Former BetonSports Executive: It Was Like a Jigsaw
Jenny Woo
Oct/22/2008
Gambling911.com's Jenny Woo recently spoke with BetonSports former COO, Clive Archer. It is one of Archer's first interviews since one of the largest online gambling sites in the world was forced to shut down by the US Government back in July of 2006. Nearly a dozen executives of the company, including its founder, Gary Kaplan, and CEO, David Carruthers, were indicted. British national Carruthers was picked up while changing flights in Fort Worth, Texas. Kaplan was apprehended months later while in the Dominican Republic.
All hell seemed to of broken loose when BetonSports came crashing and to this day, millions of dollars are still owed to customers and employees.
JENNY: Did you work in the online gambling industry before BetonSports? And, if so, who did you work for? And for how long?
CLIVE: I started in the online gaming industry in 2001, providing consulting advice to an online casino. This grew into a small 4-man Company based in London, which provided business development services to Microgaming Casinos. The people in that Company have all moved on to other gaming companies and hold senior positions in the industry. The primary brands, in which I was involved, were Gaming Club and RiverBelle and their sister brands. Basically, we worked across affiliates, media buying, white labeling and opening new markets. When Carmen Media purchased these brands, I moved to join Carmen in Gibraltar as Business Development Director. I left Carmen when the BoS opportunity arrived. So, overall, I¹ve had 8 years of experience in the industry.
JENNY: How were you approached by BoS to join their site? And what key attributes did you bring to the Company?
CLIVE: I was initially approached by the Non-Executive directors of BoS following the profit warning. They wished to strengthen the management team in Costa Rica and were looking for an Operations and Marketing Director (COO) and a CFO. The profit warning had shaken the market¹s confidence - coming 6 months after the IPO. The board was keen to bring in a team which could turn this around and reestablish confidence and the share price. I joined as COO and Richard Creed joined as CFO. My 5 years of experience in Internet Gaming with my own business, and then with Carmen, meant I had a strong knowledge of the market and the products, and a track record in marketing. Previous to this, I had worked in Sales and Stock Trading and then as Managing Director of a large marketing Company. This included the management of large call centers. So, it was a natural fit for me, as well as an exciting opportunity.
JENNY: What were your initial impressions of BoS when you first joined the Company?
CLIVE: My first impression was that the business was fundamentally sound, but that it was poorly managed without its old leader. Like many businesses that recently floated, the business was built as an ntrepreneurial led company and needed to change into a commercial and broadly managed organization with clear roles and responsibilities for all staff. It was like a jigsaw; all the pieces were there but they had to be put together differently. It was relatively poor on the Internet side. Marketing was primarily offline and there was no affiliate system. Neither the small amount of online marketing that was done, nor the product set outside of Sportsbook, was up to par. Still, it was a huge ­ and very exciting - opportunity that required a lot of work to make the most of its assets and to turn it into a professionally-managed business at all levels.
JENNY: You seemed to admire Gary Kaplan when we spoke in Costa Rica recently. Where, exactly, do you think he went wrong along the way? Did it start with going public? Do you believe he¹ll ever return to the industry if he gets set free? And, do you think he can get off relatively easily?
CLIVE: I have a lot of admiration for Gary. He¹s a charismatic and clever leader and he established a very successful business. I spent relatively little time with him as he was not directly involved in the business when I arrived but just offering consulting services in the development of Central and Southern American countries. But, in our dealings, I found him insightful and hugely motivational. He wasn¹t always easy to deal with but he always listened and was quick to recognize good ideas. The Company certainly missed his leadership. But to continue growing, it needed a new management team approach and some big changes to make it scalable. I¹ve heard all the stories about Gary, but I never witnessed anything but a guy who wanted the business to succeed. I think the mistake was going public. Given the size of the Company and Gary¹s maverick reputation, it was an easy target when the DOJ started chasing the industry and the money. I have no idea how it will end for Gary, but I hope it ends on a good note ­ and I hope it ends soon. It¹s unbelievable that he hasn¹t come to trial yet and that he¹s been in prison for over a year. Like many other cases, this seems to be all about the money. Since Gary has significant assets, there¹s no reason why a deal can¹t be made. As to whether he¹d return to the industry, well, I certainly wouldn¹t rule it out
JENNY: Do you keep in touch with Gary Kaplan?
CLIVE: No. Sadly, I haven¹t had any contact with Gary since the indictment was unsealed. This was on the advice of professionals on both sides.
