Joseph Borg, senior advisor, has recently had an article published in Issue No 88 of the iGaming Business Magazine.  In the article, Joseph explains why Malta has requested the opinion of the European Court of Justice on the Council of Europe’s recently adopted Convention on the Manipulation of Sports Results.

The Council of Europe Convention on the Manipulation of Sports Results was adopted on the 9th of July, earlier this year. While there was broad consensus on the objectives of the convention, Malta vociferously pronounced itself against the provisions relating to sports betting and in particular to the definition attributed to ‘illegal sports betting’ that reads that it includes ‘all sports betting activity whose type or operator is not allowed under the applicable law in the jurisdiction where the consumer is located.’ In an official communication issued by the Lotteries and Gaming Authority (LGA), it held that ‘that the sports betting provisions have gone beyond the scope.’

In fact the Convention seems to focus a lot on illegal sports betting without entering into the specifics of the industry and employing a risk based approach based on hard facts. It encourages States that are parties to the Convention to take all necessary measures to fight operators of illegal sports betting, including:

  • closure or direct and indirect restriction of access to illegal remote sports betting operators, and closure of illegal land-based sports betting operators in the party’s jurisdiction;
  • blocking of financial flows between illegal sports betting operators and consumers;
  • prohibition of advertising for illegal sports betting operators;
  • raising of consumers’ awareness of the risks associated with illegal sports betting.

What is wrong with this Convention?

There is certainly nothing wrong with combatting match fixing and manipulation of sports results. Combatting the manipulation of sports results has, rightly so, been high on the agenda for quite a few years now. Awareness spiked with the News of the World undercover report in the Pakistani cricket scandal in 2010. However, that incident was just the tip of the iceberg. Over the past years we have seen increasing incidents especially in football, with the worst cases being match fixing in the German and Italian football leagues. One would ask why there was this sudden increase over the past few years. Some put the blame on the increased availability of sports betting. However, the most plausible answer is that awareness was raised and so where the mechanisms to detect it.

Match fixing and manipulation of sports results have been with us forever. It is not something new and it is not something that was born in the 21st century either. The reality is that in the past there was a lot of this shameful and disgusting activity going on but it was next to impossible to track it and even more difficult to prove it. By raising awareness and giving it more importance we have started to tackle this problem. In fact, in recent years, governmental authorities, sports federations and sports associations have found a lot of help from the betting industry. Yes, correct, from the betting industry itself. Sports betting operators are as much victims of match fixing and sports result manipulation as much as consumers and sports teams are.

The problem seems that through this Convention and other recent initiatives, there is a witch hunt with respect to sports betting service providers. However, in reality, the witch in this tale is not the witch at all. Are we missing the bush for the trees? Well, in a way, yes. Governmental authorities and law enforcement agencies, as well as sports bodies need to work hand in hand with sports betting service providers, not against them. They are victims as well. However, they have access to data that can be very helpful for governmental authorities as well as sports bodies. Through associations like ESSA, which is an association of sports betting operators that aims at protecting sports integrity, it was possible for sports bodies and law enforcement agencies to detect match fixing at early stages. Through their early warning system law enforcement agencies and sports bodies were able to detect and deter the corruption of betting markets through the manipulation of sporting events.

Objectively speaking these provisions of the Convention seem to be, at best completely disproportionate, especially when taken into the context of the development of online gaming regulation in Europe over the past years. They seem to go beyond the rulings of the European Court of Justice over the past years, which allowed deviation from the principle established by the Treaty relating to freedom to provide services within the community for overriding reasons in the public interest, as long as proportionality of the measures is ensured. They are also clearly threading in unchartered waters for EU administrative and political institutions. In its green paper, the Commission tried to stir clear from this, which is still an unsettled matter at a European level, as Malta has correctly stated. In fact, the Commission has gone as far as acknowledging the existence of a ‘grey market’ and stopped at that on this matter. This Convention, on the other hand, seems to criminalize all operators regulated in an EEA Member State and offering their services in another EEA Member State, and almost blames them for manipulation of sports results. It is wrong to portray the situation as if the operators are the perpetrators or accomplices in this crime.

The definition of ‘illegal sports betting’ in this Convention is truly worrying as it seems to be a move to ban all cross border betting. It may also be interpreted as a further attempt by the Member States that have or are planning to have a national licensing regime to protect their local regime. It should be noted, however, that the practical effects of this convention are very limited in practice. It merely gives the Member States a go ahead to block sites that are not licensed in their jurisdiction. However, the political and PR effect may be greater than that. Nevertheless, my biggest worry revolves around the fact that once again, a big opportunity was missed in doing something effective and finding a concrete solution. Instead we got lost in translation.

The situation could have been tackled better and more effectively by requiring Member States that regulate gaming to implement and enforce minimum standards on operators. Also, it would have been much better to focus on unlicensed and unregulated sports betting, particularly with respect to unlicensed and unregulated land-based betting. In fact, it is much safer for fixers to place their bets with land-based operators since there is no or limited tracking of the bets placed, especially if regulated by a reputable jurisdiction. We have seen this happen in the ‘News of the World’ Pakistan cricket match fixing probe in which the fixer advised the undercover reporter to avoid highly regulated online gaming sites.

Why is Malta so much against this?

Only Malta and a handful of other countries are against this definition and the provisions relating to sports betting within the Convention. This should not come to any surprise, out of the current jurisdictions that regulate gaming, the only one that has an open (.com) regulatory regime and a voice in such fora is Malta. All the others that participate in such fora have or are planning to have a closed (.country) regime and have all the interest to see this definition through in all official documentation of the EEA, not just this convention.

Malta has gone a step further and has filed a request for opinion of the ECJ under the procedure set out in Article 218 (11) of the Treaty, asking the Court to clarify whether the envisaged Convention, and in particular the definition of “illegal sports betting”, coupled with the betting provisions, Articles 9 and 11 thereof, are compatible with the Treaties and in particular, with Articles 18, 49 and 56 TFEU.

I sincerely believe that referring this case to the ECJ was a very bold move from the Malta government and the LGA. The chances of success are very slim in my opinion. However, I am convinced that the ECJ will not oversee the disproportionality of this definition.