Abstract
With economic globalisation and the Internet, online sports betting has become predominant and created a betting environment that has raised risks to the integrity of sport. Now bettors can shop around bookmakers worldwide and bet at any second of time. Complexity of the huge global online sports betting market offers opportunities for new rigged betting behaviour in particular on those illegal segments of the market. New fixing opportunities emerged with product differentiation online: in-play betting, handicap betting, proposition betting, and betting exchanges. The empirical evidence covered in this chapter shows that fraudulent online sports betting is now a big business and may even be used by criminal networks for money laundering.
Keywords
With economic globalisation and the Internet, online sports betting has become predominant. The evolving betting environment has raised risks to the integrity of sport. However, with globalisation of the economy on the one hand and, on the other hand, the Internet-isation of betting these kind of risks have tremendously increased because now the major part of a global sport betting market is operating online. Now bettors can shop around bookmakers worldwide and bet at any second of time. It is more complex for potential fixers to evaluate the costs and benefits to them of engaging in manipulations of sporting events on the field for betting gain (Forrest et al. 2008) but it is even more complicated to detect them in operation. Global criminal networks that take part in online rigged betting related to match-fixing are extremely difficult to trace, discover, crackdown, and sue in court. Particular markets and situations are especially susceptible to corruption such as increased betting market liquidity, situations where the probability that the fix will be both successful and undetected is very high while the probability of detection lowers on online betting-related match-fixing global black markets.
This chapter briefly sketches how the Internet and economic globalisation have increased complexity in a globalised economy and have triggered a skyrocketing growth of online sports betting alongside with much more opportunities for rigged and fraudulent bets.
1.1 Online Sport Betting in a Complex Context of Globalisation and ‘Internet-isation’
Online sport betting is only part and parcel of the increasing complexity of an entirely globalised economy (Andreff 2017). Complexity is neither a concept nor an approach used in standard mainstream economics. However, in recent years the emergence of complexity economics is to be noticed though this new analytical framework is still in the cradle. Analysts of economic complexity attempt to bring forward a better understanding of increasing complexity in the real world of a globalised economy which is typically exemplified here by online betting-related match-fixing.
1.1.1 Complexity Triggered by Economic Globalisation
Mainstream economics describes rational ‘smart people in unbelievably simple situations’ while the real world involves ‘simple people coping with incredibly complex situations’ (Beinhocker 2012, 52) relying on their bounded rationality. Then follows a search for a complexity theory in economics relaxing basic mainstream assumptions (equilibrium, representative agents, rational choices) and seeking to move beyond while emphasising the power of networks, feedback mechanisms, and the heterogeneity of individuals (Bruno et al. 2016). The idea is to investigate economic phenomena not as derived from deterministic, predictable, and mechanic dynamics but as history-dependent, path-dependent, organic, and continuously evolving processes.
In economics at least, a complexity approach paves the way to studying:
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The economy as a global system rather than a mechanics converging to a general and stable equilibrium.
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Emergence which relates to the dynamic nature of interactions between components in a system.
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Path dependence meaning just that: where we are today is a result of what has happened in the past.
Thus complex systems, such as today’s globalised economy, are dynamic, nonlinear systems with multiple equilibriums and disequilibria, evolving and self-organising in time and space characterised by historical dependencies, complex dynamics, and thresholds. One step forward towards complexity economics puts the focus on constant disequilibrium or continuously shifting micro-equilibrium points rather than a predefined general equilibrium point. In sports economics, such a step forward has been taken with the publication of a ‘disequilibrium sports economics’ book (Andreff 2015).
The economic policy implication is that a correct policy must react to the evolution of a system rather than pushing it in a (presumably) desired optimal equilibrium direction—a Pareto-improving policy in mainstream economics. The underlying radical message of complexity economics is that organisation and not efficiency should be the key concern of economics that would drive to investigating the interactions of individuals rather than the individuals, as stressed by Kirman (2011).
Another dimension is the increasing complexity of a globalised economy in the real world. That globalisation has made the economy very complex can be witnessed in everyone’s daily life. Buy a sport T-shirt and you will be able to check that it has been shaped by an Italian designer with American software, and then produced with Western African cotton and polyester buttons manufactured in China out of Indonesian petroleum. The complexity of a globalised economy has gone so far that multinational companies (MNCs) have elaborated on so-called global strategies to trade-off between different potential host countries before investing abroad (Andreff 1999; Michalet 1997). To manage global complexity MNCs have developed sophisticated managerial tools such as non-market transfer pricing, hedging, leads and lags, tax optimisation, and sometimes fraudulent or borderline strategies like tax evasion through tax havens. However, foreign direct investment and production relocation in tune with these strategies take some time to be implemented by a company.
