5D is one of the larger offshore sportsbooks, one of several operating relatively unfettered in the Caribbean. They usually make more money than legal sportsbooks in the U.S. And they pay no taxes.
But now 5D wants to go legit and find a home in New Jersey. But first, the company has to get past the gatekeepers, the regulators who issue a license to do business in the state. And 5D comes with baggage and plenty of it,
William Sean Creighton, owner of the company, disappeared two years ago, the victim of a botched kidnapping. At the time, he was close to a guilty plea for money laundering, illegal gambling and fraud. A year ago, authorities identified his remains in Costa Rica, where he ran his business and lived with his wife, Laura Varela, according to the Philadelphia Inquirer.
In October, Varela agreed to pay $47 million to call off U.S. agents and federal prosecutors in Philadelphia over the money laundering.
“The Department of Justice understood. I felt their sympathy throughout this long process,” said Varela.
Varela, who owns the sportsbook with a million gamblers in its system, has enlisted the help of high power attorneys in Washington and Philadelphia to go legal in New Jersey, a stepping stone to other states. New Jersey operators accepted $3 billion in bets to date this year, paying the state $200 million in taxes.
But 5Dimes takes in billions in bets each year, and could grow New Jersey’s already record shattering business. As part of the settlement, Varela will block U.S. access to 5Dimes’ websites and stop handling U.S. bets, but can still take those from other countries.
“The illegal business is certainly larger than the legal business,” says Chris Grove, partner at the Eilers & Krejcik gambling-business advisory firm in Irvine, Calif.
Her lawyers expect it could take several months for an initial response from New Jersey. If approved, it could pave the way for other offshore gambling operations to seek legitimacy in the U.S.
Can 5Dimes make the jump? “It’s a huge if,” said Michael Pollock, a former New Jersey Casino Control Commission spokesman who is managing director at Horsham-based consulting firm Spectrum Gaming Group. “That assumes they will be able to get licensed and take whatever steps the state deems necessary.”
But Grove, of Eilers & Krejcik, said there are powerful reasons for New Jersey to approve. Offshore companies “are doing wagers worth hundreds of billions of dollars,” especially on NFL and NCAA football games.
Varela knew her husband was under investigation, said Stephen Miller, a lawyer at Philadelphia-based Cozen O’Connor, who is representing. “She hired us to engage the prosecutors and propose 5Dimes would go legitimate.”
Gamblers using 5Dimes and other big online Caribbean bookmakers tend to spend more than U.S. regulated customers.
“A U.S. company might have a customer spending $125 or $150 a year on average. The Costa Rican books gamblers might spend $1,200 on average per year. They cater to more serious gamblers,” said Jeff Ifrah, a veteran Washington casino lawyer also representing Varela.
Besides taxes, Ifrah says it costs tens of millions for the marketing, security, payments and compliance systems to start a legal sports-betting operation. Her lawyers say Varela can raise the needed cash.
