World looks to U.S. to legalize sports betting, fight match-fixing
David Purdum, ESPN.com
Crime syndicates are attacking the soul of international sports with relentless and brazen attempts at match-fixing and betting fraud, thriving in areas where sports betting is underregulated. However, they can cross over into legal markets online to manipulate games all over the globe. They're taking a toll on the perception of the games, increasing the public's skepticism with each compromised match. Now, the world's integrity monitors are looking to the U.S. to join the fight by legalizing sports betting and teaming with like-minded countries to eliminate gambling corruption in sports.
"Eastern European and Southeast Asian betting fraudsters have driven European soccer into the danger zone," Chris Eaton, a global sports security expert who has worked with INTERPOL and FIFA, said. "The USA very much holds the key to saving international sport from complete loss of credibility."
Long-tentacled syndicates have used millions of dollars to bribe match officials, club officials and players in more than 15 countries, according to Europol. Some networks have gone as far as to concoct make-believe "ghost" matches, duping sportsbooks with fraudulent data and profiting by betting on the result of an event that never occurred.
With the global sports betting market estimated to be four times larger than the global sports economy, it's a scary time for international sport and the U.S. leagues looking to expand their reach into these territories.
But there are companies fighting back against the corruption.
European integrity service Sportradar tracks the betting action on more than 65,000 matches across 10 sports annually. Since 2009, it has sent out more than 1,800 betting fraud reports on matches it was confident had been manipulated, including 380 in 2014. And Eaton is now the executive director of sport security for the International Center for Sport Security (ICSS).
Formed in 2011, the ICSS advises in sport safety, security and integrity and aims to rid sports of corruption. It has partnered with data providers, betting integrity monitors and sports leagues to get a grasp of the scope of the global sports betting market. The ICSS estimates the global sports betting market is worth $1.5-2 trillion, nearly equal to the gross national product of Russia, and believes approximately $406 billion is wagered on American sports outside of the U.S. With the vast majority of sports betting taking place in unregulated environments, estimates are difficult to legitimize, but everyone agrees -- it's a mammoth market that is being capitalized on by organized crime and used as a vehicle to launder large sums of money.
"If the U.S. wants to avoid the European experience, it must first regulate or, at the very least, nationally recognize the reality of global sport betting," Eaton said. "As U.S. sports internationalize, they need to realize that they are entering a vulnerable sport betting market at the same time. U.S. sports must avoid repeating the European error of thinking they can protect themselves at home, while remaining a target abroad."
To this point, even with an underregulated sports betting framework, the U.S. has avoided widespread corruption. A 2000 study by a Las Vegas consulting firm found only 0.01 percent of games across 12 U.S. sports leagues from 1990 to 2000 showed signs of unusual wagering. Still, there have been issues, mostly confined to point-shaving in college basketball.
Beginning with Arizona State in 1994, NCAA basketball has averaged one point-shaving scandal in college basketball per student-athlete cycle. There have been point-shaving cases at Auburn, San Diego, Toledo and Northwestern, and those are the only ones reported publicly.
The NBA was deeply scarred by the 2007 gambling controversy centered on former referee Tim Donaghy, but it didn't suffer a long-term loss in popularity with fans or bettors. Franchise values have climbed to all-time highs, with the Los Angeles Clippers selling this year for $2 billion. A record $1.1 billion was bet on basketball at Nevada's sportsbooks in 2014, nearly double the amount wagered on hoops in 2006, the year before it was revealed Donaghy had bet on games he officiated. (Nevada Gaming Control combines betting numbers on the NBA and college basketball into one category).
Now, nearly a decade later, NBA commissioner Adam Silver is leading the push to legalize sports betting in the U.S. He believes, ultimately, it is the best way to protect the integrity of games. Owners and high-ranking officials for the Dallas Mavericks, Los Angeles Lakers, Sacramento Kings, Boston Celtics and Washington Wizards have expressed support of legalization. The NBA is all in; other leagues are not.
Major League Baseball and the NHL have acknowledged a willingness to take a fresh look at legalizing sports betting. The NFL and NCAA, on the other hand, remain adamantly opposed.
In a statement to ESPN Chalk, the NCAA said it "opposes all forms of gambling -- legal and illegal -- on college sports. The spread of legalized sports wagering is a threat to student-athlete well-being and the integrity of athletic competition." NFL commissioner Roger Goodell told Associated Press sport editors in April that he doesn't anticipate the league's opposition to legalizing sports betting will change.
