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Aug 27, 2026
A Numbers Game | August 27, 2026 | Hour 3
A Numbers Game | August 27, 2026 | Hour 3
00:00
44:51
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Transcript
0:00
[upbeat music] The numbers tell the story, they always do. He's one of those idiots who believe in analytics. This is a Numbers Game with Gil Alexander on VSiN.
0:09
Hour number three of a Numbers Game at VSiN, the sports betting network, vsin.com, Game Plus, iHeartRadio, YouTube TV, SiriusXM channel 158. Gil Alexander, Bill Krackenberger in studio.
0:20
You can follow him on Twitter @BillKraKMan with a K. Uh, name of the podcast is Wise Kracks, which he does with John Orlando.
0:27
Um, wherever podcasts are available, and he does it right here from the, uh, Circa Sports Book- Yes, and we're-... right behind us... we're gonna have Randy McKay on football season. Uh- Nice...
0:36
i- when he's in town, he'll come in person. If not, he'll be on Zoom with us to give you, uh, give you guys some NFL plays. Sweet. Yeah. Okay. Looking forward to that.
0:45
Randy's always, uh, good to hear from, and by good I mean profitable. Yeah. Okay, what's the story from your, uh- No, I was just saying last night, the, the...
0:52
We were with someone else at dinner last night that never heard, uh, a lot of the stories, so I told them the story about, uh, when I grew up on that boardwalk K- uh, Kingsburg, New Jersey, and, uh, how I broke into gambling there.
1:03
And not, it wasn't only the, the parlay cards that were delivered to our house from a bookie, and, you know, my father used to give me one. "Fill one out. Fill out four teams, you get 10 bucks."
1:11
You know, like, which is today's parlay cards that they have now in some of the casinos. Wait, the bookie would come to your house to deliver them? Oh, he would drop them off. [laughs] Okay. He would drop them off.
1:18
He'd drop them off on, like, Thursday, pick them up Saturday. Okay. Yeah. Mm-hmm. You know, my, and m- you know, my dad, uh, you know, corrupted by my mother, my mother's family, all the Italians- Yeah...
1:27
so my dad would give them out to my uncles and they, you know, her, her brother and her brothers and stepbrother and, and they would, um, you know, all, everyone fire a big pack of parlay cards on the weekends, you know?
1:36
And then you give them to the, the guy on, on Saturday or Sunday, even Sunday morning even sometimes. But, uh, the boardwalk is really where I, uh, broke in gambling at a young age.
1:47
Started working at nine years old at my aunt and uncle's pizza business, and, uh, there was the, the whole boardwalk had these wheels, and the wheels were, uh, games of chance where you can win, you know, uh, candy and toys.
2:01
And I told you last night they had a cigarette stand. Mm-hmm. So they actually had a cigarette wheel, where you win, you win a carton of cigarettes. Like- [laughs]... cigarettes was a big thing back then. Yeah.
2:08
Um, this, don't forget, this is the '70s. This is, like, '77. Atlantic City was just opening. So I'm nine years old in '77, and, uh, literally Atlantic City just, was just about to open.
2:19
But Atlantic City actually hurt the boardwalk businesses, because they had merchandise wheels and beautiful statues and stuff.
2:25
People came down, I mean, the weekend of, of gambling on the boardwalk, they were gambling for, for merchandise. But at night, those games, a lot of them became wheels of chance. Mm.
2:35
So they, um, uh, the wheels were real money. You, so you'd, you'd, you can bet half the wheel. Y- you can bet half or half the wheel, and it's 50/50 chance that you're gonna win money.
2:44
And they, you know, you could put a dollar up and you, you gotta give it, almost like a $1.10. You have to, it's something... Every wheel was different. There was a couple different ones.
2:50
Then we had, uh, Skee-Ball and the little horse game where you, you rolled the balls up and then, you know, it was basically a m- th- a little bit of skill to it. And, uh, you'd bet on that.
2:59
You could, you, you win cash instead of merchandise. They had a play, they had something called Skillo, which is basically like a Keno, but it's called Skillo back then. They were games of chance.
3:08
So here I am working, you know, I'm making 50 cents an hour in 1977, and, uh, you know, and gradually I became, you know, making more money. I, I worked at l- all different types of games on that boardwalk.
3:21
Gaddafi was a ba- a bad leader. I think I told you before. We had a Kill Gaddafi stand. I pl- I worked in the dart, the dart stand. You know, you hit the- Leader of Libya. Yeah. Leader of Libya. Yeah.
3:29
You hit twice in a row and you get, you get tickets to Bon Jovi, front row tickets to Bon Jovi. That w- that was a real prize. Do you know what m- you know what mom used to say about Gaddafi? What's that?
3:36
Because he was such an awful man. Yeah. She goes, "Oh, he's terrible." Yeah. "He's very good-looking though. Do you know that?" No way. She would say that every time. Really? Yeah. "He's very good-looking."
3:43
He wasn't, he- Like she, she somehow saw the [laughs] she saw the, her, her opinion of his, uh, phys- physicality took over his awfulness. He wasn't good-looking in the end after they beat him to death in the street.
3:53
No, no, he wasn't. [laughs] Yeah. That's all I remember her saying though, over and over. Yeah. But, uh, I, I was just saying my, my cousin w- went to a card counting school.
4:00
I'm about 12 at the time, and he used to run down a deck all the time, counting all the cards, you know, kno- knowing what the last four cards or how many aces were left in a single. That was part of the training.
4:10
And he taught me some card counting. He taught me some pitching quarters. I never talked about this. Mm-hmm.
4:14
So the lower you get to the ground, the easier it is to pitch a quarter and try to land on top of the other quarters, which is an automatic winner.
