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Gecko Holdings, Inc, formed in December 1997, intends to develop and market an Internet Casino with Sportsbook, Sportsbook call-in and casino games. Address: 4533 Mac Arthur Blvd, Suite 257, Newport Beach, CA 92660 Phone: 888-638-2381
THE OFFERING Common shares no less than 50,000 shares and up to 2,500,000 shares at $2.00 per share for the total offering between $0.1M-$5M. The Company may pay a 15% commission or finders fee.
Business Plan - Only a three-page business plan is provided which is not nearly enough to determine if this has any prospect of success, and makes us wonder how serious the business intent here really is.
The gambling industry is growing. The revenue of legal gambling business in the US was nearly $40 B in 1994. Gambling on the Internet is expected to become a $10B a year industry by Smith Barney. Even with that, internet gambling remains illegal in the United States. Read our "Online Casino" newsletter. So the IDE attitude is that we cannot pursue an investment in anything, so long as it remains illegal, even though it seems to be accepted in practice. This adds an additional, and unknown factor to investing that seems to be unwarranted.
The Company will target Internet users aged 18-45, with middle to upper level incomes. (No disclosure of the size of this target market). The Company’s marketing strategy is to capture a minimum of 4% of the worldwide Internet gaming market in its first five years of operations. There are no facts of the size of the current worldwide Internet gaming market and its growing trends. And no market research by this company to show HOW they are going to capture a minimum of a 4% market share. This is a variation of the marketing (of the investment) of "If the market is THIS big, and we get THIS much of it, we’ll make THIS much money". We have never seen profit projections based on this kind of thinking ever produce a successful company. As we say around here, "If they won’t take their business seriously enough to do a marketing study, why should we?" This question again addresses the intent of management. How serious are they about this business, or are they ‘making money by raising money’?
With these questions in mind, and ignoring the basic illegality of internet gaming in the U.S., we will need additional information for further review:
FURTHER INFO - We have had no response from the company. But here is additional information. Like many internet companies, Gecko is raising $5 million for an Internet site that probably only costs $500,000 to set up. (See the 1997 Sports Illustrated article on these costs). Salesmen that have left the company allege they were receiving 20% in commissions, making the Memorandum Use of Proceeds a fabrication. We estimate that the front loads are in the neighborhood of 40% or more, and according to the same sources, the principals have invested none of their own money into the company. We were told in a sales pitch that the company is claiming their last project was ‘Crytologic’, which they claim they brought public. According to these sources, this is not so, and that that the only connection is that Gecko Holdings only uses Cryptologic software for their gaming website. Please remember these are ‘second party’ allegations from someone who worked at the company, and could be sour grapes. Weighing against that, the information is consistent with a company with no serious business intent, and is ‘making money by raising money’. Unless more compelling evidence presents itself, IDE will not pursue this into the secondary and tertiary stages of due diligence.
UPDATE: March 1999. Three phone rooms selling this were raided as being part of a stock sale in a nonexistent gaming website. Shut down were Gecko Holdings and RLS Consulting, who have bilked investors out of up to $5 million, promising investors huge returns on stock in nonexistent companies. The principal behind this is alleged to be Robert L. Syrax, whose whereabouts are unknown. He has fled leaving behind a 1999 Rolls Royce Silver Spur, that Mr. Syrax paid $176,000 for, CASH. This is what your money’s going for folks. We will resist saying ‘we told you so’, and will only note that a lack of serious business intent is often reflected in the private placement memorandums and in the terms offered to investors.
UPDATE: April 99. Robert Syrax and wife were apprehended by the FBI in Florida as they were preparing to leave the country under assumed names with $2.5 million in investor funds. Apparently after they dumped their Rolls they rented a small car and drove across country.
BEFORE YOU INVEST IN A HIGH YIELD GROUND FLOOR COMPANY,
Investor Data Exchange, Inc.
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