"We think the integrity of the game is the most important thing, and we believe that our current position is the right way to be able to handle that," Goodell said. "But, on the other hand, if changes happen, we'll be prepared for those."
Eaton believes the NCAA and NFL are making a mistake.
"I don't know what their reasoning is," he said, "but I can say that globally [an unregulated market] just does not work and it's been proven not to work."
Path to legalization
Only 15 percent of the global sports betting market is legal and visible to regulators, according to the ICSS. The remaining 85 percent of the market comes out of underregulated areas that spawn the majority of match-fixing and betting fraud.
In the U.S., less than 3 percent of the hundreds of billions of dollars bet on sports takes place in a regulated market. A record $3.9 billion was wagered on sports in 2014 with Nevada's licensed bookmakers, while Delaware's pro football sports parlay system attracted $37.8 million in wagers in fiscal year 2015. The rest of the money wagered on sports in the U.S., including the booming daily fantasy market, is done so in the type of underregulated, gray environment that has produced corruption internationally. Transitioning from a predominantly unregulated sports betting market to a legal, transparent and heavily monitored one in the U.S. is a complex issue.
It will require powerful entities, each eager for a piece of the pie, to put greed aside for the sake of the market. The sports leagues and government must accept taking a cut of the revenue that will allow the sportsbooks to, ideally, offer the most competitive odds to prevent unregulated bookmakers from undercutting the legal market. In return, normally tight-lipped gaming companies -- and the gamblers themselves -- must be willing to become completely transparent to protect the integrity of the games and the market.
"I think the first step is to clarify the purpose," Jake Williams, an Australian attorney, who has worked for the Confederation of North, Central American and Caribbean Association Football, told ESPN Chalk. "The government wants tax revenue. The leagues need to focus on fan engagement and not tax bookmakers. If they focus on fan engagement, they will see huge ancillary benefits like sponsorship, much higher TV broadcast rights and so on. Casual bettors need access to legal online betting, and pro bettors and syndicates need large and liquid legal markets. If they aren't available, they will look to offshore and other liquid markets. And bookmakers need a fair tax model that allows for a solid business."
On the surface, with the U.S. sports betting market valued in the hundreds of billions of dollars, getting everyone involved a cut doesn't seem too difficult. But sportsbooks operate on minuscule margins and vigorously protect them against the sharpest sports bettors. They often limit -- and sometimes outright ban -- the most successful gamblers. On average, Nevada books hold between 4-6 percent of the amount wagered. Hold percentages at offshore books are comparable, sources told ESPN Chalk.
"There's absolutely -- no question -- enough money [in the U.S. betting market]," Mark Locke, CEO of European integrity monitor Sport IM, said. "If you compared even the most aggressive projections on the side of the fantasy sports market, they are absolutely dwarfed by the potential revenue that you drive out of [traditional sports] gambling."
While the numbers are crunched, gaming entities and sports leagues are already working more closely together to address the transparency issue. The Pac-12 conference, for example, is supporting a proposed amendment to Nevada Gaming Control regulations by sportsbook operator CG Technology that would allow books to share the identity of a patron, the events that they wager on and the amounts they wager, if requested by a professional or amateur sports league or governing body.
In April, the NFL invested in a deal with the U.S. branch of Sportradar, the European data and betting integrity monitor. Sportradar US is now the official data provider to the NFL. The NFL's deal with Sportradar US does not include betting integrity services, NFL spokesman Brian McCarthy told ESPN Chalk.
"We have other [betting monitoring] services that we work with," McCarthy added in an email.
Protecting the perception of sports
Gamblers regularly call the NCAA's office in Indianapolis to complain about an outcome that didn't go their way. They'll leave voicemails about the need to investigate a certain coach, team or official. Complaints have even been mailed in on postcards from gamblers convinced games aren't on the level.
When sports betting becomes legal in the U.S. -- something experts believe is inevitable -- the cynicism of the legitimacy of outcomes will intensify. This is a major concern for the sports leagues.