4:21
Uh, but the closest to the wall, he just sh- you know, showed me some little, uh, just the little gaffs and stuff, the little things, and just learning advantage gambling. But yet, didn't matter.
4:30
I was an idiot, and told you last night, I used to go to Monmouth Racetrack and blow the money. Mm-hmm. I, I was a total idiot, you know? And another thing too, I would blow the money on the boardwalk all the time.
4:39
There, there was a, the Heidelberg hot dog stand. I used to go and buy hot dogs. There was a french fries with malt vinegar and salt. I used to buy... You know, there was stuff on the... I, I, I spent all my money.
4:48
I went to the arcade and blew the money. I, I never knew how to handle money. Like, I always believed in spending money. Like, and that's, that's from my dad. My dad was the same way.
4:58
My dad w- my dad had no money, but he would go to dinner and he's paying or else he's not going, so. What's interesting about this to me is that this nine-year-old Billy Krackenberger- Yeah...
5:05
who's experiencing all this- Yep... you couldn't have ended up being anything else. No. You just couldn't have- Yeah... with that, with that background.
5:12
Yeah, and I had, always in trouble in high school flipping quarters. And the wood shop said, "Mr. King, if I hear another quarter back there, Krackenberger, I'm coming and taking everyone's money out of their pocket."
5:21
Like, like, you know, the, always the, the gambler. But I was known as a gambler in school, um, but not so much of an advantage gambler, but poker.
5:28
Poker was, you know, they didn't know, the kids didn't know my cousin taught me about im- imp- you know, applied odds and, uh, pot odds for a pot. Like, you know, everyone played every hand. They didn't care.
5:38
They got dealt two, three, five. "Oh, I can get a straight. I, I'm playing." You know, seven card stud was the only game back then. There was no Hold 'Em. It was seven card stud or five card stud. That was all.
5:46
There wasn't, Hold 'Em wasn't even a game back in the '70s. Well, it was, but- Did-... not, not, not, not, not in New Jersey. Did your mom or dad ever chime, did they ever worry about you going down a certain path?
5:55
I'm gonna say no. Nothing about... You know, I love Mom and Dad. Yeah. Uh, and, and, but they gambled every weekend. They did. It was in their blood. We had games in our house.
6:03
We had p- the men played Pinochle, the girls played Continental or, or, or, you know, Gin, and they, there was gambling games in our house every weekend or at my aunt's house every single weekend.
6:13
So, and when the holidays came, Thanksgiving, and when the kids went to sleep, they would, everyone went to Atlantic City, you know, when, uh, eventually when Atlantic City opened. That's what they did.
6:21
You know, me and you were both in Atlantic City at young ages. Yeah. But I, I wrote something down that someone sent me something and- The, your crowd's perfect for it.
6:30
The, the VSIN, uh, the- these are the guys that are more astute, more, have been around. These aren't 22-year-old kids listening. Um, I, I grew up... I'm, so it's a, it's a, it's not that long. It'll take a minute.
6:41
I grew up in Kingsburg, New Jersey, but never thought I was raised by low/middle income parents at the time. During a time when most everyone treated each other with respect.
6:50
We didn't eat a lot of fast food because it was considered a treat, not a food group. We drank orange Tang/Kool-Aid made from water that came from our kitchen sink with real sugar.
6:59
We ate bologna sandwiches or tuna, which was not in a pouch, peanut butter and jelly and grilled cheese sandwiches, hot dogs, pot pies, but mostly homemade meals consisting mainly of dough, meat, potatoes, vegetables, bread and butter, homemade desserts.
7:13
We, we grew up in a, a time when we mowed lawns, pulled weeds, babysat, helped neighbors with chores, and be able to earn our own money. We went outside to play a lot of games, ride bikes. I loved riding my bike.
7:24
Red Rover, dodgeball with siblings and friends, and played hide and seek. We drank tap water from the hose. Always tap water from the hose outside. Uh, bottled water was unheard of.
7:34
If we had a Coke, it was in a glass bottle, not a plastic bottle. We watched TV shows that we grew up on. I grew up on Happy Days, Bewitched, Brady Bunch, Little House on the Prairie. That's what I grew up on.
7:43
I Love Lucy. After school, we came home, did homework, chores before going outside, having friends over. We would ride our bikes for hours.
7:50
We had to tell our parents we were, where we were going, who we were going with, and what time we'd be back.
7:55
You learned from your parents instead of disrespecting them and treating them as if they absolutely knew nothing. Uh, you know, uh, uh, this, it's, it's just so different today and, and what they said was law.
8:07
My mom and dad, oh, my God, we didn't question it. I, I knew better. When, when the sun was starting to come down, I had to be home.
8:13
In, in school we said the Pledge Allegiance, we stood for the national anthem, listened to our teachers. We watched what we said about our, around our elders.
8:19
We knew if we disrespected any grownup, we would get our behinds whipped, and that's a- absolutely true. They don't, no, no- This is such a great snapshot- Yeah... that people can relate to of a certain age.
8:28
No real beating, but- Yeah... you know, my mother used to chase me around with a wooden spoon. She never caught me, but it was more funny than anything. [laughs] It, it, it wasn't called abuse. Wooden spoon.
8:36
It, it was called discipline. We held doors, carried groceries, gave up our seat for an older person without being asked.
8:42
You didn't hear curse words on radio, in songs, or TV, and if you cursed and got caught, you had a bar of soap stuck in your mouth. Uh, you had to stand in the corner.
8:49
Please, thank you, yes, uh, yes, please, no thank you, yes, ma'am, yes, sir. A- a- and, and no s- uh, you know, really, w- they were part of our daily vocabulary.
8:58
I, I grew up to respect the nation, the flag, and it, it's just so different today, and I seen this. Someone sent me this, and I just thought it was pretty cool. My mom washed my mouth out with soap once. Wow.