In some industries where instant trade can be done online, globalisation is much swifter, so fast that trade flows are sometimes unobservable or undetectable, sometimes veiled or hidden on purpose. A first example is the finance and banking sector insofar as with the Internet and globalisation (in particular through offshore centres) money can be instantly transferred from place to place, from country to country, and from a bank account to another one. Such is the complex way that transformed the US subprime crisis into global financial disorder. The latter was due to both the speed of international financial transactions and the complexity of new financial products—securitisation of bad loans, collateralised debt obligations, credit default swaps, mortgage-backed securities—fuelled with fraudulent or borderline practices such as fake accounting, short selling, shadow banking, and financial pyramids (Andreff 2013).
Even swifter than international financial transfers throughout a global economy, the most instantaneous international moves of funds have been registered in the past recent years with online betting since bets can be placed and changed by anyone in less than one second through the worldwide web.
1.1.2 Internet and Globalisation of Sports Betting: New Market Behaviour
Gambling on sport results, first of all on soccer matches’ outcomes, has taken two main forms in the past. Football pools were pari-mutuel competitions where participants whose forecasts are correct share a prize pool that is a predetermined fraction of total stakes. The second form of fixed-odds betting was where a bookmaker accepts bets on soccer outcomes and pays any winnings according to odds quoted at the time the wager is placed (Forrest 2014). Both modes have commonly been subject to restrictions as to availability in all countries of the world.
In that time, the classic betting-related fix was basically initiated to make money. Often deliberate underperformance by one competitor was intended to facilitate making a profit in betting markets operating parallel to the sports contest: Athletes were trading directly in such markets, wagering that their opponent will win, or accepting bribes from third parties who planned to make betting gains from such transactions (Forrest 2017).
Prior to the millennium, few clients had the physical means of placing new bets quickly as they saw a sporting contest evolve. Everything changed in the twenty-first century with the emergence of a global market for sport bets based on Internet communication. The product offered by local bookmakers, including illegal street bookmakers, became relatively less attractive when online betting emerged with its round-the-clock access to in-play betting on a wide variety of events worldwide. Everything changed as Internet penetration grew and broadband speeds increased. Internet and mobile telephone technology gave many the means of betting online—and bookmakers learned to programme computers to adjust odds automatically in response both to events, such as the scoring of a goal, and to betting partners and volumes. With new technologies, ‘bookmakers learned routinely to offer odds during a match by developing statistical algorithms to automate odds-setting, with odds updated with every significant event in the match’ (Forrest 2018, 101).
As analysed by David Forrest in his different articles, technological change also enabled the broadcast and streaming of multiple sports events which helped the sport betting market to grow faster because watching and betting on sport became complementary activities: the one makes the other more exciting—for example, betting makes the gambler a stakeholder in the outcome of a game and so even those who are neutral can then find the event more thrilling to view. Consumers could construct what essentially emerged as a new leisure product: following a match on television or through a streaming service and, simultaneously, trading on the betting market through a personal computer or mobile telephone. This has extended the sports betting market to non-fans and consumers with no allegiance with a sport or a team, and explains the popularity of in-play betting (also coined live betting) since technology underpinned the emergence of widely available in-play betting.
In many markets, in-play betting was estimated to contribute about 70% of betting turnover. This new product drove the global sport betting market in double-digit growth rates after the millennium. Such swift market growth was triggered by much higher odds and returns on newly offered varieties of online sporting bets compared to former betting on final game outcomes, known as 1 × 2 (for win-draw-loss). Now, average rate of return to players (RRP) on online sporting bets usually is over 95% and often close to 99%.
Technically, sport betting is possible online 24 hours per day. Thus the Internet also facilitated the emergence of betting exchanges, with Betfair being the major operator on this market. Here the operator does not fix the odds and instead lets the wagers bet as they want: one punter lays out money on the occurrence of an event X and then looks for another wager ready to bet on the non-occurrence of X. Betfair takes only 3% of outlays and leaves a 97% RRP to the winners. In the case of a betting exchange, the operator does not suffer any loss from an upcoming match-fixing since it confines itself to putting punters in mutual relations. Consequently, the operator can be indifferent to match manipulations.