Goodell, in a 2009 letter to Delaware Gov. Jack Markell, wrote, "Professional sports involve athletic contests that must not only be honest, but be perceived by the American public as honest. NFL owners and players have worked hard from the league's inception nearly 90 years ago to protect its integrity. There is no issue of greater importance to the league. That is why the NFL's position on legalized sports gambling has remained consistent for decades. State-promoted gambling not only adds to the pressure on our coaches and players, but creates suspicion and cynicism toward every on-the-field mistake that affects the betting line."
Last week, a goalkeeper for Turkish club Genclerbirligi failed to make a save on the winning goal in a 1-0 loss to Gala. Replays made it appear that keeper Ferhat Kaplan pulled his hand back while attempting the save. It sparked match-fixing allegations.
"I am only 26," Kaplan told reporters. "I have aims ahead, I want to reach those aims. I don't want [either] my name or my goalkeeping to be mention with those dirty things."
On Tuesday, Italian police detained approximately 50 people, including team managers, players and a suspected mobster in match-fixing scheme. The defendants are accused of fixing dozens of matches in Italy's third division and top semi-professional league. And, in 2013, China's football association banned 33 players and officials for life for their roles in match-fixing.
"As a result of this scandal, the attendance in China's football went down [by] 70 percent," Eaton said. "It's rebounding now, beginning to draw back some of its lost popularity, but China, the most populous country in the world, ought to have one of the strongest soccer teams in the world and, at one point in time, it was headed in that direction. The reality is the cynicism of the fan translates into the performance on the field."
China is ranked 82nd in the current FIFA World Ranking.
If the U.S. wants to prevent similar instances, experts like Eaton say national legalization of sports betting is the first step, but not the end game. The U.S. must take a global approach to take down illegal bookmakers, who have too many advantages over a regulated operator to simply close up shop because of a new legal market. Operating online, overhead costs are low, and illegal bookmakers have the ability to tempt the biggest bettors with better odds and offer credit to gamblers who don't want to put money up front. It's exactly what's happening to Europe's legal sports betting market.
"The European belief that it can protect itself [from match-fixing and betting fraud] with some sort of legislative bubble around the European Union has brought soccer almost to its knees," Eaton said. "U.S. sports have to avoid the same problem. Don't think you can bubble off legislatively and with your geographical borders. It is not true and will not work."
David Purdum, ESPN.com
Crime syndicates are attacking the soul of international sports with relentless and brazen attempts at match-fixing and betting fraud, thriving in areas where sports betting is underregulated. However, they can cross over into legal markets online to manipulate games all over the globe. They're taking a toll on the perception of the games, increasing the public's skepticism with each compromised match. Now, the world's integrity monitors are looking to the U.S. to join the fight by legalizing sports betting and teaming with like-minded countries to eliminate gambling corruption in sports.
"Eastern European and Southeast Asian betting fraudsters have driven European soccer into the danger zone," Chris Eaton, a global sports security expert who has worked with INTERPOL and FIFA, said. "The USA very much holds the key to saving international sport from complete loss of credibility."
Long-tentacled syndicates have used millions of dollars to bribe match officials, club officials and players in more than 15 countries, according to Europol. Some networks have gone as far as to concoct make-believe "ghost" matches, duping sportsbooks with fraudulent data and profiting by betting on the result of an event that never occurred.
With the global sports betting market estimated to be four times larger than the global sports economy, it's a scary time for international sport and the U.S. leagues looking to expand their reach into these territories.
But there are companies fighting back against the corruption.
European integrity service Sportradar tracks the betting action on more than 65,000 matches across 10 sports annually. Since 2009, it has sent out more than 1,800 betting fraud reports on matches it was confident had been manipulated, including 380 in 2014. And Eaton is now the executive director of sport security for the International Center for Sport Security (ICSS).
Formed in 2011, the ICSS advises in sport safety, security and integrity and aims to rid sports of corruption. It has partnered with data providers, betting integrity monitors and sports leagues to get a grasp of the scope of the global sports betting market. The ICSS estimates the global sports betting market is worth $1.5-2 trillion, nearly equal to the gross national product of Russia, and believes approximately $406 billion is wagered on American sports outside of the U.S. With the vast majority of sports betting taking place in unregulated environments, estimates are difficult to legitimize, but everyone agrees -- it's a mammoth market that is being capitalized on by organized crime and used as a vehicle to launder large sums of money.
