World Sports Exchange, also known as WSEX, has been around since 1995. It is one of the oldest online sportsbooks that offers poker and casino games as well. Cofounder and former CEO Jay Cohen went to prison to fight for the rights of online gambling operators and players. This gained the respect of the entire online gambling community. Every sportsbook portal had WSEX as a top rated book. So what went wrong?
In 2006 WSEX surprised the online poker world by going to 100% rakeback. While it had been done before this was the first and to this point only time an existing, established poker room, had decided to go rake free. In my opinion it was a brilliant marketing gimmick. It made poker a true loss leader to bring in sports and casino action. There is no telling how much extra action they received but it certainly wasn’t zero.
The forums were full of hype about the new business model. Players were excited, affiliates were nervous and other poker room operators were watching with interest. At first it looked like a success. The games were decent in quality and selection and players were happy using software that lacked most modern features in exchange for 100% rakeback. Then came the Unlawful Internet Gambling Enforcement Act (UIGEA).
When the UIGEA passed processing became difficult if not impossible for many U.S. friendly sportsbooks. It was hard to find processors willing to cut checks for sportsbooks that obviously were violating the Interstate Wire Act. Then in January 2007 Neteller pulled out of the U.S. market. This caused massive delays in payments to U.S. players and made WSEX less liquid since money couldn’t pour in as easily. As time went by it started to look like WSEX was in trouble.
In March 2009 Sportsbook Review made their first downgrade from A+ to A- and then downgraded them to B+ in April citing processor issues. Just over a year later WSEX had fallen all the way to a D grade. It is estimated $250,000 is owed to players that have complained to Sportsbook Review. On top of the processing woes there were quite a few accusations of bot use that went unpunished. The player count at WSEX Poker dropped and dropped. Today their average player count is about 30 after they used to average hundreds a day.
Also the 100% rakeback stopped. First it went to 90% rakeback, then 75%, then 70%, 65% and now it is 0%. For a model that had so much promise it was a shame for players that it was a failure. They aren’t the only 100% rakeback site to fail. Zerorake.com, Cardcrusade.com and PayNoRake.com all attempted a structure like that and none of them were successful. While I believe rake is too high in online poker it has become obvious some rake must be paid in order for sites to cover marketing, processing and staff. Maybe the poker world will meet somewhere in the middle. Rakeback has already helped to get us part of the way there.