5Dimes Leaves US Market and Settles With Authorities

5Dimes leaving USA

In early September 2020, offshore sportsbook 5Dimes announced it was leaving the US sports betting market and hinted at making a return as a licensed operator.

The following message greeted US customers visiting the 5Dimes website:

“5Dimes is excited to announce that it is embarking on a new business venture. With the evolving legal landscape in the United States, we want to take advantage of the opportunity to offer an improved online sports betting experience to our many U.S. customers. In order to do this, we need to temporarily suspend temporarily our service of the U.S. market so that we can launch our new operations with a fresh start.” 

The statement went on to outline the exodus plan:

  • Online betting services to US customers ceased on September 21, 2020
  • Customers could withdraw funds until September 25, 2020.
  • Unclaimed funds were transferred to a third-party claims company on September 30, 2020.
  • On September 30, 2021, any unclaimed funds were considered abandoned.   

As a longtime offshore sportsbook, 5Dimes carved out a niche flouting US law and serving Americans well before the Supreme Court struck down PASPA and states began legalizing online sports betting.

5Dimes’ departure (temporary or not) from the US was a significant development, but the impetus for the move was unclear at the time.

There were two feasible, and plenty of other less likely, explanations for 5Dimes’ decision to pull out of the US market.

Those reasons were:

  • The company was prepping for a US relaunch as a licensed, regulated sportsbook.
  • 5Dimes had run into issues (payment processing or otherwise) in its dealing with US customers.

5Dimes Settles with US Authorities

Later, 5Dimes confirmed its intentions to re-enter the US market and announced it had reached a $46 million settlement agreement with the US Attorney for the Eastern District of Pennsylvania that will allow it to apply for sports betting licenses in regulated states.

In a statement, 5Dimes announced it would temporarily stop serving US customers in order to “launch our new operations with a fresh start.”

The 5Dimes website began IP-blocking visitors from the United States shortly thereafter.

5Dimes also confirmed that its earlier decision to stop serving US customers was indeed motivated by a desire to enter the regulated market. To that end, 5Dimes forfeited more than $46 million to the government. In return, the US Attorney’s Office for the Eastern District of Pennsylvania agreed not to prosecute 5Dimes for crimes committed while serving the US market.

The non-prosecution agreement did not cover tax evasion, if any occurred, and did not guarantee US regulators will accept any licensing petitions from 5Dimes.

In a statement published on Twitter, 5Dimes said this:

We look forward to relaunching 5Dimes as a sportsbook and casino in the legal, regulated U.S. market and bringing the same great experience to all our customers.

A Tale of Two Statements

5Dimes and the US Attorney’s Office for the Eastern District of Pennsylvania both issued statements at the time, each emphasizing different aspects of the agreement.

press release from 5Dimes read in part:

In the spring of 2019, Ms. Varela voluntarily contacted the EDPA to resolve any prior criminal activity by 5Dimes. This settlement agreement is a direct result of Ms. Varela’s extraordinary cooperation with the EDPA to resolve the criminal investigation and clear the Company. As part of the settlement, Ms. Varela identified criminal assets associated with the Company and agreed to forfeit more than $46 million in value to the government. The cooperation did not include disclosing information or identities of any customers.

As noted in the settlement agreement, the government’s lengthy investigation confirmed that Ms. Varela was not involved in any illegal actions of 5Dimes. The agreement expressly clarifies there are no legal restrictions on Ms. Varela’s use of her assets or the assets of the 5Dimes brand to explore future options, including, but not limited to, re-constituting the 5Dimes brand to be licensed to conduct legal, regulated gaming activities in the U.S. and internationally.

statement from US Attorney William M. McSwain painted the agreement in a less flattering light, potentially foreshadowing the headwinds 5Dimes would face as it seeks to gain the approval of regulators in states with legal sports betting.

The settlement agreement announced today is a victory for the United States in ceasing the illegal activity of a company that was being investigated for a multitude of crimes, including a sophisticated money laundering operation. It is also a testament to the dedication of the investigators and prosecutors who doggedly pursued this case even after the primary target was kidnapped and murdered. As the Office has done with a variety of criminal and civil matters, we will use every tool at our disposal to hold individuals and businesses accountable and ensure their compliance with federal law.

Through our 5Dimes investigation, Homeland Security Investigations illuminated a massive global network of criminals whose profession was to launder proceeds for drug cartels, kleptocratic regimes, illegal mining operations, and fraudsters,” said Brian A. Michael, Special Agent in Charge, HSI Philadelphia. “Today’s announcement of the global settlement agreement and significant monetary seizures demonstrates HSI’s commitment with our partners to deny criminal organizations the financial proceeds of their illicit activities.

5Dimes also revealed in its press release that it had retained the services of Stephen A. Miller with Cozen O’Connor, a Philadelphia-based law firm. Steve Bittenbender of Casino.org also reported 5Dimes has retained Washington, DC public relations and crisis communications firm LEVICK.

And in February 2021, 5Dimes acquired a sports betting license from the Isle of Man. The license cleared 5Dimes to operate in numerous regulated markets – but not in the United States. Still, it was a significant move toward legitimacy ahead of a future US market entry.

Can 5Dimes Sportsbook Go Legit?

The notion that 5Dimes Sportsbook can reposition itself for a foray into the legal US market seems unlikely given the site’s history and the structure of the regulated US market.

However, PokerStars managed this feat not that long ago.

While sports betting and poker is not an apples-to-apples comparison, offshore sportsbooks use some similar justifications as the online poker sites caught up in the Black Friday case. That said, PokerStars paid a hefty price for its new, “clean” image.

Without rehashing the events that are nearly a decade old, PokerStars was the cleanest online poker site operating in the US. Yet, the company ended up paying around $1 billion, key individuals were barred and had to divest their interest in the firm, and the company spent several years sitting on the sidelines in a penalty box.

I find it hard to believe a less “clean” 5Dimes (not only is it sports betting, but 5Dimes also offers online casino games) would be able to pay a similar price.

A Sign of Things to Come?

What a lot of people are wondering is if other offshore books will make similar decisions. Some books have already begun the process of cleaning up their image, and others may be forced further underground to the point that US operations present an insurmountable burden.

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