9:10
She told me, 'cause we played basketball right in front there. She, she was like, she heard us cursing. She's like, "If I hear you curse, stop cursing. If I hear you curse," and finally I cursed one too many.
9:18
She grabbed me by the, right under my armpit- Yeah... right, right under the arm- Yeah... dragged me, lathered up the soap, and washed my mouth out with soap. And I- I'm so glad this happened to you.
9:27
[laughs] I can still taste that soap to this day.
9:31
I'm glad this happened to you, 'cause I, I'm, as I'm reading this, I'm, I swear, people listening, I'm saying to myself, "Well, I, I know Gil didn't, this didn't happen to Gil."
9:37
But I mean, maybe p- people on there [laughs] that will relate to it. As soon as I get done, he says it happened to him. Oh, yeah.
9:42
I was reading it and saying to myself, "This, Gil's parents were very kind to him and, a- and didn't do it." No. None, none of this stuff happened. She, oh, she, she was a- [laughs] She was the most sad, man.
9:50
She had a streak. Wow. Oh, yeah. Wow. She ruled with an iron fist. And even in my school, I, I remember, m- I told you, Mr. Kochman, the teacher, Mr. Kochman. Yeah. I had him for two years.
9:59
One of the students, John Pasargic was his name, took an eraser and threw it at him. An eraser. Yeah. He takes the eraser, puts the kid against the chalkboard and stuff, shoves it down his thro- his throat. A teacher.
10:09
He'd be arrested today. Yeah. He'd be arrested today. There'd be cameras in the school. I mean, I, and by the way, I actually got to know Mr. P- uh, you know, I, I actually got to know Mr.
10:18
Kochman again after all these years. I got to- Let me guess, sweetest guy in the world. Nicest guy in the world. Yeah. Nicest guy in the world. 'Cause we were awful kids. Yeah. I got to know him again. Yeah.
10:26
And he's 80-some years old. I mean, he's a great guy, but yeah. I, we, we saw teachers r- wreak violence back in the day. Yeah. We're, we're not condoning it. We're just saying that's how it was.
10:34
I went to Catholic school, had a nun in the second grade that used to hit you on the, on the fingers with her, with her, uh, ruler. Yeah. Like, you know, like, no one said anything.
10:41
I mean, you know, it, it's literally 1972. I mean, '74, '75, whenever it was. I don't know. I didn't, I just didn't think too much of it.
10:49
And, and, and you think about it now the way we are, after I read this, I had to read it over again. I said, "Wow." I, I, I drank from the, the spigot outside, the, uh- Yeah... the, the hose.
10:57
Well, we didn't think twice, but the thing you said about bottled water. Yeah. Bottled water? What are you talking about? When our grandmothers get mad, your m- not your mom maybe, but maybe your grandmother that time.
11:05
It's, "You're buying water today?" Oh, they would lose their mind. Yeah. Yeah. They'd lose their mind. As, as I rank waters, right? Evian over Fiji. Like, imagine. Oh. You- Yeah... you like, what's yours? Aquapana?
11:15
Aquapana. Yeah. There it is, Aquapana water. We're so bougie now. I, I, it's, it's terrible. Yeah. And by the way, you go to airports and you see how much the water is at the airport. Oh, my God.
11:24
It's ridiculous, airport water. Eight bucks for a bottle of water. All right, we're coming back. Hopefully J- On- Hopefully Jay's around... [laughs] on the other side, hopefully.
11:30
Uh, Jay Cohen, one of the three co-founders of World Sports Exchange, will join us. This is when he's supposed to join us. Not like he was supposed to join us before now.
11:38
Uh, we'll actually have the great Jim Lampley do an intro- Ooh... for this on the other side. Jim Lampley, who famously interviewed Jay back on Real World, uh, Real Sports, rather, with Bryant Gumbel on HBO years ago.
11:50
That's next on A Numbers Game. [upbeat rock music] A Numbers Game on VSIN, the sports betting network.
12:07
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12:19
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12:30
That's jointhesharps.com and use promo code VSIN50 I'm Jim Lampley. I've looked through the front window of American sports for 50 years. Countless title fights, 14 Olympics, the biggest moments in American sports.
12:47
But one of the most remarkable stories I ever encountered didn't happen in an arena. Jay Cohen and Steve Schillinger were traders from the Pacific Stock Exchange.
12:57
Schillinger, a gifted, almost obsessive oddsmaker, Cohen, a hard-charging entrepreneur.
13:02
Along with their young runner, Haden Ware, they built World Sports Exchange, an offshore operation in Antigua that was not only legal, it was revolutionary.
13:13
Before DraftKings, before Cal-Che, before any of it, they introduced live in-game wagering.
13:20
The industry now takes it for granted, but leagues, lobbyists, and legislators moved to shut them down, cloaking themselves in integrity, insisting that gambling was a threat to the soul of American sport.
13:34
Cohen came back to the United States to stand trial. Represented by the legendary Benjamin Brafman, he fought and lost. Schillinger and Ware stayed on the island, entrepreneurs trapped in paradise.
13:48
Today, those same leagues are making hundreds of millions from sportsbook partnerships. Their logos are plastered across every betting app in America. The moral high ground didn't disappear, it was sold.
14:01
I went to Antigua. I reported this story for HBO's Real Sports in 1999. I thought I knew the whole story, but Cohen's new book reveals how justice can be bent to serve those with money, power, and influence.
14:16
I couldn't put it down. Odds Man Out: The Untold Story of How Professional Sports Crushed the Pioneers of Online Betting by Jay Cohen.
14:29
And joining us now from an undisclosed location somewhere across the pond, it is one of the three co-founders of World Sports Exchange, kind enough to spend some time with us this morning, it is Jay Cohen right here on The Numbers Game at VSAN.
