Online Pirates of the Caribbean

Three San Francisco men found riches in Antiqua with their Internet gambling site. Now they're federal fugitives. Caribbean

The intermittent rains seemed fitting when the 49ers hosted the Green Bay Packers in a recent Monday night embarrassment. Cameras zooming in on the hometown sidelines captured the grim faces of players and coaches. A benched Steve Young, arguably one of the best quarterbacks the game has ever seen, stared numbly at his team's never-ending ballet of dropped passes, fumbles, and missed tackles. ABC's commentators told viewers they were watching one more chapter in the worst single-season meltdown in NFL history. "The old days seem like a long time ago," muttered announcer Al Michaels.

Four thousand miles away, sitting in an unremarkable office on a Caribbean island, one San Francisco man was watching the game with intense interest when Green Bay quarterback Brett Favre faded back and fired the ball through a gaping hole in the defense to tight end Tyrone Davis. When Davis lurched into the end zone for another Packer score, this 49ers fan began hastily typing out a series of numbers on his keyboard. The figures were the freshest odds for bettors who were wagering on the game's outcome over the Internet, buying and selling "contracts" on the matchup even as the two teams played.

Steve Schillinger felt bad about his home team's 20-3 loss that night, but it didn't stop him from doing his job. Three years ago, Schillinger moved to the tiny island of Antigua and started World Sports Exchange, along with two buddies from San Francisco, Jay Cohen and Haden Ware. Since then, www.wsex.com has become one of the world's most popular -- and notorious -- Internet gambling sites.

Michael Miller
Haden Ware (right) and his brother take in the scenery of Antigua.
Courtesy of Haden Ware
Haden Ware (right) and his brother take in the scenery of Antigua.
Steve Schillinger relaxes between bets in the World Sports Exchange office.
Courtesy of Haden Ware
Steve Schillinger relaxes between bets in the World Sports Exchange office.
Michael Miller
The Pacific Exchange houses the nation's third busiest trading floor.
Anthony Pidgeon
The Pacific Exchange houses the nation's third busiest trading floor.
Michael Miller

Details

RELATED LINKS

World Sports Exchange
wsex.com: Visa and Mastercard accepted

World Sports Exchange gambling license
Certificate authorizing the establishment and operation of business in the Antigua and Barbuda free trade and processing zone.

Internet Gambling Prohibition Act of 1999
The full text of Sen. John Kyl's anti-gambling legislation

Gamblers Anonymous
The front page of wsex.com refers people with gambling problems to GA.


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The former options traders hit the Internet Gold Rush at precisely the right time. Like most successful new media entrepreneurs, they sensed an untapped market, secured investors, and set up shop ahead of the pack. Customers leapt at the chance to place bets from their own homes or workstations. The three online pirates of the Caribbean found themselves basking in a balmy tropical paradise, watching over a business that handles an estimated $200 million in wagers annually.

But the three men are also federal fugitives who cannot set foot on U.S. soil without risking arrest. The U.S. Justice Department contends that their gaming operation is illegal, and wants to shut it down. Nearly two years ago, Schillinger, Ware, and Cohen were among 21 Internet gambling site operators caught in an undercover sting operation and charged with violating a 1961 federal law that prohibits sports betting over the telephone. Most of the other defendants have since paid fines and shut down their sites.

But World Sports Exchange is still taking bets, and fighting the charges. The company argues that it does nothing to violate U.S. law. After all, the company -- its computers, its employees, the whole operation -- is 1,300 miles from U.S. soil, wholly run from a small nation that has welcomed it and granted it full permission to operate.

Since their indictments, Schillinger and Ware have remained in Antigua. Cohen, though, has slipped back into the U.S. to face the music personally. He plans to emerge from hiding and show up for his approaching trial in New York, and challenge the government's case. His court date is scheduled for Feb. 14, coincidentally about the same time Congress may make a final decision on what exactly it wants to do about such ruffians.

