Internet Gambling Bets on Costa Rica

Internet gambling knows no borders, and dozens of online companies have flocked here to make this Central American country a leading offshore bookie haven.

At least 80 Internet gambling companies--most taking bets on sporting events around the world--have set up shop in Costa Rica, lured by lax regulations and a relatively cheap labor force whose workers often speak English in addition to Spanish.

While the growing industry has put up to 5,000 Costa Ricans to work with good wages and benefits, U.S. officials aren’t happy about Web bookies in Costa Rica, nor the Net casinos in the Caribbean and elsewhere.

The majority of Web bookies in Costa Rica cater to customers in the United States, although some also focus on the growing Asian market. The largest numbers of bets are on football, followed by professional basketball.

The U.S. Department of Justice notes federal law prohibits the use of the Internet for sports betting by U.S. residents, and there have been attempts in U.S. Congress to ban casino-style games online.

But trying to implement a ban would be difficult. Internet gambling companies are difficult to track, with locations all over the globe. They can crop up any place with phone lines and high-speed Internet or satellite connections.

Costa Rica is especially attractive because it offers what online gambling companies are looking for--young people with strong computer and English skills, and a country with good infrastructure.

The country has been working to attract high-tech businesses--it also is home to a growing number of electronics factories--to diversify the economy from its main industries of coffee, bananas and tourism. It has revamped regulations and opened computer schools seeking to become more competitive.

Although it hasn’t actively pursued online gambling companies, Costa Rica has made it easy for them to set up shop. Unlike some other countries where Internet gambling is legal, Costa Rica has no licensing fee--or any other laws dealing with the business.

Costa Rican officials are happy because the companies pay well and offer good benefits. Four gambling companies set up shop in 1995, and dozens more followed.

“The small ones try to survive, while the big ones absorb and consolidate,” said Greg Champion, head of NASA Sports International, a sports betting service. It has 600 employees in Costa Rica.

Eugenio Monge, a representative of Rio International, says there is plenty of room in the online gambling market for all the companies in Costa Rica, although he concedes competition has forced some to offer promotions and prizes that have diminished profits.

There already appears to be a shortage of workers, with newspapers advertising for workers with computer basics and perfect English. The benefits are great: a flexible schedule and pay between $4 and $9 an hour.

Americans “go crazy about football,” said Daniel, a 22-year-old employee at NASA Sports. He wouldn’t give his last name for fear of retaliation from his employer.

Daniel said employees are generally between 18 and 30, and earn from $600 to $1,600 a month. That compares with an average of $595 a month for support staff at other online companies--and $325 a month for the average Costa Rican worker.

Congressman Otto Guevara says the jobs created by the online casinos make up for the fact that they pay almost no taxes.

A report by investment firm Bear Stearns estimates online gambling has total annual revenues of $12.5 billion and will produce $2.3 billion in profits next year.

In 1998, NASA Sports moved its operations from Aruba to the two floors of a mall in downtown San Jose.

“No one takes into account the infrastructure and the technology of Costa Rica,” Champion said.

Although the country has not come up with specific legislation dealing with online gambling, the businesses operate with municipal licenses and under legal names. However, because customers can access the games from overseas, local laws can’t regulate the industry.

“If the United States wants to do something, then block U.S. residents so they can’t call us,” Champion said. “We are a business that provides entertainment services, with operations in five countries. We aren’t small, and we don’t want to break any law.”

Champion said Costa Rica should pass legislation specifically legalizing online gambling companies and taxing them.

“Antigua charges $100,000 a year for the license. Costa Rica could do very well doing the same thing,” he said. “The country would earn a lot of money and avoid the idea that we are a bunch of criminals who don’t pay taxes, take their money and run.”