14:42
Jay, thank you so much for doing this. Appreciate it. Well, thank you for having me, and thank you for, uh, covering the book. I appreciate it.
14:50
Um, let me just say, and I've, I've said this on-air a few times already, but I will say it to you, I didn't have the hard copy. It was... I had a PDF file on my phone that was sent to me. I read it in two sittings.
15:00
It is absolutely riveting. I hope that writing it, researching it, and writing it, because it was very detailed, that's what I mean by the research, obviously, you l- you lived it yourself.
15:10
I hope it was cathartic for you. It, it was painful, honestly. It, it really is painful to go through it sometimes, but it is what it is. [clears throat] Hey, Jay. Uh, what made, what made you, um...
15:24
I, I had you on my podcast last week. I asked you- Hmm... a lot of questions, but I didn't ask you this p- this question. What actually made you write the book?
15:29
What made you come to saying, "Let me write a book about this?" And by the way- Well, so it's-...
15:33
everyone in the offshore world loves this book because they were there back then, anyone that w- that was around back then. I'll say that, but what made you actually write this book?
15:41
Well, it's just the, the rise of the current, uh, uh, industry and some people came to me and said, "Oh, we should, uh,
15:49
you know, you should really put all this on, on paper," and I said, "Well, you know, I tried once before. I, I came up with 12 pages," and they said, "Well, let, let me help you- Ah...
15:58
and I'll teach you how to w- write a book." So that, that was really it. Uh, we really wanted to do something on film, and, uh, maybe this is a stepping stone to film from this.
16:09
Well, let's go back to the beginning because I'm not gonna assume that everybody knows the details. Those of us, again, of a certain age, uh, World Sports Exchange- Yeah...
16:15
has a special place in our hearts, and, um, we'll get to some questions later, but let's just get to some of the, the details early. So you, you grow up in New York, you end up at Cal Berkeley.
16:24
Um, you kind of didn't know what to do out of school, as it's very detailed in the book, Odds Man Out. You see an ad, I wanna say it was the San Francisco Examiner, and this is perfect for you.
16:35
This sort of melds your strengths. It is a job on the Pacific Stock Exchange.
16:39
For those who don't know what that building is in San Francisco, you may remember the Agassi, uh, Sampras Gorilla tennis commercial in the '90s was right in front of that building. You are a wild success.
16:50
Um, at a very early age you're making good money, and you meet, in the pits, you meet what turns out to be one of your co-founders, what will eventually be one of your co-founders, uh, Steve Schillinger, and it was the OJ trial in 1994 that sort of sparked this.
17:06
Can you explain what happened there? Well, S- Steve was kind of a floater. I, I stu- I stuck to one pit. I was a market maker in one pit.
17:16
Steve drifted around the floor and went to wherever it was busy, but he was an amazing trader, but he specialized in trading fast, active, uh, securities. So we were trading options down there, and he ended up in my pit.
17:29
Something in my pit got busy, and I got to know him. But he was also kind of, I, I don't want to say the floor bookie, but he was the...
17:37
He would always have these obscure bets that you wanted to bet something, he- you'd go talk to him, he'd give you odds, or sometimes he would present things out of nowhere [clears throat]
17:47
that no one would, uh, was even looking for and, and he would make odds on them, and he'd draw people in and get them to bet.
17:53
So, uh, when the OJ trial started, he s- made markets in, uh, the outcome, f- guilty, n- not guilty, and other, and he structured it like futures.
18:05
And he had a bid and offer, and he said whichever one wins will go to 100, the others will go to zero. So if you bought one for 30 and it, it prevailed, it would go to 100, you make 70.
18:19
But he made these live markets all throughout the trial, throughout the day. People could buy them, sell them, close out their positions. Really just trade, trade the trial.
18:30
And then after that he started doing other, um, sporting events, long-term season stuff, MVPs, and that's when I said, "We, you know, we should put this on the internet."
18:41
That's what happened "We should put this on the internet." That was when the light bulb- Yeah... went off for you.
18:46
And so you're, forgive me for being personal, you're making, I'm guessing, high six figures at this point in your, in your day job? Yeah, it was, life was good. Uh- Life was good...
18:56
I was in my 20s and single, and it was the '90s when, when six figures was six figures. Yes- Yeah, when six-... so life was okay [laughs] When six figures was six figures. So let me just ask you this.
19:05
So you come up with the idea, and you guys decide, and this is really key to this story, you guys decide we are doing this, seriously we're gonna do this above board.
19:13
We are gonna make this, uh, we're gonna get lawyer, legal advice. We're gonna do this as, as legally compliant as possible, and you figure out you're gonna have to go offshore for this.
19:22
My first question is, um, d- I asked s- something similar of Bill in the last segment, do either of your parents chime in at this point, or somebody who, you know, who you, uh, respect and says, "Hey, uh, Jay, life is pretty good.
19:35
What the hell are you doing, man?" Well, I d- I don't think my father was, he- just the tone of his voice, but at by that point in my life he knew not to, that I wasn't interested in his, uh, professional guidance.
19:48
[laughs] Um, my mother was okay. Uh, and Steve, you know, Steve was older than me, so he was well past that. [laughs] Why Antigua?
19:57
W- because most offshores at that point we know to have been stationed or to be headquartered in Costa Rica. Why did you end up in Antigua? I called multiple jurisdictions.
20:08
I called the governments of multiple jurisdictions and, uh, like when I d- I remember calling Costa Rica and I said, "What, what are your regulations for online gaming?"
20:18
And they said, "Oh, you just work it out with the local mayor wherever you are," and that's not what I was looking for.
20:23
And then I came upon Antigua, and they had an entire, uh, you know, a wagering commission and a whole setup, uh, designed for this. And we were looking to be transparent, regulated, and completely above board.