In just a few years, online gambling has exploded into a $1 billion-a-year business. Whatever happens in the World Sports Exchange case could affect more than 700 other gambling sites. And whatever affects online gambling will also affect further Internet regulation, and even the economies of small nations like Antigua. And let's not forget Nevada's casinos, which are already losing millions to online gambling.

How did three men from San Francisco wind up in the middle of the hottest court battle going over international Internet gaming? Where did World Sports Exchange's unique and sophisticated operation come from?

The answer would be the West Coast's unofficial university of gambling -- the trading floor of the Pacific Exchange in downtown San Francisco.


The twin doors of the 220 Montgomery building open into a lobby of walls and pillars painted to resemble marble, all dwarfed by a gaudy, two-story chandelier. Staircases on either side ascend to the second level where, past an electronic gate and security guard, sits the noisy trading floor of the Pacific Exchange.

Open for options trading since 1976, it is the third most active stock exchange in the country, behind Chicago and New York, and also acts as a last refuge for the nation's tardy traders. The floor remains open until two minutes after 1 p.m. each day, allowing the rest of the U.S. a few extra moments to complete its trades.

Until three years ago, this was where Steve Schillinger, Jay Cohen, and Haden Ware worked.

On a November morning, the room appears busy yet oddly calm, reflecting a temporary lull in the markets. Paper litters the floor, a reminder of the chaos that periodically erupts. Traders earn six-figure salaries, but they also endure unimaginable stress. They wake up when it's still dark outside, don their floor jackets, and stand from 6:30 to 1 p.m., barely slowing down for a takeout lunch. They scream out orders, yell into telephones, or silently brood at the changing rows of colored figures on monitors that line the room. Success or failure is measured in seconds. A trader can make millions on a shrewd move, or screw up and tank so badly that he never works in the business again.

Steve Schillinger is remembered by several traders as a gregarious, husky 6-footer from Chicago who worked the floor for 18 years. When Schillinger's name is mentioned, the reaction from his former colleagues is always the same -- a pause, followed by sly, knowing laughter, and a shake of the head. They loved or hated Schill, as he was known. But he was always upbeat, and possessed an incredible head for numbers.

"He was God," says one trader with graying Brillo pad hair. "He was a natural."

"A wheeler-dealer!" chuckles another named Terrence Pierce.

"Very street-wise," adds Brad Rucker, a trader who hung around with Schillinger when they were kids growing up in the Chicago suburb of Arlington Heights. "We hustled a lot of pool together."

"He's one of the smartest guys I know," smiles trader Rob Kovell. "Like a mad scientist."

Schill was an inspiration to other traders, says Bob Pagnini, because he always kept his cool under pressure. Even if he was having a terrible day, "he wouldn't show it emotionally. He's terrific at it."

People remember Schill for another reason. He was the undisputed king of the office pool. On the side, Schillinger took bets from fellow traders, making book on which movie was going to win an Academy Award, or what the verdict would be in the O.J. Simpson trial. The traders loved it, in part because it took balls to attempt such a thing -- right there, on the floor of the Pacific Exchange! And he remembered everyone's wagers, never writing anything down. He kept all of it in his head.

The informal gambling provided welcome relief from the stress, which traders handle in various ways. The younger ones blow off steam, charging through San Francisco bars, shooting off to Tahoe for a weekend of skiing. The older ones compartmentalize their stress, and try not to bring home all the bullshit to their families every night. Some burn out early and fade away, others sit simmering with thoughts of another way to make a living. As one says, "People are always looking for other avenues."

In 1996, Schillinger and fellow trader Jay Cohen decided their avenue out of the Exchange would be Internet gambling, on a scale nobody had ever seen. Their jobs -- buying in the morning and selling in the afternoon -- weren't much different than making book. The Internet gaming market appeared wide open, with little or no competition. The three men researched the legal issues, consulted with attorneys, and began talking to investors about launching a Web gambling site.

About the same time, the Exchange caught wind of Schillinger's betting operation, and noticed that he wasn't making as many trades as he once did. In-house regulatory staff asked Schillinger upstairs for questioning about his betting pools. "He declined to explain," recalls Exchange Corporate Affairs Vice President Dale Carlson.

