Costa Rica, like most Central American countries, conjures up images of lush rain forests or miles of exotic beaches yet there is another side to this growing offshore financial centre - it is becoming a key location for the fast-expanding online gambling industry as US gaming entrepreneurs flock there to take advantage of the low setup costs and to avoid legislation in the US, namely the 1961 Federal Wire Act, which prohibits interstate wagering via telephone or telegraph.
Joe Gallagher, owner of All Sports Network, a consulting firm based in Dominica, said 'There are more people in Costa Rica doing this than anywhere else in the world'. He believes that part of the attraction of Costa Rica is the fact that it costs less than US$10,000 in government fees to launch an online gaming venture, in contrast to some Caribbean islands, where official startup fees can be as high as $250,000, in addition to large annual fees. Furthermore, Costa Rica's capital San Jose, is said to have a reliable telephone system and a plethora of multilingual employees ready to work in the online gaming sector.
Also extolling the virtues of Costa Rica is Greg Champion, CEO
of the North American Sports Association (NASA), who moved his
sports betting operation from Aruba to Costa Rica due to lack
of office space and large telephone bills. He said 'No one has
the infrastructure and technology of Costa Rica. Finally I've
found a place we can't outgrow.'
As well as NASA, San Jose can boast other major players well-known to Americans, such as Casablanca Sportsbook & Casino, Inventabet.com, e-Las Vegas and Casino Earth. These so-called virtual casinos are a fast growing activity on the Internet and of an estimated 700 Internet gaming companies worldwide, around 125 have been established in Costa Rica. Their future certainly looks rosy - according to a report by New York gaming consultants Christiansen/Cummings, it is predicted that there will be 43 million gamblers, hailing mainly from the US, Canada and Asia, generating approximately US$2.3 billion by 2001.
Whilst Internet gaming may be booming in Costa Rica, bringing with it investment and the creation of jobs, its appeal is not universal and obviously Costa Rica's national lottery chiefs are keen to retain their monopoly. Jose Manuel Echandi, president of the country's Social Protection Board, the government agency that runs the national lottery, claims that online gambling is illegal in Costa Rica because the Gaming Law of 1922 grants the government a monopoly over the lottery and, hence, all betting activities. Other politicians have called for amendments to Costa Rica's gambling law, with National Liberation Party Congressman Rafael Arias stating 'The spirit of the law is that it's illegal but there are lots of loopholes.'
Web gaming companies can employ devious methods such as finalising all bets in the Bahamas so no gambling technically takes place in Costa Rica. Moreover, sites typically register as data processing companies, and virtual casinos argue that they respect the government's monopoly by using filters to weed out local Internet providers and keep local Costa Ricans from placing bets. A San Jose corporate lawyer said 'Anything that isn't clearly designated as illegal is considered legal.'
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