20:37
We weren't looking to hide. We, uh... All, all of our investors had to submit to background checks to Antigua. Uh, so it was very, uh, structured. Okay. That's what we wanted.
20:49
So- We did not want, uh, you know, shady deals on the side. What was your starting bankroll to do this?
20:56
I know the, the first spring, 'cause you go in January of '97, which of course, again, after the Super Bowl, not the optimal necessarily, but you guys went ahead and do it January '97.
21:05
What was your starting bankroll, and how long did it take before you thought, "Oh wow, this, we really have something"?
21:13
W- we went down there, we started with less than a million dollars, but m- and most of it, or a good bit of it, went to development of the, uh, software. Uh, re- remember, we were fully transactional.
21:24
We built a futures exchange from scratch. We built the sport- sportsbook software, and we made sure it was all idiot-proof. Uh, and you could do everything online, point, click, bet, check your balance, the whole deal.
21:37
Uh, most of the other places at that point, even if they had an online site, they were stale numbers and you could call an 800 number.
21:46
We were the first truly, uh, transactional online gaming site, uh, for sports, uh, back then. Uh, but
21:55
there were, there were days, and I talk about in the book, there were days in that spring where Steve and I were kinda staring at each other wondering if we did the right thing, where we sat there all day and the phone didn't ring once.
22:06
But once, uh, football season came around, uh, we, we, uh, it confirmed we were in the right place. What did year one look like, Jay? Was it profitable out of the gate, which is never the case normally. If the...
22:16
How, how'd you guys do? No. No, it, it was probably s- you know, probably a break even after football season, but nothing, uh, nothing to write home about.
22:24
But you knew you had something after football, the volume of football season, you knew you probably had something here, uh, after not getting phone calls, you know, over the summer. Jay, hol- hold the thought.
22:32
Yeah, I mean, w- We, we-... we knew we could keep building, you know? Yep. It all sounds like a great story now. Everything's on the up and up. Um, doing everything above board, offshore, the money's coming in.
22:45
Uh, then things take quite the turn. Jay Cohen, one of the co-founders of World Sports Exchange. The book is Odds Man Out. Coming back right here on The Numbers Game at VSiN, the sports betting network.
22:55
[upbeat music] A Numbers Game on VSiN, the sports betting network. Back on The Numbers Game live from Circa Resort Casino, downtown Las Vegas. It's Gil Alexander. It's Bill Krackomberger.
23:12
Krack responsible for our guest that is kind enough to join us here for the, uh, balance of the hour.
23:17
Again, uh, for those who missed it, uh, Jay Cohen, uh, worked on the Pacific S- uh, worked at the Pacific Stock Exchange in San Francisco, met Steve Schillinger, uh, along with, uh, their runner Hayden or, or Jay's crew, uh, Jay's, Jay's runner Hayden Ware, his clerk.
23:35
Uh, they decided that the future of gambling would be on the, uh, still-developing internet at that time, and the three of them together would go on to found World Sports Exchange at wsex.com, W-S-E-X.com, an online betting exchange and sportsbook based in Antigua, which so many listeners to this show, um, no doubt remember fondly and nostalgically.
23:54
But, uh, you know, what resulted after carefully making sure that the operation complied with American law with painstaking care turned wildly successful pioneers into the target of US legislators.
24:06
So let's fast-forward here in the interest of time, Jay- Okay... um, to, to when it gets a little ugly. So you, you think, you know, and you had some in...
24:14
There was some legal stuff, but it sort of went away, and then all of a sudden, and this is, you know, this is 1998 now, so you've been there for just over a year I believe at this point. You're faced with eight- Yeah...
24:24
charges.
24:25
This is sort of the, and this is what you do a great job of in the book, it's the confluence of this very powerful law firm, uh, Debevoise and Plimpton, I believe that's how you pronounce it, with the sports leagues and the Southern District of New York, and it's eight charges, uh, one count of conspiracy with intent to violate the Wire Act, seven counts of using a wire communication to transmit bets or information assisting in bets.
24:48
You immediately decide- I'm going back to fight this. I know I'm right. You make that decision, you have no regret to this day on that, do you? None. None whatsoever. I did nothing wrong.
25:02
I will maintain my innocence till the, my last day on earth, okay? Uh, I, I drew a horrible judge who directed the verdict, and that's what happened.
25:13
The insinuation was that you d- you deliberately violated the Wire Act, uh, which was by the way, written long before the internet ever existed, right?
25:22
Um- M- well- But, and your contention was the bets were- Yeah, I mean, I, of- Oh, I'm sorry, go ahead. I, I mean, of course I was well aware of what the, what the, uh, federal Wire Act was.
25:31
Uh, and we had discussed that at length before we went to Antigua.
25:35
And, uh, it was our position that all the bets took place in Antigua, the money was there first, it was 100% post op, and that people were directing foreign transactions. Uh, the real, uh...
25:48
So when, when we made this argument to the judge, of course the prosecutors dismissed it, and it was actually the same way at the time that Capital OTB horse racing was functioning in New York under the same, um, structure.
26:02
And then, uh, so the, the judge, uh, agre- agreed with the prosecutors and they, they threw out that argument and wouldn't allow us to make that argument to the jury.
26:13
And then fast-forward to a couple of years ago, and there's a case in Florida with the Seminole Indians versus the state of Florida, and the Seminole Indians want to offer sports betting around the state, and the state of Florida says, "You can't do that.
26:27
You can only do it on the reservation." And the Seminole Indians say, "Well, no, the, the betting takes place on our server on the reservation."
26:35
Now, here's the real, you know, the s- the knife in the back here, is that the feds, the same feds who told, said that my argument was a fantasy, wrote a letter in support of the Seminoles saying, "Oh, yes, the bets take place on the server on the reservation."