JENNY: What do you say to people who try to blame you for what happened at BetonSports? Was it your decision to close the Company or were you at the mercy of the other shareholders?
CLIVE: I was left running the Company with the other directors when David was arrested. Actually, I was the last one to leave Costa Rica. Since I was the last man there and responsible for the operations and staff and the one who had to implement the close-down ­ I became an obvious target. As a Public Company, the primary responsibility of the directors is to look after the interests of the shareholders. The decision to close the Company was made after several weeks. This was based on the advice of our legal and financial advisors and was deemed to be in the best interests of the shareholders and creditors. The simplest solution for the board would have been to liquidate the Company, walk away and leave it to others to close it down. However, we decided to stay and see it through, in the firm belief that it was in everyone¹s best interests. I can say that I was the one most in favor of keeping the Company operating. But, as with all Public Companies, it isn¹t up to one person and we simply had to follow the advice we were given. The decision to close was very simple in the end as there were several factors that made it impossible to keep operating even if we ignored the advice given us; To continue operating would have meant ignoring the indictment and civil action and increasing the risk to the shareholders, directors and Company. The argument over jurisdiction was impossible to win as charges were based on extra-jurisdictional laws and agreements. You see, with David in jail we were under their jurisdiction as he was on US soil ­which is the only reason we had to terminate his employment. There was also insufficient cash to continue operating as the season had not begun and a large part of the cash from the balance sheet had been spent on acquisitions. The marketing money was already out and the loan we had negotiated to replace the cash with debt in the balance sheet was withdrawn when the indictment hit. The telephone lines had been cut off and the domains frozen. Advertisers and Payment Processors were not willing to continue operating with us while were under the indictment. The advice from our advisors was that it was in the best interests of shareholders and creditors to cease trading in the US.
JENNY: What is your explanation/defense of reports that customers sensitive data was being smuggled out under your eyes?
CLIVE: There was no evidence of customers¹ sensitive data being removed from the Company on my watch. There were, however, several instances of the customer contact details being passed on to other sports-betting companies. We had as much security as possible in place and even moved the customer data servers to Canada so we had complete control over the data. Still, many employees had collated data from call records, etc., and when they were in danger of losing their jobs (and they eventually did), some took advantage and tried to capitalize on the lists. In every instance that we were aware of, we issued legal notices but everyone knew we were toothless as we didn¹t have the money to press the claims. It¹s a shame when people you trust betray you, and some of the operators certainly did. You do learn who your real friends are and who you can trust in situations such as this.
JENNY: You've stayed in Costa Rica, contrary to initial reports, and it¹s clear you have made friends within the online gambling community down there. Do you question how BoS¹ competitors responded to the situation? It seems like there was little helping the players or employees - and more helping themselves (a la capitalizing on stolen customer lists).
CLIVE: I left Costa Rica when the Company was closed and we had sold every asset we could. At that time, I returned to the London HQ where I continued to work with Richard Creed, the Finance Director, to try and recover funds and also to mount a rescue plan which sadly came to nothing when Far Eastern assets proved to be worth far less than believed. This part of the business had been run outside of the other directors¹ control by David and the vendor of the business and its customer base were gone when we tried to realize the asset. We did sell it back to the original vendors who were the only buyers we could find, but for far less than the original purchase price. When we had done all we could, we put the Company into voluntary liquidation based on expert advice. That way, the liquidators could add their weight to the recovery of money. We stayed on to help the liquidators and remained unpaid directors for the final few months with the objective of maximizing any return to investors and creditors. I returned to Costa Rica 5 months ago. I love it here. I love the country, the people and the opportunities. I also love gaming and have many friends here, both inside and outside of the industry. It¹s a shame that some of the operators took advantage of the situation - but it was actually only a few of them. I think everyone originally believed this was an isolated attack on BoS, based on our profile and Gary¹s alleged past and so no one got involved. As it unfolded and it became obvious it was an attack on the industry, I think every operator tried to maintain as much distance as possible to avoid getting wrapped up in it. It should be said that certain operators were supportive in buying assets, taking on staff and offering advice. However, I will not name them.
JENNY: The Internet gambling industry has received a lot of negative press and attention. Do you think David Carruthers should take the sole blame for this?
Tomorrow, Archer answers this question and many more posed by Ms. Woo.
Be sure to check out www.gambling911.com tomorrow for Part 2 of this interview.
Jenny Woo, Gambling911.com Senior Correspondent