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SAN JOSE, Costa Rica (Reuters) - "Fifth floor, GK Worldlink Telecom" reads the lobby directory in an office building at the western end of Costa Rica's capital.
But the name is just a cover for Diamond Sportsbook International, where dozens of young Costa Ricans staff a huge bank of phones and computers, furiously taking long-distance bets on U.S. college football games.
"Navy three and a half for five dimes," yelled a bet taker on a recent Saturday, getting the nod from the wagering floor manager for a $5,000 bet on an Army-Navy game.
The same betting fever goes on every day in dozens of offices in Costa Rica that operate Web sites such as http://www.2betdsi.com and http://www.v-wager.com and process millions of dollars of mostly U.S. bets.
Sports books began setting up here in 1996 to take advantage of vague gaming laws, cheap labor and good English speakers in this sub-tropical Central American nation, best known for rich coffee, rain forests and exotic frogs.
But with the government threatening to take a piece of the action through new fees or taxes, this bookies paradise may fold. Gambling operators say they will pull up stakes and move on to the next gambling-friendly haven.
"Other countries are going to eat their lunch," said the general manager of Diamond, who set up here in 1998 and just visited to Panama to check out possible sites.
Panama and Belize want the jobs and are offering free buildings, zero tax hassles and maybe even a break on telephone fees. Diamond pays "astronomical" bills to Costa Rica's state telephone and Internet monopoly ICE, said the manager, who asked not to be identified.
In the past, sports books have moved quickly when their welcome wore out. They abandoned Antigua en masse in the mid-1990s when the Caribbean island imposed new taxes.
Costa Rica may also be getting uncomfortable for some bookies after arrests in New York this year of alleged members of organized crime families linked to sports books here.
OFFICIAL AMBIVALENCE Costa Rican officials are ambivalent about the dozens of on-line sports betting operations that sprang up here before they even knew it, disguised as data processing centers.
They don't want to lose some 10,000 to 15,000 decent-paying jobs that are helping many a university student pay tuition.
But they are not happy the companies pay no licensing fees and few taxes. And they are not sure unregulated gambling, an industry notorious for sheltering dirty money, is good for Costa Rica's image as an eco-tourism destination.
"We don't want to drive them away. We are proposing regulation that would allow the state access to information and clearly guarantee that the funds in these places come from legal sources," said Security Minister Rogelio Ramos, adding that he is aware of several outstanding U.S. arrest warrants for people involved in sports books here.
Some Costa Rica legal experts say sports books are legal because there is no law expressly prohibiting them.
Other experts say sports books violate a law that says gambling is allowed only in casinos inside big hotels, but they skirt the rules by registering themselves as data processors.
Sports books don't pay taxes on earnings in Costa Rica, since the money is handled off shore, in accounts that bettors set up in tax havens like the Cayman Islands.
Costa Ricans may be ambivalent, but U.S. officials are not. Phone and Internet betting are illegal in the U.S., even via international call, and sport bets are allowed only in Nevada.
Prosecutors have charged people in the United States with running illegal gambling operations because they directed bettors to phone Costa Rican sports books.
Earlier this month in a mass arrest of alleged mobsters in New York, three reputed members of the Luchese crime family were indicted for illegal gambling for providing access to a sports betting office in Costa Rica through a toll-free number.
And in June in New York, seven alleged members of the Gambino crime family were indicted for running an illegal sports-betting operation using phone rooms in Costa Rica.
Prosecutors said they could not give out the names of the Costa Rican sports books linked to the Gambino and Luchese families.
Two sports book managers interviewed by Reuters in Costa Rica said their operations were not mob-linked and scoffed at the notion there is money laundering in the industry.
A GOOD THING GOING
The government -- desperate to narrow its widening budget deficit -- keeps changing its mind on how to tax bookies. At first, Congress pondered a yearly tax per computer terminal, but that was scrapped in the face of loud industry protest.
"Costa Rica has a really good thing going. They want their piece of the pie. Not a single person in the industry would fight that (but) we can't exist under what they propose," said Dalton Wagner, who runs V.O. Group, a cluster of Web-based casinos, sports books, race books and bingo parlors with 300 employees and 20,000 off-shore bettor accounts.
Wagner, a former Texas corporate head hunter who set up V.O. Group with two partners in 1998, said he would be willing to pay a yearly fee if it brought benefits like legal status, but other bookies disagreed.
Finance Minister Jorge Walter Bolanos told Reuters he met recently with industry representatives and struck a deal to charge a flat one-time fee next year of $20,000 for small companies, $60,000 for mid-sized, and $100,000 for big ones.
"He's sadly mistaken," said the Diamond manager, who said he has 4,000 bettor accounts. "We're not going to accept the deal."
Michael Randles, a sports book software consultant, said even if Costa Rica backs down on new fees, the damage is done.