26:52
Same argument I had made y- you know, 25 years earlier. So. It's- That's, uh- It's such a, you know, I, uh, the courtroom odyssey. There's no other way to even describe it. It's just an odyssey.
27:04
You thought, you thought, "Hey," when you, when you left, uh, Hayden and Steve in Antigua, you're like, "I'll be back in six months." Yeah. It ends up being eight years till you- Yeah...
27:11
ever return to Antigua, uh, which included jail time, uh, ultimately. But the- Yes... the, the detail with which you write that court odyssey, and the judge who, uh, you called it the directional verdict.
27:23
The, the w- every- He directed the verdict, yes. He did. Every time he chimed in, it was anti you, uh, anti your side. Yes.
27:29
Your, your lawyer, despite his best efforts just, was just nipped at the bud in every, uh, at every turn. You actually had a juror afterwards who approached you? Yes, on the street at, after the guilty verdict.
27:44
She said, "We wanted to acquit you, but the judge gave us no choice." [laughs] And that was when- That's what she said to me... and that was corroborated by the foreman years later as well, right? Yes.
27:55
While we were writing the book, we tracked down the foreman and, uh, he said something similar. He said, "We like the guy, we wanted to acquit him, but we felt the judge boxed us in and gave us, uh, no choice." Boy.
28:07
And so- That's what happened. And, and the, the judge, I mean, he, you know, I took the stand in my own defense. Most people don't do that. And, uh,
28:16
the judge, uh, in the jury instructions told the jury that my testimony was not relevant. Jesus. It, it, it's just, it, uh, my blood was boiling reading it. Mm-hmm. It really was.
28:26
And so- And, and he had Ben Brafman- Yes... as an attorney. Yeah. He had a great att- Famous lawyer... famous lawyer. I, yeah. So you're watching- Yeah, I mean-... after, you know, you spent a year there.
28:34
You're watching the, the rise wa- because Hayden and, and Steve are back there, and the business is just growing and growing. After you serve time, you go back, and it wasn't very- Yeah...
28:45
short while after that where 2006 happens, right? Yeah, I mean, I went back in 2006. There were over 100 people there. Uh, you mentioned Ben Brafman. Ben Brafman wrote the forward.
28:58
Uh, and you can even read the forward on wsex.com without buying the book. I, I highly recommend that everyone reads the forward. Yeah, the site, the site's still up.
29:08
It's not often you hear a defense lawyer- The site's great. Yep... speak like that. Yep. Yeah. But, um, uh, uh, yeah, I went, I went back and, uh, it was a different company. I mean, I left there were four of us.
29:18
I, I, I came back there were 100 people there. [laughs] Amazing. There, there was a 15-person fraud department. [laughs] Jeez. Wow. Which you, which you couldn't have imagined at the beginning.
29:27
By, by 2006 coming, what I meant obviously for those who are, uh, who lived through it, was the Unlawful Internet Gaming Enforcement Act.
29:34
And is that kind of the beginning of the downturn in terms of the business, would you say? Would you point to that moment?
29:41
Well, that, that was a problem right away because the, all the government, uh, all, all, all the newspapers ran headlines, uh, government bans internet gambling.
29:52
And I think about half the customers just left the next day. So that didn't help anyone. Yeah. Uh, but they didn't start enforcing that, uh, law really until 2009, which, uh, made trouble for everyone.
30:05
But yeah, sure, that was the, the beginning of the, of a lot of the problems. Uh, and you know, we had won the WTO case,
30:14
and the WTO ordered the US to bring their laws into compliance with the GATS treaty which they had signed, and instead they actually took them further out of compliance. So
30:29
i- i- it was, these com- it was this competing narrative. You know, we, for a time we kept thinking the WTO case would prevail and that the US would finally come to some, uh, way of complying, but ultimately they didn't.
30:44
And yes, the, the, the, uh, banking restrictions and the processor restrictions, uh, forced, uh, WSEX to use shadier and shadier processors who took more and more percentages- And also, uh, on occasion took 100% of the money, which made, uh, it very difficult to do business and gave them no recourse because they were shady processors to begin with.
31:11
So World Sports Exchange, which pioneered live betting, um, pioneered what we see now in prediction markets with settling at zero and 100, and again, uh, zero and one, pardon me.
31:21
And we, and again, Steve was doing all the odds by himself, which is just mind-boggling to, to think about. Politics- Yeah... uh, golf, your golf product was just above and beyond, so great.
31:33
And then it's the, it's the legal assault, it's the, the economics, or at least the, the credit card processing, as you said, didn't make it easy. At what point...
31:43
And then the WTO case, I'm glad you brought that up, where now the US is not even complying when they're wrong. At what point do you come, become- Yeah...
31:49
so disillusioned, Jay, that you're just like, "I'm leaving Antigua now. Um, this is, uh, uh, I'm putting this in my rear view." I, I left Antigua myself in, in 2009. Uh, not, not for anything to do with the business.
32:03
I just, I was getting a bit of, uh, island fever, I guess. I, I said, "I'm, I'm gonna go." Uh, I wasn't necessarily walking away from it, but, um, it, it was, um, you know, they,
32:20
WSEX continued to, to move on and, um, there were times when things seemed like things were gonna get better, and then ultimately, you know, just,
32:31
you know, not, not cutting expensive- expenses aggressively enough, not, uh, losing one too many processors, uh, just, uh, took them under.
32:42
Uh, there's this, uh, myth that somehow there was this pile of money that Aiden and I left with. There was no pile of money. I came out of there poorer than I went in.
32:51
I never made anywhere close to what I made before I w- be- before I worked there in any given year. And, um, literally when b- by the time they went under, Aiden and I just had the shirts on our backs.