Along with technological evolution and pushed forward by Internet networking, the sports betting market, as with all the other financial markets, became genuinely global. The extent to which the market is now globalised is evident in soccer, where odds movements in Asia tend to be mirrored in Europe within one minute or less. With the Internet, bettors can use price comparison websites to check odds available at suppliers based all around the world. It is often assumed that the conditions in Internet betting appear to be not far from those of perfect competition (Forrest 2012). Obviously, it is not so as regards online bets related to a fix, and the perfect competition hypothesis is to be dropped when a non-negligible number of bets are rigged—i.e. related to match-fixing. Nevertheless, in the new global competitive environment, bettors could shop around for the best odds on the Internet for the particular wager they wished to make, rather than rely on a local retailer.
As a consequence liquidity in the sports betting market is now dramatically higher than before the Internet. This appears to be a dangerous development from the perspective of sport because liquidity may be termed the friend of the fixer (Forrest 2012). High liquidity permits criminals to place large bets without attracting undue attention and without driving prices against themselves. This makes large-scale fraud more feasible and the erosion of bookmaker margins makes it more profitable. When the volume of betting exploded, liquidity reached levels that had the potential to allow bets which would generate very significant betting profit from manipulating sports competitions. Therefore, it is not surprising that organised crime deepened its penetration into the field. There was a radical increase in the demand for fixes by sport outsiders, thus an epidemic propagation of fixing which has contaminated sport over the last decade.
Globalisation has brought about increased economic competition in the sport gambling market due to both the Internet and market deregulation. Now, punters have direct access to foreign bookmakers while the gambling business must be liberalised under pressure of international organisations such as the World Trade Organisation or the EU. The volume of sporting bets has skyrocketed, the opportunity for frauds as well (Forrest et al. 2008). Alongside with globalisation sprung up product differentiation of offered bets such as live betting, handicap betting, spread betting, proposition betting, and betting exchanges, all of which encompass new risks. Now, as a result, fraudulent fixes may materialise in match outcome or scoring fixes but also in spot-fixing (see 2.2.1). Differentiating the product also explains that sport betting has spread to any kind of sport; for example in 2012, Sbobet or Bet365 were offering bets on U19 Bulgarian football, the 3rd division of Turkish football, dart contests, ski jump, and junior tennis tournaments.
In relation to the above-mentioned evidence, 80% of online betting operators are based in tax havens. Since 1995, and even more so after 2002, the number of new online betting operators skyrocketed; they were about 10,000 in the world of which 80–90% had no licence in 2006 (CERT-LEXSI 2006). Many of them had been created in small countries/areas eager to attract significant financial flows such as Alderney (Guernesey), Gibraltar, the Isle of Man, Malta, the Cagayan province in the Philippines, the Kahnawake territory in the Quebec region, Antigua and Barbuda, Nevada and Delaware states in the US, Costa Rica, and Curacao.
Major betting operators offering sport bets are Unibet, Lotto BG, Hravstka L, Pinnacle Sport, Danske Spil, Veikkaus, Française des Jeux (FDJ), Tipico, Bwin, OPAP, SBOBET, GVC, Lottomatica, SNAI, Betdic, Betfair, William Hill, Ladbrokes, Bet 365 (Precrimbet 2016). The major Asian sport betting sites online (Sbobet, Icbet, 188bet, 12bet) are now registered on the Isle of Man and are allowed to operate on the UK market, exhibiting that the market has globalised. On the other hand, European operators such as Betfair, Bet365, and Ladbrokes offer their services on the global market and concentrate a high liquidity. Leading operators sell on every continent. For example, Expekt.com, which is based in Malta, was reported to offer betting in nineteen languages and to have clients in 227 countries (Forrest et al. 2008), i.e. nearly all countries of the world.
1.1.3 Estimating the Size of Global Online Sports Betting Market
The total amount of sport betting was assessed, with a wide-ranging view, to be €200–500 billion of annual stakes, encompassing both the legal and illegalFootnote 1 market (Sorbonne-ICSS 2014). Experts assess that winnings related to fixed sports competitions are around 1% of the total global market which is equivalent to a huge cash sum. If the global sports betting market amounted to about €450 billion overall (legal and illegal), 1% of winnings would represent €4.5 billion, equivalent to Surinam or Lichtenstein GDP (Precrimbet 2016). Live (in-play) betting enables bigger placed layouts (PLOs) than prematch betting since it is possible to bet all the time during the game. Sportradar estimated in 2012 that 90% of bets were registered on the live market in tennis and 70% in soccer while it assessed that 1% of European soccer matches were fixed (about 300 matches per season).
