Online gambling: EU Institutions must de-couple funding and integrity

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

This article is part of our special report ICT: Fuelling the economy.

A European Parliament committee may be at odds with the European Commission over online gambling, but it is possible to forge a compromise to the benefit of consumers, argues Khalid Ali from European Sports Security Association.

Khalid Ali is the Secretary-General of the European Sports Security Association (ESSA).

"The European Parliament’s Committee on the Internal Market and Consumer Protection (IMCO) may appear at odds with the European Commission on the subject of online gambling, but there is still time to engineer a conclusion from its deliberations on the forthcoming vote that could benefit European consumers, sports and businesses alike.

In its recent report on online gambling, which was adopted in October, IMCO claims that the integrity of sport is at risk from the burgeoning popularity of online sports betting due to a rise in the risk of fraud associated with such activities.

According to some the proliferation of online betting, helped by innovative services such as side bets – where consumers can bet on scenarios that do not affect the final outcome of a given contest – or in-play betting, where bets are placed during a contest rather than before it, has reached such a point where nobody knows what’s going on anymore and criminals are exploiting the situation to clean up; at the expense of bookmakers, consumers and sport itself.

Unfortunately this assertion is not correct as it fundamentally misunderstands the reality of online bookmaking. Increased fraud and criminal activity of any kind does certainly lead to a loss of integrity, the lifeblood of sport itself. But due to the digital nature of online betting, where all bets are catalogued in real time and every customer creates a unique fingerprint, licenced, regulated bookmakers are able to spot suspicious betting patterns as they happen, regardless of whether this is before or during a contest. They’re incentivised to do this as they are the principal losers financially when fraud is perpetrated.

This is the benefit Europe enjoys over other markets, some of which still outlaw gambling. Because Europe – or at least certain member states – has allowed its licenced, regulated bookmakers to evolve to take full advantage of the breadth of possibilities presented by broadband Internet, its service providers lead the world, presenting consumers with unrivalled entertainment and protection.

This protection is as important to bookmakers as it is to sports themselves. Through the work of my organisation, the European Sports Security Association (ESSA), and their own efforts, bookmakers work closely with sports governing bodies to detect, disrupt and report any suspected wrongdoing.

By contrast, countries where the natural evolution of online gambling has been stymied by over regulation have had to deal with, at best, a flight of consumers to gaming operators in unregulated domiciles or worse, a black market at home. Criminality cannot fail to flourish.

The point is not lost on the European Commission, whose recent workshop on online gambling in relation to sporting integrity surmised that sport betting did not represent a threat to the integrity of sport. It also noted that bookmakers played a positive role in tackling the problem through the education of athletes and officials – something that really should fall to the sports governing bodies to take care of themselves.

IMCO, too, recognises that the industry plays a positive role in keeping criminals out of gambling however it also believes that regulated bookmakers should pay a betting right to sports governing bodies in return for offering bets by way of reparation for any ‘pollution’ that match fixing should bring about.

The problem with this approach is that when this model was introduced in France in 2010 it failed to either increase the flow of funds to sports – instead, bookmakers have simply left the market, viewing it as unsustainable – or improve integrity.

The other principal weakness of fair return is that it undermines so much of the good work that has been done in recent years to improve the integrity of sport. Not only are unregulated bookmakers let off the hook from sanctions, they actually stand to gain new customers as their regulated rivals become less competitive.

Lastly, fair return does not work because most sports themselves are in no shape to be able to put through the kinds of reforms needed to tackle match fixing even were funding no object. Time and again, governing bodies have failed to clamp down on the conditions that have allowed match fixing to flourish.

This conclusion was arrived at by none other than Richard Pound, IOC member and founding president of WADA. Commenting at a conference in October on a meeting the regulator held earlier this year to combat corruption, Pound said: “The most disappointing aspect for me about the IOC initiative was the response of many of the sports officials involved.

“Instead of focusing upon the problem of corruption, many of them saw the meeting as an opportunity to advance the proposition that because betting agencies have a profitable business in relation to sports, the betting agencies should share those revenues with the sports organisations. Quite properly, the betting agencies perceived this as little more than a money-grab by the sports organisations, rather than a serious effort to address the underlying problems.

“Just as they have a tendency to do so with respect to doping, sports organisations tried to lay off the problems of corruption on governments and government agencies, all but absolving themselves from any responsibility in relation to their own sports.”

For the benefit European consumers, let us hope that Pound’s common-sense approach stretches to EU decision-makers, otherwise another European success story could find itself in jeopardy."

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