Sports betting – balancing a national pastime with a need for greater integrity

Posted in Regulations Governance, anti-bribery and corruption

There are not many parts of the world that have a public holiday for a sporting event. In Melbourne, Victoria, the so called sporting capital of the world, they have two. This includes the Friday before the Australian Football League Grand Final and the first Tuesday in November when Australia’s most prestigious horse race, the Melbourne Cup, is held.

Considering this cultural phenomenon and the fact that Australia was the first country to deregulate sports betting in 1980, it is unsurprising to learn that Australia gambles the most per capita globally. Having a ‘punt’ (a bet) is effectively a part of the Australian psyche.

Recommendations to Enhance Integrity

The recent Wood Review into Sports Integrity (Wood Report) which focused on a review of Australia’s sports integrity arrangements has released three key recommendations (among others) to combat match-fixing and associated corruption:

No.

Recommendation

1.      

The Australian Government to establish match-fixing offences with transnational application similar to those in New South Wales, while continuing to encourage national consistency in relevant criminal provisions introduced by State and Territory Governments. 

2.      

Australia becomes a party to the Council of Europe Convention on the Manipulation of Sports Competitions (Macolin Convention), which is the primary multi-lateral international treaty aimed at combating match-fixing and other related corruption in sport.

3.      

Australia’s response to sports integrity threats is nationally coordinated by the proposed National Sports Integrity Commission, including administration of the Australian Sports Wagering Scheme, and facilitation of information and intelligence collection, analysis and dissemination across regulators and law enforcement agencies. This would include the establishment of a Sports Betting Integrity Unit.

Each of the above recommendations seem eminently sensible to combat the growth of off-shore betting markets and the greater sophistication of illegal gambling through technology. As discussed below, the Australian Government has agreed with these recommendations and has taken some steps towards implementation.

  1. National match-fixing offences

The Wood Report found that State and Territory response to match-fixing offences is inconsistent, inhibiting law enforcement agencies in their investigation and prosecution of offences relating to match-fixing. This is particularly troubling given that sporting competitions are often multi-jurisdictional or international. The Government has agreed to establish match-fixing offences at a Commonwealth level but a bill has not been introduced as at the date of this article.

Another suggestion to improve consistency is the creation of an ‘Australian Sports Wagering Scheme’ to provide clarity, transparency and consistency of the regulatory regime at a national level. For example, the Sports Wagering Service Providers (i.e. betting agencies) utilizing the proposed ‘Suspicious Activity Alert System’ (SAAS). It would be administered by the Sports Integrity Commission and would facilitate reports to be received from individual Sports Wagering Service Providers of suspicious wagering activity. This would allow for greater information sharing across sports to target criminal elements involved in corruption, but also enable law enforcement agencies to receive reports and therefore act in a more timely way.

  1. A more globalized approach to combat match-fixing and corruption

The Macolin Convention will enter into force on September 1, 2019. Signed by over 30 countries in Europe, the Convention has also been adopted in Australia in February 2019 in response to the Wood Report. The Convention requires parties through Article 8 to develop and implement strategic mechanisms with respect to sports funding including provision of funding to assist sporting organisations to combat match-fixing. However, does this go far enough to address the disparities that can be evident in international sport and especially in athletes’ salaries?

An example is most evident through the recent Cricket World Cup held in England and Wales. Afghanistan having made their second World Cup have a combined yearly salary of US$105,000 for their entire team. This equates to less than US$10,000 per player. In contrast, the Indian Cricket Team have a combined yearly salary of US$9 million (excluding endorsements and contracts with franchise teams) largely due to their passionate supporters and a population exceeding one billion people.

With sports betting being legal in only some Indian States, it is staggering that the Federation of Indian Chambers of Commerce estimates the Indian betting market is worth US$60 billion, with cricket betting accounting for 80 percent of this. While there is no suggestion of match-fixing at the recent Cricket World Cup, this statistic highlights the vast sums of money at stake and the potential for corruption.

To enhance integrity and combat match-fixing, bodies such as the International Cricket Council could consider paying teams with more limited resources a greater percentage of the total revenue of the World Cup. This would reduce the potential for emerging nations to be susceptible to bribes to induce a particular outcome. 

  1. Offshore wagering and the expanding role of law enforcement through information sharing

The Wood Report highlighted the vast sums in global sport and racing wagering. It is estimated that in 2017:

  1. The global amount wagered on all racing codes was US$179 billion;[1] and
  2. The global amount wagered on all sports was US$202 billion.[2]

However, the above figures are dwarfed by the US$500 billion to US$1 trillion of estimated money wagered to move through the unregulated market.[3]

Of particular influence is both the growth of technology which is revolutionizing the wagering market and its increasing globalization. Bookmaking was once a localized industry with limited available markets dominated by retail and on-course wagering. The more recent shift to online platforms, both onshore and offshore, has provided global access to thousands of wagering markets on a vast array of sport and racing events, 24 hours a day, seven days a week. In Australia, it is estimated that 600 online platforms offer gambling services to Australian residents, with transactions in Australian currency. Without filtering for Australian currency, this increases to more than 2,000 platforms.[4] This includes some interactive gambling activities, such as 'online casinos', which are illegal under the Interactive Gambling Act 2001 (Cth) when used by someone in Australia. However, the individual accessing and using the interactive gambling services does not commit an offence.

While Australian sports and law-enforcement agencies can scrutinize money placed with domestic-regulated wagering service providers, the same cannot be said of unregulated overseas wagering service providers. According to the Australian Criminal Intelligence Commission, almost 80 percent of the global sports wagering market is estimated to move through online offshore wagering platforms. These offshore platforms can provide a haven for criminals to launder money as they are easily accessible, provide high levels of customer anonymity, allow a wide range of bet types and facilitate movement of large amounts of money.

As a consequence, the above offshore markets present a significant challenge to sports integrity. The creation of a National Sports Integrity Commission and a Sports Betting Integrity Unit, with the capacity to regulate sports wagering, gather and assess data and intelligence, and with connections to its overseas counterparts, will be a significant step in addressing the issues associated with offshore markets.

There is also a need for bodies such as the Australian Transaction Reports and Analysis Centre (AUSTRAC), which regulate anti-money laundering to play a collaborative role with a National Sports Integrity Commission and their overseas counterparts to combat the illegal offshore wagering industry. With anticipated changes to the anti-money laundering framework in Australia on the horizon and greater scrutiny of digital currencies being imposed last year, a stricter enforcement regime on illegal offshore wagering platforms through information sharing is timely.

This article is the second in a series focusing on sports integrity. To continue to follow the series please sign-up at our Inside Sports Law Blog. If any questions arise out of the above please email jeremy.moller@nortonrosefulbright.com or matthew.fonti@nortonrosefulbright.com.

 [1] Engelbrecht-Bresges, ‘The Wagering Landscape: Industry Trends and Strategies’, Proceedings of the 36th Asian Racing Conference, 24–29 January 2016, Mumbai, India.

[2] Engelbrecht-Bresges, ‘The Wagering Landscape: Industry Trends and Strategies’, Proceedings of the 36th Asian Racing Conference, 24–29 January 2016, Mumbai, India.

[3] Australian Criminal Intelligence Commission, Submission.

[4] Australia’s Sports Integrity Arrangements Review Panel consultations with ACMA on 23 August 2017.

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