5dimes Taxes
Offshore sportsbook 5Dimes announced this week it was closing its doors to US customers. But there were some hiccups with that move.
Multiple 5Dimes customers have since had their open futures bets and accounts transferred a more obscure offshore site called Betanysports.
5Dimes, the popular sports betting and gaming platform was awarded a license from the Isle of Man Gambling Supervision Commission today. Varela, a member of the board of directors at 5Dimes. The news of a settlement between 5Dimes and United States Department of Justice was surprising to some in the online sports betting and gambling industry. The 5Dimes brand became a popular site for. 5Dimes suddenly stopped taking bets from US customers at the beginning of September 2020. This turned out to be related to the settlement the company paid to the Pennsylvania authorities. In return for admitting to the company’s misdeeds and paying the fine, Varela received immunity from further prosecution — for herself and the company.
The site layout, prices and bet options all look identical to 5Dimes. Review sites note betanysports is also based in Costa Rica and a “sister site” to 5Dimes.
- 5Dimes has taken another step toward legitimacy, announcing it has been licensed in the Isle of Man. The move comes four months after reaching a deal with the US Department of Justice to stop.
- When you first lay eyes on the 5Dimes website, there’s nothing that tells you that, in my opinion, this is the best offshore online sportsbook there is.The 5Dimes design is at least 15 years old.
As one Reddit user reported: “5D transferred my entire account over, and it went flawlessly. All account info, all pending bets, balance, etc…all transferred and looks exactly like 5d did.”
The simplicity of the migration suggests that 5Dimes and betanysports might run on the same platform. Migrations simply aren’t that easy otherwise.
Using the same platform doesn’t necessarily mean the companies are connected, but it does raise some questions.
Multiple Reddit and social media users also reported a straightforward switch and that betanysports was identical to 5Dimes.
What is going on behind the scenes at 5Dimes?
The company and customer service agents said there was no relationship between the two sites.
It’s also important to note not all customers were offered the chance to switch. Some bettors with massive +EV futures simply had them voided.Legal Sports Report also asked 5Dimes customer support for options for betting with the site closing off the US. No suggestion or offer to move was given. (The account also had no deposit history, for what it’s worth.)
There’s obviously a huge imbalance here in favor of the book. They’ve already collected on a lot of losing NHL and NBA futures. And now they can cancel the remaining live tickets.
That might explain why betanysports stopped accepting transfers on Tuesday, as some 2+2 users reported.
Bettors were also told that the minimum withdrawal amount on account balances was $100, causing more issues for smaller players.
How did we get here?
Remember, 5Dimes is closing US customers because it wants to relauchits operations with a “fresh start”. The company hinted it could be looking at the regulated market.
However, it declined to provide any details on how such a relaunch would work. One option laid out by Eilers & Krejcik analyst Chris Krafcikcould be the PokerStars route.
That is, some kind of settlement with the Department of Justice, then a sale of assets, like the brand and tech stack, to a third party.
That’s assuming the 5Dimes brand and tech has any value left, that is. Perhaps the most valuable asset is the database of US customers built over two decades.
Regardless of what’s really going on behind the scenes, the push for a 5Dimes rehabilitation and “fresh start,” hasn’t exactly started out promisingly.
Receiving permission to enter legal gambling markets after years of black market operations is extremely difficult. But that hasn’t stopped one of the world’s largest offshore sportsbooks from trying.
5Dimes, formerly based in Costa Rica, has just scored a massive victory in that effort. The company announced on Wednesday that it has received a gaming license from the Isle of Man Supervision Commission.
It will now relaunch its international product from that jurisdiction. The Isle of Man itself is a tiny market, with a population of less than 100,000. However, its Supervision Commission has international recognition. Whereas Costa Rican sites are effectively unregulated, an Isle of Man license is an assurance to other countries that the operator is playing by the rules.
“This licensure is an exciting milestone for the 5Dimes brand,” said Laura Varela, speaking for the company’s board of directors. “The Isle of Man is a Tier-1 jurisdiction, known for its advanced approach to gambling and e-gaming legislation and its exceptional reputation in the international gaming community. The Isle of Man sets high standards for its gaming operators and players, and we look forward to upholding the same level of principles and innovation with the launch of 5Dimes.”
Varela is the widow of the company’s founder, William Sean “Tony” Creighton. Tragically, he was kidnapped in 2018 and later found murdered.