The size of the sport betting market is usually measured by gross gaming revenue (GGR) which is the net amount won by betting operators from their clients, i.e. player losses. The latter could be interpreted as a consumer expenditure on betting. Total stakes are many times higher than GGR since only a small proportion of stakes (as low as 1% in the most competitive markets) are retained by the bookmaker rather than returned as player winnings. Since the market has become more competitive, there has been a trend for bookmaker takeout rates to fall (Forrest 2018).
Between 2000 and 2010, annual estimated global GGR from sports betting increased from €6 billion to €19 billion, according to Sport Accord and by 2016 the figure was €30 billion (IRIS 2017), an approximate fivefold increase in a decade and a half. Globally, about half of GGR was generated in the legal and half in the illegal sector. Because legal operators, namely when they are public monopolies, tend to retain a greater proportion of stakes, the share of the illegal sector in stakes is much higher than in GGR, about 82%.
H2 Gambling Capital estimated the total amount of sport betting outlays on the Internet to €16.4 billion in 2004, €32.6 billion in 2008, and €52.7 billion in 2012 (Boniface et al. 2012). This increase in sport bets consumption came alongside with an increase in the RRP which corresponds to a decrease in the price of a bet. The operators’ average margin decreased from 10% in 2004 to 9% in 2008 and 8% in 2012. Operators were compelled to decrease prices (increase RRP) to keep their clients in an increasingly global competitive market for sport betting.
The Sorbonne-ICSS (2014) assessment was a €16 billion GGR on the global market for sports betting in 2011, of which about €10.5 billion were in the legal market and about €5.5 billion in the illegal market. Placed bets, i.e. PLOs, overall were assessed to be €322.7 billion of which €47.7 billion (15%) were placed in the legal and €275 billion (85%) in the illegal market. From 2000 to 2010, GGR of sporting bets evolved in the EU 28 countries from €2.2 billion to €11.2 billion, growing at an average 15% annual rate.
Another estimation of the global sports betting market for 2012 was provided by Verschuuren and Kalb (2013) starting from a guesstimate of €500 billion for overall global PLOs. On the legal market, PLOs were assessed to be €60 billion and assuming 80% RRP this would make €48 billion paid back to winning punters and €12 billion for GGR, given that:
where PG stands for punters’ gains. The illegal online market assessed to be €220 billion which, with an assumed 98.6% RRP, would make €217 billion paid back to winners and a €3 billion GGR. The illegal offline market was estimated to be €220 billion either which, with an assumed 98.6% RRP, would give again €217 billion paid back to winners and €3 billion of GGR. Overall, the global market for sports betting was estimated, with an average (legal + illegal) RRP of 96.4%, to be €482 billion (48 + 217 + 217) paid back to punters and a €18 billion GGR kept by the operators.
1.2 Online Betting-Related Match-Fixing: New Opportunities and Empirical Evidence
In the context of globalisation, new types of gamblers and punters have emerged. They are more geared towards new trading-off opportunities, in particular high-return ‘sure bets’. They increasingly behave as players looking for enrichment as in any financial market. Thus, the global online betting market has also attracted financial traders, money launderers, and criminals. Criminals resort to runners for placing their bets without unveiling their identity. This is a way to escape being detected by either betting operators or regulation authorities supervising the legal online betting market, such as ARJEL in France. Escape is especially easy in some countries like the UK where betting market regulation allows those online betting operators based in the European Economic Area or listed on a White list to offer their services to UK punters, suffice it that the latter open accounts with betting operators located in tax havens. In the worst case, rigged betting is used for money laundering.
1.2.1 New Fixing Opportunities: Legal and Illegal Sports Betting Markets
The combination of now highly liquid sports betting markets and the opportunity to transact with anonymity has created an environment in which fixing offers high financial rewards and little risk of detection. With online globalisation, an expertise is now needed to rig online sports betting market, in particular, like in any financial market, the knowledge of how shifting large sums of money across borders, a skill which is basic in organised crime; therefore its deepening entrance in rigged sport betting. With high market liquidity, it becomes unclear where the money comes from at the end of the day, and the funds wagered are impossible to trace back to source.
