World Sports Exchange Founder Jay Cohen Gets Turned Down for Job at DraftKings

Written by:
C Costigan
Published on:
Feb/07/2024

His sportsbook once appeared on the cover of Sports Illustrated and later profiled on the CBS news magazine show 60 Minutes.  He was the co-founder of one of the very first online sportsbooks, World Sports Exchange or WSEX for short.

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In 2000, Jay Cohen stood trial after being charged with running an offshore sportsbook.  He would become the first man ever convicted of doing so and served nearly two years in a federal prison camp outside of - believe it or not - Las Vegas.

Cohen was represented by famed mob attorney Ben Brafman.  At around the same time, Brafman was representing hip hop recording artist Sean (Puffy) Combs, now known as P Diddy, on two counts of illegal gun possession. 

Brafman did a good job of representing Cohen.  We were there covering the entire trial.  The problem is, Brafman knew little about the emerging industry or much about how the internet worked, nor did the judge for that matter.  One anecdote from that trial involved the judge asking "non experts" involved with the case how certain aspects of the World Wide Web worked. Brafman did not contest this move.

The case would come down to wires in a world that was becoming wireless.  Cohen had been charged with violation of a 1960's "Wire Act" after all.

The main crux of the complaint involved the question of whether a bet was placed on the World Sports Exchange server in Antigua or where the person placing the wager resided.  The Court found it was the latter.

Brafman got Sean Combs off but was unable to replicate that success with Cohen, who some observed at the time to be too stubborn in failing to pursue a lawyer more familiar with gambling and technology.  Brafman was not that guy.

Manhattan U.S. Attorney Mary Jo White said at the time the case showed that sportsbook operators who take bets from Americans could not avoid the federal wager law by taking their business overseas.

``An Internet communication is no different than a telephone call for purpose of liability under the Wire Wager Act,'' she said. ``As this case demonstrates, persons convicted of operating Internet sportsbooks offshore face very serious consequences -- imprisonment and thousands of dollars in fines.''

Fast forward nearly 25 years and the Florida Seminoles set forth the same argument as Cohen in an effort to set up their mobile sportsbook site Hard Rock Bet.  The Seminoles had entered into a compact with the state allowing them to exclusively offer sports gambling at their retail casinos and via mobile devices.  With the latter they claimed bets were taking place on their server on tribal land.  The Court agreed with that assertion and Hard Rock Bet is now live in Florida. 

For many years following his release, Cohen was among the most vocal critics of competing sportsbooks, most notably BetOnSports out of Costa Rica.  Cohen would hammer these operators on various Web forums.  There was always speculation that Cohen returned to Antigua and still had some involvement in WSEX.  Nothing could ever be confirmed however and Cohen flat out denied any involvement when asked by Gambling911.  A source close to G911 did confirm that Cohen was spotted in Antigua years after he got out of Nellis Prison.  At the very least we knew he was still in close touch with one of the co-founders still running the book, Steve Schillinger.

In 2009, when Bank of Antigua founder Allen Stanford was charged with running a ponzi scheme, Cohen assured us that World Sports Exchange did not hold money there as, in his words, "Stanford was against gambling".  Those with money in Antigua's biggest bank lost most of it.

We could never confirm whether the sportsbook maintained funds at the Bank of Antigua.  What we do know is that the once "solid as they come" World Sports Exchange began slow paying players some time thereafter.   The slow pays would eventually become no pays. 

We met up with WSEX co-founder Spencer Hanson in Belize a year after Cohen's trial and he wanted nothing to do with his old company.  Another co-founder, Hayden Ware, moved on as well.  The last man standing was Schillinger.  In 2013, he took his own life.  WSEX abruptly closed thereafter, owing at least a million dollars to players.

For nearly ten years, Cohen's whereabouts were unknown.  They remain unknown though this week he finally surfaced as part of an SI.com piece on "Where Are They Now".

Cohen spoke to the reporter but only revealed he has been living in "an Eastern European" country and can't find work.

In a bit of irony, the man who helped create online sports betting was turned down for employment at DraftKings.  The auto reply advised Cohen that they were "going with someone with more experience".

"Me not getting a job [at DraftKings] would be like Tesla or Edison getting turned down for a job at the electric company,” he tells SI. “I helped invent the product!”

In the SI piece, Cohen elaborates some on what ultimately led to the demise of WSEX while supporting the notion he was more intimately involved than previously relayed to Gambling911.com.

Under UIGEA (Unlawful Internet Gaming Enforcement Act), strict banking restrictions were imposed on services like Western Union—suddenly, they wouldn’t process transactions between WSEX and its U.S. customers. Same for most credit card companies. Cohen says WSEX had to seek out less reputable payment processors. Terms were often larded with fees. Cohen recalls that a friend suggested they take bets via a newfangled virtual currency called Bitcoin. “We thought it didn’t make sense,” he says. “Looking back, maybe that wouldn’t have been a bad idea.”

Forgive us for being skeptical.  Bovada, BetOnline, BetUS launched around the same time as WSEX or a few years later.  Each have been in business for 20 years or longer (BetUS is now celebrating 30 years in business).  Each of these three companies continue to thrive and dealt with the same exact processing issues as WSEX. 

The SI piece is a "must read".

- Chris Costigan, Gambling911.com Published

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