But by then, Schillinger and Cohen had lined up financing for their next venture. All the pieces were in place for the company that would be called World Sports Exchange. Cohen phoned up Haden Ware, a 21-year-old floor runner and student, whose primary job every day was to fetch hamburgers at 10:30 a.m. for Cohen and Schillinger. Cohen told Ware they were going to the Caribbean. Did Ware want to come along? Ware said sure.

The three walked away from their jobs on the Exchange, confident that success awaited them on an island in the sun.


Antigua sits in the heart of the Caribbean, with Puerto Rico to the northwest, and Montserrat and Barbados to the south. Discovered by Christopher Columbus, the island achieved independence from the British in 1981, but the U.K. influence is everywhere, from the parliamentary-style government to a strange passion for playing cricket. Tourists come for the scuba diving and balmy weather, and the island advertises itself as the world's ideal honeymoon destination.

It's also ideal for gamblers.

With a population of just 80,000, Antigua -- and the neighboring islet of Barbuda -- bristles with Internet gambling. According to Antiguan government documents, at least 82 licensed online casinos and sports books operate there, with a long waiting list for gambling licenses. A hefty percentage of the world's total offshore gambling, hundreds of millions of dollars' worth, runs through Internet servers located on 108 square miles of beach and palm trees.

On the island's north coast, in an area called Blue Waters, sits the villa rented by Steve Schillinger and Haden Ware. Five minutes away, in a shopping mall, are the offices of World Sports Exchange, filled with 14 computers. Most workdays, the two sit in shorts and sandals in front of keyboards, watching sports on TV, taking bets from customers thousands of miles away. They gladly speak to reporters. Press attention never hurt before, and now, in an extended legal dispute with their own government, it can only help.

Schillinger, 46, says the idea for the operation was actually a combination of his Pacific Exchange betting activities and the computer acumen of Jay Cohen. Stocky, buff, with short dark hair, Cohen was a 29-year-old trader with a degree from Berkeley in nuclear engineering who noticed how the floor traders swarmed around Schill to bet on the O.J. trial.

"Jay came up to me and said, 'You know, you should really be doing this on the Internet,'" remembers Schillinger. "I knew nothing about the Internet at the time. I don't even think I had a computer. But he was serious about it."

Schillinger and Cohen both visited Antigua and decided it was the ideal place to base their new company. Setting up offices there, and employing the locals, they thought, would keep them from running afoul of any U.S. laws.

The three arrived within a few weeks of each other in the fall of 1996, armed with gambling software and a computer programmer. Antigua was up for grabs. At the time, only a couple of gambling companies were operating, mostly using 800 numbers to take bets over the phone. World Sports Exchange was going to be revolutionary. Internet only, right through the computer.

World Sports Exchange opened bank accounts, paid the annual $75,000 licensing fee to Antigua's government, and the founders underwent mandatory criminal background checks. As with all its offshore businesses, Antigua exempted them from any income or corporate tax.

When they needed a source for their odds and point spreads -- what gamblers call "the line" -- they registered with Don Best and Roxy Roxborough, two of the best-known Las Vegas oddsmaker services. They would make money the traditional way, keeping 5 percent of all money taken in bets.

Customers were initially skittish about sending their money to some address in the Caribbean, an area historically rife with rum-crazed pirates and smugglers cradling machine guns. World Sports Exchange hit upon a relatively safe method of cash flow, which most offshore gambling sites also use. With a few minor variations, this is how it works: Customers deposit funds into an account, either from credit card or wire transfer, and then draw from that balance to place their bets. There is a maximum amount that can be lost -- the contents of the account. No credit is extended. Winnings are automatically deposited back into the customer's account, unless the gambler wants to be paid right away, in which case a check is FedExed to him the next day.

Unlike other gambling sites, crowded with images of heroic athletes and lazy palm trees, the World Sports Exchange site is designed without graphics, just plain text so customers can bet quickly. "If you can use a mouse, you can place a wager," reads the company's slogan. Online gamblers quickly discovered how unique the site is; it even offers an interactive betting feature that allows customers to essentially trade futures while a sports event is under way.

