The sportsbook industry booms in San José, Costa Rica. (AP)

Costa Rica, Sportsbook Mecca

Johnston Farrow


Deep in the jungle of Central America, one of the first gold rushes of the 21st century attracts people from far and wide. In this case, the gold is a share of the lucrative online sports gambling industry that has exploded in the last decade.

If Dawson City was the boomtown of the Yukon in the late 1800s, then San José, Costa Rica is its equivalent in the offshore sportsbook world, housing a large portion of the Internet-based industry. Dozens of new sportsbooks pop up every year in San José.

A stable democracy, a solid infrastructure, government tolerance, a better lifestyle and an educated, yet cheaper workforce are all reasons why the billion-dollar offshore sportsbook industry shifted from the island towns of the Caribbean to the Central American capital in the late '90s.

"There is no mystery in this one, it’s a purely capitalistic decision,” Cole Turner, CEO and founder of BoDog.com, told Covers. "The best overall bundle of value will always win, and Costa Rica is that package for our industry."

But San José hasn’t always been a welcome home for the sportsbook industry. The first books in San José faced several challenges that eventually paved the way for future success for many other books.

Perhaps the most difficult hurdle sportsbooks had to deal with in the late '90s was the poor telecommunications system in place. The Costa Rican telephone monopoly meant high prices for communication services; yet, sportsbooks often found themselves offline, sometimes for days at a time with less than efficient service and frequent downed lines.

"It took almost as long as six months to hone and refine phone systems," Tom Miller, General Manager of Millennium Sportsbook (founded in 1997), said. "You know what problems satellite can cause, especially in bad weather. You can have mucks down in Costa Rica or in the United States, then boom, you don’t have Internet."

Little government regulation of the sportsbook industry allowed two fly-by-night sportsbooks to set up shop, which lent a black eye to the industry. However, the Costa Rican government distanced itself from the idea of full regulation because it could draw the ire of the United States, a major trading partner that considers Internet sports gambling as money laundering.

“The Costa Rica government really can’t seem to get together on guidelines for licensing," Miller said. "You have to remember that Costa Rica and the U.S. have good trading relations. You don’t want an (American) embargo on Costa Rica where they aren’t accepting bananas, coffee, dates and papaya."

Sportsbook owners also pay high import tax on foreign made items, which can run up the cost of starting a new book or upgrading their current business.

"They have a tremendous import tax here in Costa Rica, which can run as high as 100 percent on a product," Miller said. "Even though you might buy a product offshore in the United States, it’s going to cost money to import it here."

New sportsbook employees in the late '90s also dealt with the huge difference in the standard of living in a developing nation and the humid jungle climate.

"When I first moved to Costa Rica, it was a bit of a culture shock for me because I had been living in Southern California,” Mike Nichols, CEO of Betcom.com, told Covers. "I was so naïve. Nobody tells you that it takes three hours to get to the beach."

The early challenges were too much for some sportsbooks. Nichols moved Betcom to Venezuela after a year because of the difficulties it faced in Costa Rica. For a time, the sportsbook industry’s new digs resembled more of a frat house than the sparkling palatial resort many thought Costa Rica would be.

Once the sportsbooks ironed out the wrinkles, however, the industry thrived. With help from the government and the telecommunications sector, sportsbooks increased their productivity with the upgrade to fiber optic cable. The shift to cable-powered communication reduced the need for satellite-based Internet and reduced the price for telecommunications.

“I was one of the pioneers that suffered in the '90s, but now in the year 2004, you and I are talking very clearly on the phone," Miller said.

Costa Rica also has mandatory education and free university, giving the sportsbooks a large skilled workforce to draw on.

The Costa Rican government, obviously aware of how much money the offshore industry pumps into the economy, finally opened up to the possibility of greater sportsbook regulation. Many well-established owners welcome the regulation because it lends legitimacy to the industry and protects players from shady sportsbooks.

"I like the industry heading right where it is going," Turner said, "a moderate increase in regulation and taxation to give the industry more international status without compromising the value to the players of the current free market system in place in Costa Rica."

The culture shock has worn off and employees have made themselves at home in San José. For example, Betcom returned to Costa Rica to take advantage of the current success and the better lifestyle that caters to the foreign-owned business.

"My expectations were a lot different (when we returned)," Nichols said. "Compared to the island where we were, it became attractive to us because culturally, there’s a lot more going on, restaurants, movies and kind of normal city stuff that you kind of miss when you’re living on an island."

A better infrastructure with government cooperation and an affordable, enjoyable lifestyle means there is no end in sight to the sportsbook boom in Costa Rica.

"Labor is cheaper, cost of living is cheaper, rent is cheaper and the list goes on and on," Turner says. "We are very happy with our decision to be a Costa Rican-based group."