33:05
There was, wasn't like there was this pile of money we chopped up and said, "Okay, let's go." That's- And, and you say, and you say-... just what happened. Unfortunate...
33:13
yeah, Hayden and I because Steve, uh, mere days after the shuttering of the business, uh, committed suicide.
33:20
And as you point out in the book, with everything with him, it was, uh, his, his mathematical brain decided this was the best option for him at that point. Y- yes, he was very,
33:32
very much that way, that, that, that this is, uh, "I'm gonna do this, or if this happens, I'll do that." It was an, it wa- it wasn't within days. It was that night. That night. It was closed. Same night.
33:41
I said, "Okay," and- Damn, geez... that was it. The book is Odds Man Out. One more segment with Jay.
33:46
I'm gonna ask Jay a couple tough questions here on the other side, including those customers that are still embittered to this day holding the bag. Uh, we'll come back.
33:54
Jay Cohen, exclusively on A Numbers Game right here. [upbeat music] A Numbers Game on VSiN, the sports betting network.
34:11
It is A Numbers Game right here at VSiN, live from Circa Resort Casino, downtown Las Vegas. The name of the book is Odds Man Out. Its author is Jay Cohen. He's one of the three co-founders of the World Sports Exchange.
34:22
Odds Man Out: The Untold Story of How Professional Sports Crushed the Pioneers of Online Betting. And they were, in fact, pioneers.
34:31
Again, live betting, uh, what you see in prediction markets today, um, so much that they did. They even, they even bought Ma- uh, they even started Matchbook, uh, which came and went, Hayden did, uh, later on.
34:43
Uh, just w- w- pioneering golf product that they had there as well, politics.
34:50
Just an amazing story, but then again, the confluence of the Southern District, uh, of New York, a high-powered law firm that represented the professional leagues, took what they thought was a aboveboard business and really decided, "Well," um, these are my words now, "If we can't make the money on this, he certainly is not gonna be in our way to do that."
35:10
And so we have a landscape today where all these innovations are being capitalized on by others. Prediction markets like Kalshi and Polymarket have valuations each of $20 billion.
35:21
And Jay, the tough questions for me are, are as follows, and we'll get to the, uh, the customers at, uh, next. But my first thing is, I totally get it, man, you have no regrets about starting the business.
35:31
You have no regrets about fighting it because that was how you were convicted. You believed what you were doing is right.
35:37
And, and you have no regrets about, uh, about, you know, anything in those days, and I totally get it, and the judge railroaded you, and I bel- and I, I believe all that totally.
35:47
What I am curious about is the, the part a- in the aftermath after the jail time, after you served your time. Do you have any regrets- Yeah... about how you decided to play out life from that point?
36:00
In other words, you even renounced your citizenship. You can't even come to see your elderly father. Do you feel like- Right...
36:07
it, it must be horrible for you to watch these companies make so much money based on your innovations. Would you have liked to have played that part- Well-... of your life differently?
36:17
I, I mean, if there was a way, I mean, uh, first of all, I, I, I would have relatives send me emails, "Hey, you see what this company's doing?"
36:25
They'd send me an article in The New York Times, and it w- I, I'd say, you know, "We did that 20 years ago. What, what do you want me to do about it?" I mean, they wiped me out.
36:33
They, they, they, they destroyed my business. They put me in jail. They destroyed my life, and they, you know, they knocked out my capital, and what, what am I supposed to do? And now let, let's, let's take this...
36:45
Even if I said, "You know what? I've got a pile of capital. I wanna start again," they'd say, "Oh, you can't have a license. You're a convicted felon," right?
36:52
I mean, that's, that's probably a non-starter with most gaming commissions, so- Even, and you have, you- I really- Have you thought to contact any of these?
37:01
Are you, would you be interested in working with any of them, or is that also a non-starter for the reasons you state? I, I, I would be interested, but I, I don't know if they're interested in me.
37:10
Um- I, I've applied to some low-level positions at some places in Europe where, uh, uh, the best was, you know, supervise a team of live sports traders, and I get the, uh, standard email, uh, uh, "Thank you, but we, we're going with someone with more experience."
37:25
[laughs] A form letter. Like, uh- That's just ridiculous. Yeah. Yeah. [laughs] Like, like, like Tesla, like Tesla getting turned down at the electric company, you know?
37:34
[laughs] So I, you know, I thought of taunting some of these people, like, do you know, do you know who I am? But it's just, you know, it doesn't help that I'm old, and people say age doesn't matter, but it does. Sure.
37:47
Um, so- Jay, Jay, what about the part about the customers? 'Cause you know as much media as you're gonna do to promote the book, and again, let me just say the book is spectacular. You did such a great job with this.
37:57
It's, it's a riveting read. It will make your blood boil. I am, I'm just gonna tell everybody that now, but it is a riveting read.
38:04
So no matter how many of these media appearances you do, you are going to get people in the comments, Jay- Sure... and you know this. It comes with it. Who, who- Yeah... they remember- It's fine...
38:12
they, they loved what you did, but at the end, and World Sports Exchange was not the place that we thought was gonna let customers hold the bag. What do you say to those people- Mm...
38:21
who have lost any degree of money, different degrees? I, I'm, I'm not happy with, with the way it ended, of course not, but I did not run off with, with their money. Uh, like I said, I, I,
38:35
I, I came out of there, all of us came out of there worse than when we started, and it, it was certainly not, not our intention. You know, people say it was a scam. I saw someone say it was a scam. Yeah, it was a scam.
38:46
We planned this all out for 16 or 17 years, then we're gonna pull the, pull the plug at the last minute. No. It's, it's, it's just, uh, what happened to the business, and,
38:58
w- WSEX was owed a lot more from, uh, crooked processors and banks that took advantage of the situation, uh, than customers were owed, and the whole thing, it, it was just a, a perfect storm of sorts.