"We were trying to do a whole new thing, where you could bet on the games during the games," says Schillinger. "We were combining the stock market with sports gambling."

They launched in November 1996. Cohen worked on advertising and promotion, and Schillinger and Ware concentrated on setting odds and explaining their system to new customers over the phone. It was the same, really, as day trading, buying and selling contracts throughout the course of a day, except with sports events instead of stocks.

Business trickled in, initially from friends and trading floors, but then Cohen's marketing efforts began to pay off. After only a few months, the company was the subject of articles in the Wall Street Journal and New York Times, and business went through the roof. It made for good copy -- options traders turned sports bookies. The group was processing dozens of bets per minute, well on its way to the current client base of 10,000.

"We were able to do well right away because we had such low overhead," says Schillinger. "We were working 18-hour days, seven days a week, the three of us."

As it progressed, and the money rolled in, the three saw patterns emerge. Their customers weren't just fellow options traders, or long-term gamblers tired of calling their bookie from a pay phone. People came from all walks of life -- doctors, attorneys, professionals from Europe and Australia, mostly guys about 40 years old, who would make wsex.com their home page.

Football became by far the most popular sport, with bets equally split between college and pro. The Super Bowl isn't even their biggest game. Any weekend during football season is complete gravy, as are the annual "March Madness" playoffs of the NCAA basketball tournament. Business slows down in the summer months, but Schillinger has devised ways for gamblers to geek out. Customers can buy and sell contracts on every shot of a golf tournament, or every pitch during a baseball game.

But their booming business, and the media attention, made the three an easy target for the FBI.


Like most businesses during the early years of the Internet, bookies raced to establish an online presence. The U.S. government watched offshore sports books making millions of dollars with absolutely no restriction, and realized there was no existing regulation for this new type of gambling.

The only weapon the U.S. government really had was a dusty 1961 law, pushed through by then-Attorney General Robert Kennedy to fight organized crime and racketeering. Its official language reads: "Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers, or information assisting in the placing of bets or wagers, on any sporting event or contest shall be fined under this title or imprisoned not more than two years, or both."

When the Justice Department revisited the 30-year-old law, it decided the language could be interpreted to include gambling on the Internet, since most Internet connections are made (at least for the moment) with a phone line, i.e., a wire. But the original law did not include casinos or poker. Nor did it target the people placing bets, a law enforcement task that would be impossible.

So when the FBI was assigned to crack down on Internet gambling, it focused its attention on the sports sites, and the people who were actually taking the bets.

Unfortunately, Internet sites mostly sprang up in countries where gambling is legal, and many are owned and operated by non-U.S. citizens. The FBI couldn't exactly run down to Costa Rica and arrest a British citizen for running a Web site, just because some guy in Kansas was betting on a basketball game.

But would-be regulators found some leverage in this tangled mess of contradictions. They interpreted the law to mean that if an overseas betting organization was owned by an American, and took wagers over the Internet from an American bettor -- even though the bettor might be placing his bet from a gambling-friendly foreign country, and even though the Internet computers and servers might be located in a gambling-friendly foreign country -- this was a violation of the Wire Communications Act.

The FBI launched a yearlong undercover sting operation in 1997, based in New York state. Posing as gamblers, agents opened accounts and placed wagers at sports books based in Costa Rica, Nevis, Curacao, the Netherlands Antilles, the Dominican Republic, and Antigua.

One of the names on the hit list happened to be an outspoken media darling of the exciting new online gambling world. FBI agents opened a phony account with the World Sports Exchange, says Schillinger, and deposited $300.

"They bet $50 a game. On hockey! And just to show how smart they are, I think they won one and lost five," he says. "There's where your taxpayers' money is going -- them blowing money at sports books."

