re in the middle of discussions with folk who haven’t had success in the industry yet,” Ifrah said. The attorney further shared that there was keenness from casino companies, as well as startups and corporate bankers; “It’s amazing, the level of interest we’ve had,” he said. “People really like the brand and respect it.”
What About Customer Databases?
The 5Dimes customer database is believed to be the biggest asset for the book, more so in the case of California, where online gambling is not regulated yet. Here, only DraftKings and FanDuel can market for daily fantasy sports.
Ultimately, 5Dimes is eying a legal future as a new company in an industry that is brutal toward newcomers. However, Varela appeared determined as she said, “I reckon there’s a misconception that the offshore market is easy. It’s absolutely not, and I’m so excited about this new chapter and the prospect of continuing my husband’s legacy into a regulated company.”