With globalisation, most online betting operators offer bets everywhere in the world often without a required legal authorisation or a licence. Such bets are usually considered as illegal. However, the definitions of legal and illegal sports betting market are controversial. Illegal is often defined as any bet which is unauthorised in the jurisdiction where the bettor is located. Thus a bet placed by an American resident with a licenced Caribbean online operator would be deemed illegal even though the operator was not breaking its local law by accepting the bet. Operators in offshore gambling hubs typically argue that legality should be defined by the point of supply rather than the point of consumption.
Match-fixing and to a lower extent spot-fixing have become the most widespread form of crime in sport in recent years. Fixing just one element in a contest is commonly termed spot-fixing. With spot-fixing some gambling operators offer online to bet for example on a number of yellow or red cards, or on the first or last player who would receive a card, or on the first foul, the first offside, the first corner kick, or how many minutes of additional time, who will kick from the corner, or will be the first player to be fielded from the touch bench, and so on. Such events are much easier to rig in a non-detectable way than fixing a match outcome or final score. Moreover, they may not influence the final outcome or score and empirical proofs cannot be mobilised in case of suspicion. Unfortunately, technological innovations in sport betting opened new opportunities for the development of less controllable bets such as spot-fixing.
Spot-fixing is likely to be enabled by the development of in-play betting rather than by the development of markets on sundry features of a match. A priori reasoning (Forrest 2017) then suggests that the shift to in-play betting introduced new threats to the integrity of sport. Records from criminal trials show that fixers readily use both the prematch and in-play markets. The sports betting market exhibits increasing availability of bets on subjects other than the final winner of the contest. Among the new products, a loose distinction may be drawn between ‘derivative bets’ (relating to a component of the final score, for example, the winner of the first half of a match), and ‘side bets’ (relating to other data in a match such as how many yellow cards are issued). Rebeggiani and Rebeggiani (2013) note the ‘inherent cheating potential’ of side bets in particular. Such bets may be easy to execute, even by a single player, and sportsmen and women may be more ready to take part in a fixing activity if it is unlikely to have a decisive impact on the final winner of the event. The two co-authors judge that fixing will be more prevalent where betting is possible on many minor aspects of an event as opposed to only on its winner.
Side bets do in fact account for a limited proportion of soccer betting volume so far (Forrest 2017). Examination of Betfair data on 2611 matches showed that the results markets accounted for more than 90% of turnover and the main derivatives bets for another 8.5%. All the many side bets available together captured less than one half of 1% of turnover. By far the most popular of these side bets was on the identity of the first goal scorer but, even in the highest profile competition, the EPL, total transactions per match amounted to less than £42,000. Substantial wagers would scarcely be possible in such a thin market. A priori reasoning again suggests that the development of markets on multiple aspects of a match may not offer significantly increased scope for profitable manipulation of sport by criminal interests (Forrest 2017).
Nowadays, fraudulent networks of punters and criminals rig matches through bribing players or referees whereas placing bets on the fix through Internet. In the past dozen years, match-fixing that interacts with rigged betting has become a global complex issue which is now chased by international police and sentenced at national justice courts. Networking has facilitated its emergence. Fraudulent punters need to network internationally in order to be able to gather a large amount of money to place on a fix. In most cases in court, connected people from different countries have been judged and sentenced together. Online betting and network globalisation together may be used to create major distortions in significant sporting contests and whose economic consequences are often in the millions of dollars.
1.2.2 Some (Non-exhaustive) Empirical Evidence
It is impossible to provide an exhaustive picture of online betting-related match-fixing first because it is a hidden activity and, second, because it has started to be detected, traced back, and investigated only recently. Absolutely non-exhaustive empirical evidence is mentioned below. However, most of the recent cases of match-fixing in various sports covered in Volume 2 were related to online sport betting. The most recent and comprehensive coverage of rigged sports betting is published in Forrest (2018).
In the twenty-first century, reports of fixes and attempted fixes come almost daily and have related to virtually all countries and to a very wide range of sports including such as badminton, basketball, cricket, e-sports, soccer, motorboat racing, rugby league, snooker, sumo wrestling, table tennis, and tennis. It is difficult to quantify how widespread match-fixing is since detected cases reflect only an unknown proportion of all match-fixing activity. Sportradar reported a very likely fixed 1625 soccer matches played in an approximately five-year period to November, 2014, a little less than 1% of all matches for which is carried out a monitoring. Despite the surveillance of 30,000 games per season in 43 European football leagues, such criminal business is skyrocketing. In 2011, about 10% of matches were felt suspicious, in 2012 about 700 games were found to be rigged, primarily in lower professional divisions, most in connection with online betting.