Once the FBI collected enough evidence, it named the site operators in a criminal complaint. On March 4, 1998, 21 individuals, representing nine different offshore sports books, were charged with conspiring to violate the Wire Communications Act. U.S. Attorney General Janet Reno rattled her saber, issuing this statement: "To Internet betting operators everywhere, we have a simple message: You can't hide online, and you can't hide offshore."

Schillinger, Cohen, and Ware were notified of their new criminal status, and were baffled. Some of the other sports books did appear to be breaking the law (one book operated right out of an office on Wall Street, using Internet servers and banks located in Manhattan). But World Sports Exchange had done its homework. Its servers, bank accounts, and employees were on an island where gambling is perfectly legal.

Sue Schneider is chairperson of the Missouri-based Interactive Gaming Council, a pro-gambling group that tracks the online portion of the industry. She's very familiar with World Sports Exchange. "They came in with a very innovative product. They were not the straight-out gambling company. They got a lot of people's attention," she says. "Their main crime was that they were U.S. citizens."

Cohen had been very vocal within the gambling world, giving interviews, making speeches at conferences, and debating the online issue on television. Schillinger and Ware also spoke freely to journalists about the company. Their reaction to the criminal charges was immediate and unanimous.

"It was growing rapidly. We'd put a lot of time in. Jay wanted to go back and fight this, and we decided that Haden and myself would stay down here and keep it running," says Schillinger. "They obviously wanted us to turn ourselves in, and immediately cease the operation, which we didn't want to do."

And so they didn't.

Other sports books shut down entirely. Several defendants accepted sentences of probation and home detention, and one paid a $750,000 fine. But when it came time to face charges in a U.S. District courtroom, Jay Cohen stood up and pleaded not guilty. His attorney, Benjamin Brafman, filed a motion to dismiss, which a judge denied, and so the case is scheduled for trial. After several defendants pleaded out, and charges were dismissed against a few others, the government ended up indicting 14 individuals, and issued warrants for the arrests of Cohen, Schillinger, and Ware. All three are now officially listed as at large.

As this story goes to press, Schillinger and Ware remain on the island. Because gambling is legal on Antigua, it's unlikely they will be extradited. Cohen has returned to the U.S. After several delays, his trial is now scheduled for Feb. 14, 2000, in a courtroom in New York. He did not return messages left by SF Weekly, but is rumored to be spending his time somewhere in the Bay Area.

The gambling industry is keeping a close watch on the potentially landmark case. At the worst, Cohen could face a sentence of one to two years, and the wsex.com site would be shut down. Whatever the outcome, it will presumably help pave the way for clearer legislation regulating online gambling. The country's perspective on gambling certainly couldn't get any more confusing.


If anything, the U.S. has been consistent in its contradictions regarding gambling. On the one hand, lotteries were used by some of the original 13 colonies as fund-raising tools, and lottery proceeds financed construction of the Harvard, Yale, and Princeton campuses. On the other hand, our Puritan heritage saw gambling as akin to signing a deal with the devil -- an illness that ripped apart families and contributed to rapid moral decay. As a nation, we have encouraged state lotteries, then banned them completely, then reinstated them again. We have invented slot machines and perfected horse racing, then outlawed them, and then changed our minds again. We have pushed American Indians off their lands onto reservations, then allowed them to operate otherwise illegal gambling operations. For years, we considered Las Vegas to be a mobsters' mecca of hookers and high rollers. Today, Vegas boasts casinos the size of small cities, which eagerly market themselves as wholesome family vacation destinations.

Sports betting has its own rich tradition, from Shoeless Joe Jackson to Pete Rose, and the always-questionable arena of heavyweight boxing. But sports bets are now legal in Nevada, and thousands of gamblers flood the state during the "March Madness" of the NCAA basketball finals. Despite RFK's best intentions, people still grab the phone and illegally bet millions of dollars on sports every year.