Creighton’s death left the company in Varela’s hands. It’s under her leadership that 5Dimes began to try to clean up its act. This began with a settlement made with the USAttorney’s Office for the Eastern District of Pennsylvania, to the tune of $46.8 million.
Initial skepticism may still prove warranted
The key in all of this is that Varela herself hasn’t been accused of any wrongdoing. In fact, an investigation by US authorities found that she had no part in the company’s black market operations while Creighton was at the helm. Moreover, she entered into the settlement arrangement with the Pennsylvania authorities of her own volition.
That fact forms the basis on which Varela is attempting to steer the company toward legitimacy. Regulatory bodies vary in the extent to which they separate companies from the people who run them. Some take the position that a company’s misdeeds will follow it no matter who is at the helm. However, others are more receptive to the idea that a change in leadership can wipe the slate clean.
5Dimes suddenly stopped taking bets from US customers at the beginning of September 2020. This turned out to be related to the settlement the company paid to the Pennsylvania authorities. In return for admitting to the company’s misdeeds and paying the fine, Varela received immunity from further prosecution — for herself and the company — for any crimes committed prior to Sept. 30, 2020. US customers received instructions to withdraw their funds prior to that date.
There are still causes for concern, however. Back in September, there were reports from some US-based customers that 5Dimes representatives had directed them to another offshore site, BetAnySports. This company offers a near-identical set of products, right down to a large portion of the copy on its website. Meanwhile, 5Dimes continues to serve many gray market countries, despite having pulled out of the US and a handful of other regulated jurisdictions.
These residual stains don’t seem to have impacted its ability to get a license in the Isle of Man. Other regulators may see things differently, however.
Not all offshore regulators are equal
To someone unfamiliar with the industry, switching from Costa Rica to the Isle of Man may not seem like a big deal. Both are, in some sense, offshore regulatory jurisdictions. Neither can serve US customers legally, as states require companies to host their servers locally.
However, when it comes to offshore regulators, there is enormous variation in terms of level of oversight.
Costa Rica falls at one end of the spectrum. Though many companies claim to be licensed in the country, there is in fact no such thing as a Costa Rican gaming license. Companies will pay a small amount — $4,500 up front and $1,950 per year — to register in the country. However, they have no oversight whatsoever, and pay no taxes as long as they don’t serve Costa Rican customers.
At the opposite extreme are the Isle of Man and Malta. They have each made a commitment to providing strict oversight to online gambling companies. That, combined with favorable tax rates, has turned international online gambling into a major industry for them. In September 2012, they pushed further in establishing their trustworthiness by entering a mutual data-sharing agreement. Through this, they’ve each improved their regulatory standards and developed the ability to assist each other in investigations.
Not every legal online gambling country insists that servers be hosted locally. Those that allow reputable, regulated offshore sites to operate tend to look for licenses from the Isle of Man and Malta. Virtually every company you’ll see operating legally in the US will have a license in one or both of these places if it serves international customers. This includes Flutter, Entain, 888 Holdings, and their various brands, among others.
PokerStars was the exception to the rule
After settling with US authorities, 5Dimes claimed it would apply for a New Jersey license. It hasn’t received one yet, but it hasn’t been formally rejected either. It’s unclear whether the application was ever filed, if it is still pending, or if it has been withdrawn.
5Dimes is popular because it has favorable lines and a good reputation compared to other offshore sites. US sports bettors are therefore hopeful about its chances. Those without a personal stake in the matter are more skeptical, however, and for good reason.
We know that it’s not impossible for a company to clean up its act and make it into legal US markets. There is exactly one example of that, namely PokerStars. It served US customers illegally from the 2006 passage of the Unauthorized Internet Gambling Enforcement Act (UIGEA) to the 2011 crackdown known as Black Friday.
That illegal activity has prevented PokerStars from getting licensed in Nevada. Other state regulators, however, have been more charitable. PokerStars is currently active as a poker room in New Jersey, Pennsylvania, and Michigan, while its associated sportsbook Fox Bet is in all of those plus Colorado.
5dimes Taxes Online
However, PokerStars’ entry to the US demonstrated the effort required to go straight. It transformed its corporate identity and went public via a reverse merger with a much smaller company. It distanced itself not only from its original owner, Isai Scheinberg, but also all its executives from that era. Finally, it spent years bending over backward to show a proactive attitude toward compliance. That’s an effort that continues to this day.
5dimes Taxes Free
If 5Dimes has to go to similar lengths, then its Isle of Man license is only the first of many hoops. It is, however, an important step. Moreover, the speed with which it managed it should give doubters at least a little pause.