Moreover, many illegal bets are aggregated by agents and placed with multinational operators licensed in small Caribbean or Central American jurisdictions or in other betting-unregulated tax havens in Asia and elsewhere. Then street bookmakers feed bets into higher-level agents which then shift the money to its final destination—a multinational operator offshore. Local bookmaking is transformed in just recruiting local bettors and handling their accounts but networking of fraudulent punters remains in the shadow and difficult to detect. The bulk of bets are taken by illegal local bookmakers who manage the risk by selling them on to higher-level operators who then aggregate bets to pool risks. Eventually, further up a hierarchical structure of sports books, much of the money becomes legal when it ends up with one of the four giant operators, the world’s biggest bookmakers, which are licensed in Cagayan in the Philippines (Forrest 2017). These firms routinely deal in aggregated parcels of bets such that betting becomes anonymous.
The global market for online sports betting-related match-fixing is rather concentrated, geographically and by sports. The top ten gross wins realised on the illegal online market have been achieved in fourteen countries: China, the US, South Korea, Germany, India, the Czech Republic, Greece, Vietnam, Argentina, Brazil, Canada, Hong Kong, Pakistan, and Turkey (Boniface et al. 2012).
The Asian market accounts for a higher online sports betting volume than the European market and most of the betting related to recent criminal cases have taken place in Asia. In particular in China and India, the illegality, due to prohibition, has shaped the way the sport betting industry has developed. Many fraudulent networks are ‘based in Asia, namely China, Malaysia, Singapore, Philippines where betting outlays are not limited, and in some Central Eastern European countries. Interpol dismantled 272 such irregular bookmakers in 2007, arrested 1300 people suspected to organise online bets on fixed matches in Asia and seized $16 million in cash in 2008. Before cracking down on these networks, Interpol assessed the volume of their irregular bets to $1.5 billion’ (Andreff 2016).
Betting agents in Asia, when asked how much they could place on a fixed Belgian second division soccer match without attracting undue attention, provided a consensus answer of around €300,000 spread across several operators (Boniface et al. 2012). For a fixer this could lead to a win of up to €1 million from manipulating a match in a relatively low-level competition; and more if a match could be fixed in a higher status league with deeper liquidity—which is less often the case due to radar surveillance. Chris Eaton (FIFA, former Interpol agent) assesses to $10–20 million per match the bets placed on a single fixed match.
As regards betting-related match-fixing concentration by sports, one has first to mention that, until 2000, soccer was gathering 95% of the sports betting market. Consequently, a large number of soccer cases came to light in just a few years (Boniface et al. 2012). Since 2012, the media have been flooded with revelations about large numbers of soccer players and administrators being arrested in countries such as China, Greece, Italy, Germany, Turkey, Zimbabwe, and so on (see Volume 2). Problems of betting-related fixes have extended beyond football to handball, volleyball, snooker, sumo wrestling, cricket, and tennis, though those proven cases are only the tip of an iceberg. With live betting it has been changing and expanding towards different sports. For instance in 2014, Transparency International surveyed 259 Lithuanian basketball players and 21% reported having been personally approached to take part in a fix.
In a smaller survey which covered a wide range of thirteen sports and a more diverse set of countries (Austria, Cyprus, France, Greece, Ireland, and UK), 20% of the more than 600 athletes questioned were aware of a fix in their team in the preceding twelve months and nearly 13% were aware that they themselves had taken part in a match which was fixed (Forrest 2018).
Now, when it comes to the products (kind of bets) that attract betting-related match-fixing, in criminal trials, the evidence gathered was that criminals had placed bets on final results—the winner, the margin of victory or the total number of goals. None were recorded as having been placed in markets on incidental features of a game. In only 6 of 1468 suspicious matches was anything detected in side betting markets (Forrest 2017).
Finally, rigged betting related to match-fixing often came to light during police investigations of other activities of organised crime (ex: prostitution rings in the Bochum case). That sports corruption was discovered, in a sense, ‘accidentally’ is worrying to the extent that it reinforces suspicions that the cases we know about may be the tip of a large iceberg.
