iGaming Business Magazine (iGB) has published an article by James Scicluna and Robert Zammit in their January/February 2014 issue . The article addresses the issues on match-fixing and the online betting business.
Online betting has been under the lens repeatedly for the alleged risks which it poses to sports, in particular, the alleged connection between this industry and the manipulation of sport results. Claims to this effect are often made as sweeping statements without clarifying that there is no evidence of a link between online betting which is regulated in Europe and fixed sports results.
It is our view that in a regulated environment remote betting operators should be seen as an important means to fighting the ugly phenomenon of match-fixing and fraud in sports, rather than as a threat to sports integrity. This is because there is a rather obvious convergence of interests between remote betting operators, sports organisers and law enforcement agencies insofar as the fight against match-fixing is concerned.
Regulated remote betting operators depend on the integrity of sports as much as the sport organisers themselves. Without a fair game the betting operators’ customers would lose confidence in the sport, which would result in a loss of business for remote betting operators. Additionally, the ability of a betting operator to correctly price an event, therefore not exposing itself to liabilities which it cannot afford, depends on that operator’s bookmakers being able to make a fair assessment of risk. A fair assessment of risk cannot be made where the result of an event has been fixed.
It is remote betting operators regulated in Europe themselves which introduced safeguards to ensure that their business is protected from match-fixing. For example, the European Security in Sports Association, a membership based organisation which brings together Europe’s top online gambling operators, requires its members to monitor incoming bets, to have an approval process for high stakes and to have continuous risk management analysis.
It wouldn’t be unfair to say that, as often happens, regulators and legislators are playing catch-up with industry.
Following the European Commission’s 2011 Green Paper on online gambling in the Internal Market and its communication to the European Parliament, the Council, the Economic and Social Committee and the Committee of the Regions titled ‘Towards a comprehensive European framework for online gambling’ of October 2012, the European Commission initiated the process for two studies to gather evidence in view of its intention to issue a Recommendation on best practices in the prevention and combatting of betting-related match-fixing. The scope of the studies is to gather as much information as possible with respect to:
risk assessment, management and prevention of conflicts of interest for the prevention of and fight against betting related match fixing;
the sharing of information and reporting of suspicious sports betting activity.
Practically in parallel to the European Commission’s assessment of the situation, a draft international convention to combat the manipulation of sports competitions is also being considered by the Council of Europe (‘Draft Convention’). The intention is that the Draft Convention would be a binding instrument open to both European and non-European countries or, if wide consensus is not reached, it may be finalised by the Enlarged Partial Agreement on Sport (EPAS) as a non-binding legal instrument. The European Commission is one of the members negotiating the Draft Convention and therefore, should the Draft Convention become a binding instrument it would be expected that the European Commission would recommend to the EU and its members to accede to the Draft Convention. The result would be that the Convention’s provisions would become binding in every EU Member State.
The Draft Convention’s stated aim is to create a global framework for the purpose of information sharing between authorities, betting operators and sports organisations, as well as identifying the necessary measures to combat match-fixing.
The objectives of the Draft Convention are of course admirable. Increased collaboration between enforcement agencies, operators and sports associations would be welcome. However, there are a number of matters proposed to be included in the Draft Convention which are likely to have an impact on the regulated remote gaming industry in Europe whilst not contributing in any significant way to addressing sport integrity.
For example, the possibility exists that the final version of the Convention could include a definition of illegal betting which implies legality based only on the law which applies in the territory where the consumer is located, rather than also taking into account the place of establishment of the licensed remote betting operator and the body of EU and international law which exists in this area. This would circumvent all pronouncements made the EU’s institutions to date on the subject via a text negotiated and agreed in an entirely different forum, ignoring and by-passing in particular the stated concerns and wishes of the European Parliament and the European Commission.
Some of the other proposals which should be of concern to operators include requirements for operators to notify sports competition organisers about each event and each bet type which they intend to offer. Due to the sheer volume of bet-types alone this seems impractical. How would the event operators monitor the bet types and how would knowledge of the bet types significantly enable them to prevent an event or given actions during an event from being fixed? Wouldn’t it be more beneficial for there to be stricter reporting obligations on the part of operators in case of suspicious market movements? Suggestions that there should be some form of consideration paid by operators to sport event organisers in order to combat match-fixing seem remind us of arguments which sports associations sought to make in France in the run up to the regulation of the French market. In that jurisdiction these associations were successful in acquiring some form of sui generis right to a payment in consideration of allowing operators to offer betting on events organised by those sports operators. It was suggested by various associations and French parliamentarians at the time that this money would be used to promote integrity in sports. Any action taken in this regard by those associations seems to have failed to attract attention from the international media.
The Draft Convention also considers limiting high-risk betting. It is still unclear as to what is to be considered high-risk betting. We understand that in-play betting is considered by a number of delegates to the Convention to be high-risk, but isn’t it harder to influence the outcome of an event on a real time basis where during a match or game a sportsman cannot really communicate with the “outside world”? Wouldn’t a reduction of the breadth of betting products available to consumers in Europe push betting operators and customers towards unregulated markets, thus losing the safeguard of regulation an oversight by one of more Member States?
It is our view that the correct approach to combatting the manipulation of sports results is the criminalization of match-fixing across the EU and the introduction of mandatory reporting requirements on officials of sports organisations and betting operators alike in cases of objectively suspicious parameters. Sports organisations must shoulder their own responsibilities and play an active role in investigating allegations of wrong-doing. Penalties should be harsh on both perpetrators and accomplices to such crimes, and whistleblowing provisions should also be provided for. These are indeed matters being considered by the Draft Convention. The inclusion of provisions which do not really serve the stated purpose of the Convention, but which seek to further stifle any suggestion of cross border trade and cooperation in the field of gambling is, frankly, a shame