"There's a loss of faith in the government here. The deal was 'leave us alone.' The government is going to be the loser because of the jobs that will go. There's not going to be a mass exodus, but there will be a trickle out."
But the name is just a cover for Diamond Sportsbook International, where dozens of young Costa Ricans staff a huge bank of phones and computers, furiously taking long-distance bets on U.S. college football games.
"Navy three and a half for five dimes," yelled a bet taker on a recent Saturday, getting the nod from the wagering floor manager for a $5,000 bet on an Army-Navy game.
The same betting fever goes on every day in dozens of offices in Costa Rica that operate Web sites such as http://www.2betdsi.com and http://www.v-wager.com and process millions of dollars of mostly U.S. bets.
Sports books began setting up here in 1996 to take advantage of vague gaming laws, cheap labor and good English speakers in this sub-tropical Central American nation, best known for rich coffee, rain forests and exotic frogs.
But with the government threatening to take a piece of the action through new fees or taxes, this bookies paradise may fold. Gambling operators say they will pull up stakes and move on to the next gambling-friendly haven.
"Other countries are going to eat their lunch," said the general manager of Diamond, who set up here in 1998 and just visited to Panama to check out possible sites.
Panama and Belize want the jobs and are offering free buildings, zero tax hassles and maybe even a break on telephone fees. Diamond pays "astronomical" bills to Costa Rica's state telephone and Internet monopoly ICE, said the manager, who asked not to be identified.
In the past, sports books have moved quickly when their welcome wore out. They abandoned Antigua en masse in the mid-1990s when the Caribbean island imposed new taxes.
Costa Rica may also be getting uncomfortable for some bookies after arrests in New York this year of alleged members of organized crime families linked to sports books here.
OFFICIAL AMBIVALENCE Costa Rican officials are ambivalent about the dozens of on-line sports betting operations that sprang up here before they even knew it, disguised as data processing centers.
They don't want to lose some 10,000 to 15,000 decent-paying jobs that are helping many a university student pay tuition.
But they are not happy the companies pay no licensing fees and few taxes. And they are not sure unregulated gambling, an industry notorious for sheltering dirty money, is good for Costa Rica's image as an eco-tourism destination.
"We don't want to drive them away. We are proposing regulation that would allow the state access to information and clearly guarantee that the funds in these places come from legal sources," said Security Minister Rogelio Ramos, adding that he is aware of several outstanding U.S. arrest warrants for people involved in sports books here.
Some Costa Rica legal experts say sports books are legal because there is no law expressly prohibiting them.
Other experts say sports books violate a law that says gambling is allowed only in casinos inside big hotels, but they skirt the rules by registering themselves as data processors.
Sports books don't pay taxes on earnings in Costa Rica, since the money is handled off shore, in accounts that bettors set up in tax havens like the Cayman Islands.
Costa Ricans may be ambivalent, but U.S. officials are not. Phone and Internet betting are illegal in the U.S., even via international call, and sport bets are allowed only in Nevada.
Prosecutors have charged people in the United States with running illegal gambling operations because they directed bettors to phone Costa Rican sports books.
Earlier this month in a mass arrest of alleged mobsters in New York, three reputed members of the Luchese crime family were indicted for illegal gambling for providing access to a sports betting office in Costa Rica through a toll-free number.
And in June in New York, seven alleged members of the Gambino crime family were indicted for running an illegal sports-betting operation using phone rooms in Costa Rica.
Prosecutors said they could not give out the names of the Costa Rican sports books linked to the Gambino and Luchese families.
Two sports book managers interviewed by Reuters in Costa Rica said their operations were not mob-linked and scoffed at the notion there is money laundering in the industry.
A GOOD THING GOING
The government -- desperate to narrow its widening budget deficit -- keeps changing its mind on how to tax bookies. At first, Congress pondered a yearly tax per computer terminal, but that was scrapped in the face of loud industry protest.
"Costa Rica has a really good thing going. They want their piece of the pie. Not a single person in the industry would fight that (but) we can't exist under what they propose," said Dalton Wagner, who runs V.O. Group, a cluster of Web-based casinos, sports books, race books and bingo parlors with 300 employees and 20,000 off-shore bettor accounts.
Wagner, a former Texas corporate head hunter who set up V.O. Group with two partners in 1998, said he would be willing to pay a yearly fee if it brought benefits like legal status, but other bookies disagreed.
Finance Minister Jorge Walter Bolanos told Reuters he met recently with industry representatives and struck a deal to charge a flat one-time fee next year of $20,000 for small companies, $60,000 for mid-sized, and $100,000 for big ones.
"He's sadly mistaken," said the Diamond manager, who said he has 4,000 bettor accounts. "We're not going to accept the deal."
Michael Randles, a sports book software consultant, said even if Costa Rica backs down on new fees, the damage is done.
"There's a loss of faith in the government here. The deal was 'leave us alone.' The government is going to be the loser because of the jobs that will go. There's not going to be a mass exodus, but there will be a trickle out."