Sometimes, since sport betting operators are increasingly interested to invest in sport teams, a conflict of interests is likely to emerge. In 2007, Unibet was the main sponsor of a professional cycling team and, at the same time, offered bets on two riders in its team (‘which rider would arrive before the other one’); this created a very high-risk situation with regards to match-fixing opportunities (Precrimbet 2016). Or Peter Coates who is both the chairman of Stoke City football club and the main shareholder in Bet365; the employees of the latter company may have access to insider information in case of betting on a Stoke City match. Some regulators, such as the French ARJEL, prohibit this kind of situation.
1.2.3 Fraudulent Online Sports Betting and Money Laundering
Money laundering through sports betting happened to be estimated to $130 million. According to the Sorbonne-ICSS (2014) report, a compatible data of €102 billion were laundered through sport bets in a year.
In order to launder money, a criminal organisation would simultaneously bet on all possible outcomes of a match (win, draw, loss) with different operators after having checked that the odds are close from one operator to the other. It may lose about 30% of the money placed which is the price to pay for coming out from this process with 70% of dirty money absolutely cleaned and legal (appearing now as gains from a sport bet). Gambling in general, and betting more particularly, can be an efficient way to launder money, as described in Verschuuren and Kalb (2013). The major reasons are:
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the anonymity of bettors;
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the existence of illegal online betting;
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offshore sport betting regulation.
With online betting, criminals create a betting website and use it to launder money they have derived from illegal activity. The most traditional method is simple. A criminal who has created a sport betting site instructs accomplices to deposit money in various betting accounts, preferably outside the country where the betting site is established. The accomplices then simply lose the money they have deposited in their accounts, for example by betting on unlikely sporting event outcomes. For the operator and its owner, the money will be recorded as receipts (GGR) and they can be safe in the knowledge that the local authorities will not look too closely, particularly as the bets were made abroad.
With this type of betting websites generally located in offshore jurisdictions, the use of such ‘fake’ accounts can be hidden in a mass of legitimate betting accounts, further reducing the possibility of detection and making investigation difficult. Using this technique is representative of the strategy adopted by major criminal networks to mix legal and illegal activities. One of the most emblematic cases is the ‘Paradise Bet’ affair where a criminal network established a sport betting operator ex nihilo and used it in all phases of the money laundering process (Precrimbet 2016). Italian and British polices found in 2009 that the Parisi gang had used Paradise Bet, a British operator, for laundering millions of sterling pounds. They arrested 74 people involved and seized 680 bank accounts.
Criminals can also infiltrate an online betting website in order to bet very large amounts of dirty money without arousing suspicion. Rigged bets in dozens of millions of euro were placed on fixes of which €32.4 million was with a single Asian operator Samvo, licensed in the UK. The same case was unveiled in the aforementioned Bochum trial where a criminal network managed to open a VIP account at London-based operator Samvo. Samvo, at the behest of the criminal network, placed bets on the Asian market to secure additional profits. In most of the cases, sport betting is used by criminals to launder money without the active complicity of betting operators. Nevertheless, regular betting operators may be passive accomplices because money laundering is good for the growth of their business.
Illegal sites of sport betting are used to launder money by mafias, Chinese triads, and other criminal networks. They are between 8000 and 10,000 in number, primarily based in tax havens (Malta, Isle of Man, Curacao, etc.). In 2013, 68 sport betting sites were operational in the Cagayan province of Philippines (concentrating 53% of all illegal bets in the world) on a territory of 9300 km2 where there is no limit on the amounts that can be placed on bets.
As a matter of conclusion, it will not be easy or even feasible to eradicate online betting-related match-fixing since it is deeply rooted in the current state of the global economy where both transactional globalisation and Internet worldwide expansion seem to be irreversible. This business is flourishing and will grow at skyrocketing rates unless some significant national and international policy measures are urgently enforced in the coming years. To understand what is at stake in terms of policy design, a short detour by an appropriate economic analysis of rigged sport betting, in the next chapter, is required.
Notes
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See 2.2.1 for the distinction between legal and illegal sport betting markets.
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Andreff, W. (2019). Global Criminal Networking in Sport: Online Betting-Related Match-Fixing. In: An Economic Roadmap to the Dark Side of Sport. Palgrave Pivots in Sports Economics. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-28615-6_1
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