"If the U.S. wants to avoid the European experience, it must first regulate or, at the very least, nationally recognize the reality of global sport betting," Eaton said. "As U.S. sports internationalize, they need to realize that they are entering a vulnerable sport betting market at the same time. U.S. sports must avoid repeating the European error of thinking they can protect themselves at home, while remaining a target abroad."
To this point, even with an underregulated sports betting framework, the U.S. has avoided widespread corruption. A 2000 study by a Las Vegas consulting firm found only 0.01 percent of games across 12 U.S. sports leagues from 1990 to 2000 showed signs of unusual wagering. Still, there have been issues, mostly confined to point-shaving in college basketball.
Beginning with Arizona State in 1994, NCAA basketball has averaged one point-shaving scandal in college basketball per student-athlete cycle. There have been point-shaving cases at Auburn, San Diego, Toledo and Northwestern, and those are the only ones reported publicly.
The NBA was deeply scarred by the 2007 gambling controversy centered on former referee Tim Donaghy, but it didn't suffer a long-term loss in popularity with fans or bettors. Franchise values have climbed to all-time highs, with the Los Angeles Clippers selling this year for $2 billion. A record $1.1 billion was bet on basketball at Nevada's sportsbooks in 2014, nearly double the amount wagered on hoops in 2006, the year before it was revealed Donaghy had bet on games he officiated. (Nevada Gaming Control combines betting numbers on the NBA and college basketball into one category).
Now, nearly a decade later, NBA commissioner Adam Silver is leading the push to legalize sports betting in the U.S. He believes, ultimately, it is the best way to protect the integrity of games. Owners and high-ranking officials for the Dallas Mavericks, Los Angeles Lakers, Sacramento Kings, Boston Celtics and Washington Wizards have expressed support of legalization. The NBA is all in; other leagues are not.
Major League Baseball and the NHL have acknowledged a willingness to take a fresh look at legalizing sports betting. The NFL and NCAA, on the other hand, remain adamantly opposed.
In a statement to ESPN Chalk, the NCAA said it "opposes all forms of gambling -- legal and illegal -- on college sports. The spread of legalized sports wagering is a threat to student-athlete well-being and the integrity of athletic competition." NFL commissioner Roger Goodell told Associated Press sport editors in April that he doesn't anticipate the league's opposition to legalizing sports betting will change.
"We think the integrity of the game is the most important thing, and we believe that our current position is the right way to be able to handle that," Goodell said. "But, on the other hand, if changes happen, we'll be prepared for those."
Eaton believes the NCAA and NFL are making a mistake.
"I don't know what their reasoning is," he said, "but I can say that globally [an unregulated market] just does not work and it's been proven not to work."
Path to legalization
Only 15 percent of the global sports betting market is legal and visible to regulators, according to the ICSS. The remaining 85 percent of the market comes out of underregulated areas that spawn the majority of match-fixing and betting fraud.
In the U.S., less than 3 percent of the hundreds of billions of dollars bet on sports takes place in a regulated market. A record $3.9 billion was wagered on sports in 2014 with Nevada's licensed bookmakers, while Delaware's pro football sports parlay system attracted $37.8 million in wagers in fiscal year 2015. The rest of the money wagered on sports in the U.S., including the booming daily fantasy market, is done so in the type of underregulated, gray environment that has produced corruption internationally. Transitioning from a predominantly unregulated sports betting market to a legal, transparent and heavily monitored one in the U.S. is a complex issue.
It will require powerful entities, each eager for a piece of the pie, to put greed aside for the sake of the market. The sports leagues and government must accept taking a cut of the revenue that will allow the sportsbooks to, ideally, offer the most competitive odds to prevent unregulated bookmakers from undercutting the legal market. In return, normally tight-lipped gaming companies -- and the gamblers themselves -- must be willing to become completely transparent to protect the integrity of the games and the market.
"I think the first step is to clarify the purpose," Jake Williams, an Australian attorney, who has worked for the Confederation of North, Central American and Caribbean Association Football, told ESPN Chalk. "The government wants tax revenue. The leagues need to focus on fan engagement and not tax bookmakers. If they focus on fan engagement, they will see huge ancillary benefits like sponsorship, much higher TV broadcast rights and so on. Casual bettors need access to legal online betting, and pro bettors and syndicates need large and liquid legal markets. If they aren't available, they will look to offshore and other liquid markets. And bookmakers need a fair tax model that allows for a solid business."
