Australia Sports Betting Report Offers Cautionary Tale For US Market Integrity

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American sports betting interests are looking to foreign markets for clues on wrangling the domestic industry, which is very much in its formative stages.

A pointed case study surfaced last week in a report from an integrity-monitoring organization called the ESSA (Sports Betting Integrity). The study specifically concerns integrity in Australia’s sports betting market, but the principles apply universally.

The full report is worth a read, as many of the issues explored mirror those threatening the young US market.

What is ESSA?

ESSA is a non-profit that oversees integrity for regulated sports betting operators around the world. Prospective members undergo a “rigorous due diligence process” and must comply with ESSA’s code of conduct.

The network encompasses some of the largest international gambling companies, many of which are entering the US as sports betting expands:

Membership includes what amounts to a crowd-sourced integrity monitoring service. Operators are encouraged to flag any potential issue, providing notice to the entire group. The ESSA itself then follows up on the suspicions centrally.

Should the administration find legitimate cause for concern, it notifies the sports governing bodies and local regulatory agencies with which it works. Its relationships facilitate two-way information sharing at the account level, including the source location of the suspicious bet(s).

According to Secretary General Khalid Ali, data shows that “criminals are avoiding using ESSA members … to place bets on manipulated events.”

The organization flagged 62 suspicious markets during Q2, far fewer than out-of-network operators. More than 70 percent of the issues involved tennis matches.

AGA on board with collaborative monitoring

ESSA’s recent quarterly report includes a full-page letter from Sara Slane of the American Gaming Association. She and the AGA support the creation of a US integrity-monitoring unit in the same vein.

Here’s Slane:

“As legal sports betting becomes a reality in the United States, the American Gaming Association (AGA) looks to ESSA as a model for promoting sports betting in a safe and regulated environment, while ensuring the integrity of games …

“To that end, the AGA supports the establishment of a collaborative integrity monitoring association in the U.S.”

Real-time information sharing is the key, according to Slane, underscoring a “mutual shared interest” in integrity between all parties involved. ESSA works with local regulators and law enforcement, as well as major sports organizations like the International Olympic Committee, UEFA and FIFA.

Ali indicated that the groups are already working together to construct a model tailored to the US sports betting market.

Addressing the sports betting black market

Protecting integrity amid widespread sports betting requires a comprehensive solution, and much of the report centers on the dangers of the black market.

“The availability of unregulated betting services has been widely recognised as the principal vehicle for corrupt activity and the manipulation of sport. Law enforcement bodies such as INTERPOL and Europol have stated that match-fixing is not primarily focused on regulated, but unregulated operators, mainly in based in Asia.

“The lack of any meaningful regulatory oversight is detrimental to the integrity of those markets and enhances the ability of criminals to engage in corrupt activity.”

Slane also addressed the problem in her editorial:

“This illegal market fuels criminal activity, fails to protect consumers and doesn’t generate a dime in tax revenue. It also enables betting fraud and makes games vulnerable to breaches of integrity since the illegal market lacks the transparency, oversight and cross-stakeholder collaboration necessary to identify, analyze, and stamp out illicit activity.”

According to both, a unified national — perhaps international — solution is needed to combat potential match fixing and other betting-related impropriety. And neither think sports leagues should be the gatekeepers of that solution.

No integrity fees, everyone agrees

Any discussion surrounding integrity is incomplete without a mention of US sports leagues, some of which have lobbied for the so-called integrity fee. If included in policy, this or other fees would entitle the leagues to collect a direct share of profit from the regulated industry.

Slane once again cited the illegal market in arguing that these “foolish” burdens would only serve to hinder integrity further.

“Such a fee would wipe out operators’ already razor-thin margins, thereby worsening the odds they can offer customers and all but ensuring that customers continue to place their bets with illegal bookmakers that can offer a better price.

“It would also undercut the robust and effective integrity protections that have worked well for decades in regulated jurisdictions.”

ESSA had even harsher words in the Australia report. That market has the sort of framework US leagues are seeking, in which their governing bodies have some control over the scope and availability of bets.

According to the report, that model is widely criticized abroad and provides fertile grounds for impropriety.

“In addition, there must also be a significant question as to whether it is appropriate to permit self-regulating sporting bodies any degree of control over regulated betting markets, especially given the on-going commercial issues and conflicts that are inherent in this matter. Senior representatives of sporting bodies and clubs around the world have been implicated and/or convicted of involvement in both betting and non-betting (or sporting) related match fixing, notably in Italy, Turkey, South Africa and Brazil.”

The report cites concerns over monopolization and administrative costs as additional arguments against that model. Instead, ESSA suggests looking to markets like the UK and Italy, where operator licensing fees fund central monitoring services.