39:12
Now, some people survived. Some, some books were still using agents. We talked about this last week, uh, with the pay and collect guys.
39:20
Uh, some, some people were using some payment methods that flew under the radar, and they just didn't get caught. But w- we weren't lucky that way, and, and, um,
39:32
we ended up with the, uh, short end of the stick, and unfortunately, so did the customers. But it's not like we took anyone's money, uh, in, in that sense. Uh, it just- You even, you even innovated at the end-...
39:42
it all happened quickly... where you had some people paying out other people. Didn't you sort of adjust at the end? You tried to, to make it last as pos- Yeah... as long as possible?
39:51
Well, I was, I was trying to think, how can I do a p- a peer-to-peer payment system and, and cut out the processors? Because the processors, some of the processors would charge you, like, 10...
40:01
They would say, "We're gonna charge you 10%, so if customer sends $1,000, we're gonna keep 100, and we're gonna keep another 100 for six months."
40:12
So the pr- customer sends 1,000, so in 30 days you'll get 800, and in five months after that you'll get 700, uh, the other, the other, uh, eight, uh, uh, you get 100, then 800, and they're keeping 100.
40:28
So that's what some of these processors were, were doing, and then they ultimately took all the money.
40:32
But on the peer-to-peer payment thing, I said, "Ha- have the trusted customers, guys that have been with us forever, they can send personal checks. Leave the pay to the order blank.
40:46
Soon as that check comes in, we'll credit their account." Uh, so if someone sends a check for $1,000 and another customer is due $1,000, write his name in it, put it in the FedEx, send it out to someone else.
40:58
So that was kind of a, a, a weak attempt at, uh, peer-to-peer payments, which actually worked pretty well, but not enough people participated in it.
41:09
They thought it was too weird to send a personal check, but- I, I won't belabor-... it, it was convenient for some... I won't belabor it anymore, but so, so the customers who say, "Hey, you owe me 18,000.
41:18
You owe me $30,000," y- they say, well, the, the credit card processors worked on the way in, but they didn't work on the way out. Is that what you're telling me?
41:25
Is that, is that what, you know, s- That's p- that's, that's part, that's part of it. I mean, uh, I, I mean, c- could we have, you know, f- fired more people sooner and maybe survived? I don't know, but, um- Yeah...
41:39
it, it was... WSEX was not three guys. WSEX was a corporation at the end of the day, and the corporation unfortunately failed.
41:51
Um, last thing, Jay, in our last few minutes, because I, I'm just, I, I, I always think about this with you. I'm like, do you even f- I, I know you don't, you know, you were never a gambler at heart.
42:01
You were, you were a guy who liked to have the edge, whether it was at the Pacific Stock Exchange or here being the house at W- World Sports Exchange.
42:09
But can you, like, God, can you even watch sports at this point and stomach it? I, I rarely watch sports. I, I usually don't even know who's in the Super Bowl until the day after.
42:23
Um, it, it's, it's not, um- That says it all... not my thing. [laughs] Just because it's so hard for you. Yeah. Well, I, I, part of that, and I, I wasn't, I wasn't a big sports guy before, to be honest, so- Yeah... um,
42:39
it was, it was just always who do we need, and let's, who do we root for? And we used to joke and then never esti- uh, never underestimate the value of good rooting, even though it doesn't do a thing, but- Hey, Jay-...
42:49
it's fun... how did you guys handle the sharp bettors? So, uh, like you said about political markets, you, you don't wanna be on the other side of a guy who knows something you don't.
42:57
How did you guys handle those sharp bettors back then, you know, where you're the house on every trade?
43:03
Did you m- m- over move or learn off them, or did, did, did, did you, you know, you had losing positions, uh, at times?
43:09
Well, that, that was more Steve's department, and he was pretty quick to identify most of them and, and just, uh, cut their limits, to be honest. Gotcha.
43:17
There's no, there's no honor in, you know, letting someone take every penny you have.
43:21
You know, some of the sharp guys there, there were some guy who used to say, "Hey, all I wanna do, they're getting 11 to 10, and all I wanna do is bet 11 to 10. He doesn't wanna let me."
43:30
Like, well, yeah, you only, you wanna look at the 300 lines we posted, pick the one that's out of line, and bet $100,000. If, if you want to bet 11 to 10 on all 300 lines, I'll happily let you bet all 300, 100,000 each.
43:44
But they only want to cherry-pick the one line that, uh, we screwed up, so the- Yeah... it was a cat and mouse game, you know? It always has been, always will be. Jay, I met you in 2002, I believe.
43:54
We had dinner at the Palm in Las Vegas. You, you, you bought dinner for everyone there.
43:58
There was a big group of Major Rader guys there at the time, and you were fantastic to us, uh, back then, and, uh, I'm sorry the way this went, and I'm glad you at least you, you wrote the book and, and, uh, you came on with us here.
44:09
Uh, Gil, any last second words? Yeah, I'll just say, Jay, I w- I, I wish you the best. The book is fantastic. Uh, Odds Man out. You can get it at wsex.com.
44:16
You can get it at Amazon, wherever books are sold, and I'll just leave the, the final words from Jay that, that you wrote there in the book.
44:22
Uh, "I didn't do anything wrong or illegal, and I will never surrender that point," and that holds true from your perspective to this day, I would imagine. Absolutely. Thank you for having me.
44:33
Thank you for covering this book. Jay, thank you so much. Good doing' with you guys. Thanks, Jay. You too.
44:37
Jay Cohen, co-founder and former CEO of World Sports Exchange right here on The Numbers Game at VSiN, the sports betting network. Prop Points is next. Enjoy. [upbeat music]
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