Originally Posted by
Sidewinder
How old is this issue?
Their whole downfall is pretty crazy. Do you know if they originally had anything to do with Matchbook?
Jay Cohen, once a beacon of truth and a strong moral compass is nowhere to be found. The other founder killed himself.
WTF happened to this once great internet gaming giant?
That magazine was published in summer 2006. WSEX was riding high with a sterling reputation on par with anyone in the online gambling industry. Months before UIGEA, as poker was reaching its crest, WSEX launched a fail rake-free poker room as a loss leader attracting customers to the sportsbook and casino. This turned out to be counterproductive, resulting in a double whammy of increased processing costs while the loyal base of gamblers dusted off their deposits to rake-savvy poker players rather than the house.
WSEX had a large stake in Matchbook, a company which had its own significant issues. Once you have half decent software and some active traders, a betting exchange is a risk-free money printing dream machine that feeds its own success. The only ways to fuck it up are gambling in your own markets, like Mansion, or extending bad credit, like Matchbook, which got rolled for some big figures. Among those debts was infamous forum mogul and government informant Ken "The Shrink" Weitzner, who escaped his degenerate mistakes by taking the gas pipe along with his wife in a romantic double suicide at their Virginia home. When WSEX started to fall on hard times, the equity in Matchbook was shopped around to everyone in the industry. It was a highly coveted brand but interested parties were wary of the massive liabilities on the balance sheet from trades on the other side of those bad accounts. CRIS had an agreement to purchase in place, contingent on the player who Matchbook owed most taking a 50% haircut on his balance. He refused and the deal fell apart. About a year later, a British syndicate led by James Bord purchased Matchbook at fire sale prices and the same big player ate a shit sandwich and liked it, getting 15c on the dollar. The Matchbook sale provided WSEX with its last gasp. Players got a trickle of small payments to keep some hope alive and barebones operational expenses were met during those last few years.
It's hard to isolate any one reason that it all fell apart. The WTO lawsuit debacle sucked a lot of capital and morale from the company. Though WSEX never admitted any involvement, it's quite likely that they got burned by Antigua-based banker and Ponzi scammer Allen Stanford. Macro factors such as the UIGEA and global recession didn't help. Mismanagement and greed are ultimately what it comes down to. The founders could have saved the company but why. They already had their boats and houses and untraceable bank accounts. When the United States welcomes them back with less punishment than you'd get stealing a Snickers bar, it's hard to question their math.
Steve Schillinger was the only WSEX principal to have the common decency to blow his own brains out. Jay Cohen is in a villa somewhere, coked out of his gourd, using his sausage fingers to shovel Haagen Dazs directly into his fat face and laughing at us. Haden Ware keeps on keepin' on, living his charmed life.
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