Angry in the Great White North

From Macleans:

One application for his invention [a high-tech parimutuel wagering system] is a new gaming service targeting male players called SheTips (www.shetips.com). It invites users to contact one of a bevy of buxom SheTips girls standing by to provide them -- via a central database that crunches over four million variables -- with the kind of inside tipping information that has traditionally only been available to high-rollers.

There are three ways to access SheTips -- by phone, online, or betting machines. (The latter are described as video slot machines programmed to access the central database and calculate the best odds on horses. Instead of cherries, lemons and oranges, however, they feature blondes, brunettes and redheads.) "The girls are just hostesses and salespeople," says Stronach. "By using girls, honestly, it's better because it's less threatening."

So using large-breasted women was Andrew's idea for user-friendly service for his gambling operation? Who said it was his operation? According to Andrew, he's not really the owner:

(Stronach denies ownership of SheTips -- and he won't disclose who the owner is, except to say that he also owns racetracks -- but several workers say he's the one who hired them and pays them.)

Ahem. So Andrew hires and pays the workers, but the owner is some shadowy figure? When gambling is involved, you can't help but wonder just who is lurking in the shadows.

Organized crime? That's not an allegation, but a reasonable question.

I also wonder if the owners are getting impatient, since SheTips is still just so much hot air:

So far, however, SheTips workers say the service appears to be all promotion. The company began hiring models in North America several years ago, says Gord Scoular, a.k.a. "Bikini Gord," an events promoter and former Toronto Sun and Playboy photographer, who says he helped Stronach to recruit Canadian models to photograph for the website, off-track terminals and other promotional materials. "You should see the money he was throwing around on these photo shoots with the models," says Scoular.

"When they first started shooting the girls, there were seven different looks -- swimwear, Western wear, evening gowns, lingerie, a picture with a racehorse. They would sedate the racehorse and bring it into the studio. I had to get the girls to Fargo, to Las Vegas, to France, wherever he needed me to get them. We did group photo shoots at the [Rogers Centre], on a jet airplane, on a yacht, in SUV limos. He was trying to captivate an image for his brochures."

One Toronto-based SheTips girl who prefers to remain unnamed says she's been with the company for about three years now....To date, however, she has yet to offer any tips or run any bets.

Three years?! What sort of investor tolerates pouring money into a gambling operation for three years without a single bet being placed? The site for Casino Rama was selected in December 1994 and the operation up and running in 1996 -- and that was a bricks-and-mortar operation loaded down with all sorts of government regulatory overhead and complex negotiations with First Nations.

So for three years, Andrew helps pick the models to fill in the tight T-shirts, models who do little else? Why would Andrew spend his money on these shoots?

Apparently it's not his money:

(Stronach says someone else paid for the shoots)

Again, people say Andrew Stronach is handling and dispensing the money, but according to Andrew, the money is coming from someone else. Who? He won't say.

Andrew Stronach, front man?

A front man for people who seem to be unconcerned that SheTips is not open to the public.

A gambling operation set up by unnamed financiers, with a flashy front man, beautiful women, but not actually doing anything publicly.

So why would you set up an elaborate computer network designed to place perhaps thousands of parimutuel bets automatically, but not actually use it?

Then who said the system is not being used. For all we know, the computers have been placing bets all this time. Remember, the system is designed to allow bets to placed online. That means there is an API (application program interface) to connect the betting program with a web page. But the same API could be used to interface the betting program with any other computer program, such as one that manages bank accounts, moving money back and forth.

For those who aren't aware of it, parimutuel betting is a different sort of gambling:

Unlike many forms of casino gambling, in parimutuel betting the gambler bets against other gamblers, not the house. The science of determining the outcome of a race is called handicapping.

It is possible for a skilled player to win money in the long run at this type of gambling, but overcoming the deficit produced by taxes, the facility's take, and the breakage is difficult to accomplish and few people are successful at it.

Independent off-track bookmakers have a smaller take and thus offer better payoffs, but they are illegal in some countries. However, with the introduction of Internet gambling has come "rebate shops". These off-shore betting shops in fact return some percentage of every bet made to the bettor. They are in effect reducing their take from 15-18% to as little as 1 or 2%, still ensuring a profit as they operate with minimal overhead. Rebate shops allow skilled horseplayers to make a steady income.

Follow me on this. You have large sums of money you need to launder. From where? You fill in the blank here. You use an automated parimutuel betting system designed to place thousands of bets on races 24 hours a day, a system hosted in the Caribbean, a system designed to keep the identity of the bettor separate from the bet, with the connecting information carefully stored on a computer out of reach from North American authorities.

In parimutuel betting, you can actually make a steady income, because of the unique way in which the wagers work, that is, the house takes a fixed cut instead of trying to take all your money. If you actually own the house, you don't lose any money at all!

As long as your front man never spills the beans, we might never know who is placing the bets and who owns the system.

Take your dirty money, turn it into hundreds or thousands of individual discrete bets, using a computer network to break the money up, place the bets efficiently according to the arcane and mathematically complex rules of parimutuel betting, collect the winnings, and recombine the now laundered cash. The beauty of the system is that the scheme is designed to put up a wall between the bet and the winnings.

A perfect money laundering system, since there is no way to trace the winnings back to the original source of the money, not to mention the overwhelming challenge of tracing thousands of small bets back to their true source even if you had access to the information.

Who cares if SheTips is actually active? Fact is, if it was, precious bandwidth would be used up by two-bit gamblers leering over the bodacious runners while placing their know-nothing bets. Of course, in the long run, you might want the operation running, so that the legitimate bets act as a smokescreen for the money laundering going on in the background. The dirty money bets are lost in the noise.

As a bonus, you make more money from the legitimate side of the business! As far as SheTips can be considered a legitimate business, that is.

Who knows? Maybe SheTips started out legitimately, then in the search for backers, Andrew Stronach hooked up with people willing to bankroll the operation, but for reasons of their own, weren't interested in the computer betting system being used by anyone but themselves, except perhaps as a diversion.

Let's hope that the truth is less sinister.