As technology improves, bookies search for more breathing room. When 800-number phone banks became accessible, bookies moved operations offshore. Gamblers could then place toll-free bets without having to meet their bookie at the bar down the street, or driving to Nevada. In the mid-1990s, the Internet offered even more opportunities for customers and their offshore bookies. Small, impoverished countries with stagnant economies didn't care that the U.S. had a schizophrenic view of gambling. Betting was legal in their front yards, so they eagerly welcomed the new influx of cash. American celebrities loaned their names to cybergambling sites, from musician Kenny Rogers to comedian Rodney Dangerfield and boxer Larry Holmes.

In 1996, the National Association of Attorney Generals saw the proliferation of online gambling sites as a growing concern, and lobbied the federal government to clamp down on Internet gambling.

The feds commissioned a National Gambling Impact Study to assess the consequences of online gambling in America. But the Department of Justice faced a number of problems in its zeal to rein in this new gambling force. Chief among them was that 48 of the 50 states had already legalized some form of gambling, from lotteries to casinos and bingo games. In Nevada, you could legally place a sports bet in a casino, over the phone, on the street, in a hot-air balloon, in the kitchen of a brothel. Cracking down on Internet gaming could make the government appear hypocritical, at best, or even create the impression that the U.S. was protecting established gambling by quashing the Internet upstarts.

To this day, the Department of Justice maintains that enforcement of the Wire Act is still up to the individual states, with the feds assisting in cases of fraud or organized crime. But how is a state supposed to police the Internet? How could, for instance, the state of California be expected to monitor the actions of three of its citizens, making sports books on an island half the globe away?

Clearly, some say, the 1961 law needs to be updated. Arizona Sen. Jon Kyl tried to do that in 1997 with what was dubbed the Internet Gambling Prohibition Act. Kyl's law would have banned all online gambling everywhere in the U.S., with no exception for lotteries or any other established gambling entity. And in a departure from the 1961 act, he wanted to fine individual bettors if they were caught.

But the bill quickly sank into a mire of questions that show just how hard it is for our government to try to regulate Internet commerce.

One issue is free speech. The Internet is a unique form of communication, acting both like a one-on-one telephone call and a newspaper that services a vast audience. If the U.S. wants to enact a law prohibiting a certain use of the Internet, it had better word the legislation very carefully, or people who believe strongly in no Internet regulation are going to scream bloody murder.

If one applies the Wire Act literally, it means that a sports bet is illegal if transmitted interstate or to foreign areas, unless the transaction is legal at both ends of the transmission. But if you don't know whether the actual bettors are in Oklahoma or across the Atlantic Ocean, how do you know if both ends of the transaction are legal?

Then there are international relations. Many countries allow Internet operations to accept bets. A casino owner in a foreign country would not be violating his own country's laws if he accepted a bet from a U.S. citizen. Imagine the gall of the U.S. asking a foreign country, where gambling is legal, to help the U.S. catch its bettors here.

Kyl's bill struggled for consensus, despite amendments that decriminalized the actual bettors and exempted the operation of horse and dog tracks, state lotteries, casinos, fantasy leagues, and closed-loop Internet systems (systems that are confined to a specific geographic area, such as those found in Nevada).

But Kyl kept up interest in his anti-gambling campaign, spicing up the debate with catchy soundbites. He warned that children would "wager with Mom's credit card, click the mouse, and bet the house." Internet gambling, he says, could become as addictive as "hard-core crack cocaine." Kyl has collected an unlikely group of supporters, from the Christian Coalition to Ralph Nader's Public Citizen, America Online, the New Jersey casino industry, and professional organizations of the same sports that are the subject of betting.

Virginia Rep. Bob Goodlatte has introduced similar legislation in the House of Representatives, co-sponsored by politicians representing the casino-rich state of Nevada, and he has also learned the value of an effective soundbite. According to Goodlatte, his Prohibition Act "will keep children from borrowing the family credit card, logging on to the family computer, and losing thousands of dollars all before their parents get home from work."

On Nov. 4 of this year, the Senate finally approved the modified Kyl bill. The Goodlatte bill is still kicking around Capitol Hill. The Clinton administration is rumored to be considering a bill of its own. According to a Goodlatte aide, none of these bills is expected to reach a vote until at least the end of January.