On the surface, with the U.S. sports betting market valued in the hundreds of billions of dollars, getting everyone involved a cut doesn't seem too difficult. But sportsbooks operate on minuscule margins and vigorously protect them against the sharpest sports bettors. They often limit -- and sometimes outright ban -- the most successful gamblers. On average, Nevada books hold between 4-6 percent of the amount wagered. Hold percentages at offshore books are comparable, sources told ESPN Chalk.
"There's absolutely -- no question -- enough money [in the U.S. betting market]," Mark Locke, CEO of European integrity monitor Sport IM, said. "If you compared even the most aggressive projections on the side of the fantasy sports market, they are absolutely dwarfed by the potential revenue that you drive out of [traditional sports] gambling."
While the numbers are crunched, gaming entities and sports leagues are already working more closely together to address the transparency issue. The Pac-12 conference, for example, is supporting a proposed amendment to Nevada Gaming Control regulations by sportsbook operator CG Technology that would allow books to share the identity of a patron, the events that they wager on and the amounts they wager, if requested by a professional or amateur sports league or governing body.
In April, the NFL invested in a deal with the U.S. branch of Sportradar, the European data and betting integrity monitor. Sportradar US is now the official data provider to the NFL. The NFL's deal with Sportradar US does not include betting integrity services, NFL spokesman Brian McCarthy told ESPN Chalk.
"We have other [betting monitoring] services that we work with," McCarthy added in an email.
Protecting the perception of sports
Gamblers regularly call the NCAA's office in Indianapolis to complain about an outcome that didn't go their way. They'll leave voicemails about the need to investigate a certain coach, team or official. Complaints have even been mailed in on postcards from gamblers convinced games aren't on the level.
When sports betting becomes legal in the U.S. -- something experts believe is inevitable -- the cynicism of the legitimacy of outcomes will intensify. This is a major concern for the sports leagues.
Goodell, in a 2009 letter to Delaware Gov. Jack Markell, wrote, "Professional sports involve athletic contests that must not only be honest, but be perceived by the American public as honest. NFL owners and players have worked hard from the league's inception nearly 90 years ago to protect its integrity. There is no issue of greater importance to the league. That is why the NFL's position on legalized sports gambling has remained consistent for decades. State-promoted gambling not only adds to the pressure on our coaches and players, but creates suspicion and cynicism toward every on-the-field mistake that affects the betting line."
Last week, a goalkeeper for Turkish club Genclerbirligi failed to make a save on the winning goal in a 1-0 loss to Gala. Replays made it appear that keeper Ferhat Kaplan pulled his hand back while attempting the save. It sparked match-fixing allegations.
"I am only 26," Kaplan told reporters. "I have aims ahead, I want to reach those aims. I don't want [either] my name or my goalkeeping to be mention with those dirty things."
On Tuesday, Italian police detained approximately 50 people, including team managers, players and a suspected mobster in match-fixing scheme. The defendants are accused of fixing dozens of matches in Italy's third division and top semi-professional league. And, in 2013, China's football association banned 33 players and officials for life for their roles in match-fixing.
"As a result of this scandal, the attendance in China's football went down [by] 70 percent," Eaton said. "It's rebounding now, beginning to draw back some of its lost popularity, but China, the most populous country in the world, ought to have one of the strongest soccer teams in the world and, at one point in time, it was headed in that direction. The reality is the cynicism of the fan translates into the performance on the field."
China is ranked 82nd in the current FIFA World Ranking.
If the U.S. wants to prevent similar instances, experts like Eaton say national legalization of sports betting is the first step, but not the end game. The U.S. must take a global approach to take down illegal bookmakers, who have too many advantages over a regulated operator to simply close up shop because of a new legal market. Operating online, overhead costs are low, and illegal bookmakers have the ability to tempt the biggest bettors with better odds and offer credit to gamblers who don't want to put money up front. It's exactly what's happening to Europe's legal sports betting market.
"The European belief that it can protect itself [from match-fixing and betting fraud] with some sort of legislative bubble around the European Union has brought soccer almost to its knees," Eaton said. "U.S. sports have to avoid the same problem. Don't think you can bubble off legislatively and with your geographical borders. It is not true and will not work."
