Why You should Open a PPH Company
Again, this is the easiest way to get started for an individual or small group because you’re provided with the tools of a bigger operation.
Think how much it would cost to pay for employees in customer service, accounting, and marketing. You’ll also have to pay rent, utilities, and other overhead costs when starting a land-based or online sportsbook.
But these heavy upfront and operational costs are eliminated when you use a PPH service.
What’s more is that the PPH company has their own customers – plus bettors from other PPH bookies – allowing them to offer a wide range of lines that you can’t match.
In my situation, I have a modest amount of savings and a few investors willing to put several thousand dollars towards a sportsbook.
This isn’t nearly enough money to start a decent offshore operation. But it is enough to pay per-customer fees and cover bets if I suffer a bad week.
What You Need to Worry About
As covered before, PPH operations can take heat off of a local bookie. Given that everything is done online, you don’t have to physically meet with clients and send/receive payouts through the mail.
But the problem is that a PPH business is still illegal, even though you’re not technically doing the bookmaking. The PPH model falls under the Interstate Wire Act of 1961, which states:
“Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”
Anybody running a PPH business is assisting in the placing of bets on sporting contests. Many of these operators also avoid paying taxes on their illegitimate profits.
The good news is that authorities don’t raid PPH operations on a weekly basis. After all, there are literally hundreds of these businesses in Costa Rica alone.
But as some high-profile legal incidents show, you do have to worry about being busted – especially if you’re dealing with a PPH operating while living in the US.
Here are a few arrests that involve PPH operations:
- Poker player Jay Sharon and eight other men from New York City were busted for running a PPH-style betting ring. Newsday.com notes that bettors would make “wagers either online or by calling a toll-free number, using prearranged codes and passwords,” via a Costa Rican website or 1-800 number.
- In 2016, Rhode Island State Police carried out “Operation Free Roll” and busted 17 men in connection with an illegal gambling business.WPRI.com notes that the betting ring, which ran out of a Rhode Island restaurant, used BetCapri.com (Panama) and VIPBettors.com (Costa Rica) to run the betting operation. The 17-man ring also had $1.5 million worth of marijuana at the scene.
- In 2016, New Jersey authorities busted a 46-person betting ring run by Robert “Elvis” D’Alessio. According to NJ.com, D’Alessio’s ring used “50 gambling agents who raked in tens of millions of dollars in wagers using 1-800 numbers and a wire-room in Costa Rica, authorities said Wednesday.”
Another big thing you need to consider is how PPH businesses allow bettors to wager based on credit. This contrasts offshore sportsbooks, which force you to make a deposit before you can wager on anything.
Allowing credit betting is a necessary evil because if you don’t do this, then there’s nothing differentiating your PPH service from an offshore sportsbook.
But then you also must worry about collecting the money when you allow credit betting.