If any of the three make it into law, there will still be the momentous problem of enforcement, especially with over 700 sites around the world, most of them based in gambling-friendly countries.

"The new bills have taken out criminal provisions," says Sue Schneider. "The worst now is that they take away your ISP account. But as someone pointed out, there are 6,000 ISPs in the country."

But repercussions are already spreading throughout the gambling world.

Ron Pereira operates thesportsdaily.com Web site out of his apartment in North Beach. He doesn't offer gambling himself, but he links to other sites that do. Despite the attention cast upon online gambling for the moment, he sees room for both Internet sites and phone bookies.

"People are always gonna want to make a phone call. The runner, the delivery once a week. It's a tradition," he says. "It takes time to develop your own bookies, a certain rite of passage to get your own bookie. Get your own system set up, with a runner. You can then say you have your guy, your very own bookie. It makes it special.

"With the Internet, there's nothing stopping them. If [the Kyl bill] doesn't get passed next year, these things are gonna be so big. You start getting into the tens of thousands of customers. At some point, when the mass gets to be millions of people, that's when Vegas will have to jump in. They can't ban it at that point."

To some other nations, the race to regulate online gaming is another example of American arrogance. The Internet doesn't belong to the U.S. It doesn't belong to anybody. Many foreign-owned sites actually hope such a law will pass, so it will increase their betting traffic, up to 90 percent of which is from the U.S. Schneider travels frequently to gambling conferences in other countries, and the rest of the world's reaction to U.S. policing of the Internet is not lost on her.

"The term that comes to mind most is 'arrogant.' It's embarrassing," she says. Like many of their peers, the founders of World Sports Exchange believe it's time for some form of industry regulation. But they still believe they aren't doing anything illegal.

"It's a matter of your interpretation of the law," says Haden Ware. "Our interpretation is that the bet takes place down here. It's account wagering. They're taking a virtual visit to Antigua."

In the meantime, the validity of the Wire Act charges remains the greatest threat to World Sports Exchange and its owners. Schillinger expects Cohen will be cleared at trial, but adds that even if he is found guilty, World Sports Exchange will keep operating.

"What I find so funny, all these people who are talking about how evil gambling is, all their states run the state lottery, which is a complete rip-off," says Schillinger. "Here, we hold 5 percent of what people bet. In the lottery, they hold probably in excess of 50 percent. You have poor people in California betting their paychecks, buying lottery tickets. How can they act like that's fine, to take all those people's money without a fair chance for them to win, and they act like what we're doing is evil?"


For Haden Ware and Steve Schillinger, life on Antigua isn't necessarily the Shangri-La travel brochures would lead you to believe, but it's close. The two play a lot of golf, often with other sports bookies. Friends occasionally come down to visit. The two men stay in contact with Cohen and their attorneys back in the U.S. They used to tool around on their 29-foot boat, named Ahead of Schedule, until it was totaled by tropical storms. Apart from a golf shot or a few games of blackjack, both say they don't gamble much.

Ware says he passes the time hanging out in the sun, and posting photos of his girlfriend on his personal Web site. As a fugitive, he couldn't attend his brother's recent wedding in the States, but the best man tucked a cell phone in his pocket so Ware could listen to the ceremony.

Schillinger spends time improving the site. They've added horse racing in the last few months. Maybe a casino-type section is next. "We had to make a choice when we came down here," says Schillinger. "Whether it's Antigua or the U.S. We thought we'd be free to come and go."

But until Cohen's trial, and action on the gambling bills, the men are more or less trapped in paradise. There are a lot of hours in every day. The two occasionally visit Antigua's neighbors, but as any local will tell you, there's not that much difference from island to island.

Ware muses on what he might do with the rest of his life, once this chapter winds down. He's considered finishing his degree at Berkeley by taking extension classes. The situation with World Sports Exchange haunts him. He'd love to come home, visit his mother in Noe Valley, but the thought of looking for another job feels weird.

"I can't exactly put down on my résumé I've been a bookie for three years," he says.

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