The Pioneer Who Went To Jail: 5 Shocking Facts About Jay Cohen And The Birth Of Legal Sports Betting

The story of Jay S. Cohen, the co-founder of the pioneering offshore gambling site World Sports Exchange (WSEX), is one of high-stakes risk, legal battles, and a prescient vision that set the stage for the multi-billion dollar industry we see today. It is a tale of a man who was deemed a criminal for a business model that is now a cornerstone of American entertainment and commerce in 2025.

For those unfamiliar with the early days of internet gambling, Cohen’s name is a critical piece of history. He was the first American to be arrested and convicted for operating an offshore online sports betting service, a case that became a landmark legal precedent for the entire industry. His conviction, based on the antiquated Federal Wire Act of 1961, stands in stark contrast to the widespread legalization of sports wagering across the United States today.

Jay S. Cohen: Biography and Professional Profile

Jay Scott Cohen’s professional journey is a fascinating arc from a Wall Street-style trader to an international gambling pioneer, culminating in a high-profile legal confrontation with the U.S. government.

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• Full Name: Jay Scott Cohen (Jay S. Cohen)
• Born: 1968
• Early Career: Worked at a San Francisco trading firm, specifically Group One, before transitioning to online gambling.
• Key Role: Co-founder, President, and former CEO of World Sports Exchange (WSEX).
• Location of Business: Antigua and Barbuda, a Caribbean island nation where online gambling was legal.
• Legal Status: Convicted in 2000/2001 on federal charges of running an illegal offshore internet sports betting operation.
• Sentence: Sentenced to 21 months in federal prison and three years of supervised release (probation).
• Legacy: Considered a key pioneer and martyr in the history of online sports wagering.

The Birth of World Sports Exchange (WSEX): A Visionary Risk

In the mid-1990s, the internet was a wild frontier, and Jay Cohen saw an opportunity where others saw only risk. Leaving his job at a San Francisco trading firm, he teamed up with partners Stephen Schillinger and Haden Ware to launch World Sports Exchange (WSEX) in 1995. The company was based in Antigua, where they obtained a license to legally operate an online sports book.

WSEX quickly became a successful, visible online sports book. Their business model was revolutionary for the time, allowing users to place bets on sporting events—and even non-sporting events—from the comfort of their homes. One notable example of their innovative approach was creating a futures market for the O.J. Simpson trial, turning a major cultural event into a betting opportunity.

The core of Cohen’s argument was simple: since WSEX was legally licensed and operating in Antigua, a sovereign nation, its services should be legal for customers worldwide, including in the United States. This belief, however, put him on a direct collision course with the U.S. Department of Justice (DOJ).

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The Landmark Legal Battle: United States v. Cohen

The DOJ viewed WSEX’s operation as a blatant violation of U.S. law, specifically the Federal Wire Act of 1961. This act, originally intended to target organized crime using telephone lines for interstate betting, became the primary legal weapon against the emerging online industry.

The confrontation escalated when Jay Cohen voluntarily returned to the United States in 1998 to fight the charges, believing he had a strong legal defense based on the business being legal in Antigua. This decision was a massive gamble. In 2000, a U.S. District Court jury in Manhattan convicted him of violating the Wire Act. The conviction was upheld by the U.S. Court of Appeals for the Second Circuit in 2001 in the landmark case, United States v. Cohen.

Cohen was sentenced to 21 months in federal prison and three years of probation. His conviction sent a chilling message to the entire offshore online gambling industry, effectively setting a precedent that the Wire Act could be used to prosecute operators targeting U.S. customers, regardless of the company’s physical location.

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The International Aftermath: The WTO Ruling

The controversy surrounding Cohen’s case was not confined to U.S. courts; it became an international trade dispute. Antigua and Barbuda, the nation that licensed WSEX and other online gambling sites, filed a case against the United States with the World Trade Organization (WTO). Antigua argued that the U.S. ban on remote gambling was a violation of international trade agreements, specifically the General Agreement on Trade in Services (GATS).

In 2005, Antigua won a major victory when the WTO ruled that the U.S. had violated its trade obligations. This ruling, while not overturning Cohen’s conviction, further highlighted the legal and moral complexity of the U.S. government’s position, particularly as Cohen was already serving his probation.

The Unexpected Legacy: From Criminal to Prophet

Jay Cohen’s conviction forced a mass exodus of offshore gambling operators from the U.S. market, leading to the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006. For years, this seemed to be the end of the story. However, with the Supreme Court’s 2018 decision to overturn the Professional and Amateur Sports Protection Act (PASPA), the landscape completely changed.

Today, legal, regulated online sports betting is a massive, multi-billion dollar industry in the U.S., precisely the market Cohen envisioned and was jailed for pioneering. His case, once seen as a definitive victory for the DOJ, is now viewed by many industry analysts as a historical irony. Cohen took the fall for a business that is now generating billions in tax revenue for states across the country.

What is Jay Cohen Doing Now in 2025?

Following his release from prison and the conclusion of his probation, Jay S. Cohen has largely maintained a low public profile, especially regarding his current professional activities. The lack of detailed, up-to-the-minute information on his career post-WSEX is a testament to his desire for privacy after his high-profile legal ordeal.

However, Cohen has occasionally re-emerged to comment on the industry he helped create. He has participated in interviews and discussions, reflecting on the "changing views over the years" regarding online sports betting. His commentary often highlights the stark difference between the government's aggressive stance two decades ago and its current embrace of legalized, regulated wagering. His current role, though not publicly specified as of 2025, is likely tied to advising or consulting within the rapidly evolving iGaming, sports betting, or financial technology sectors, leveraging his unique expertise and historical perspective as a true pioneer.