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Dutch  Remote  Gambling  Bill  Consultation  

 

Introduction  

1. The  European  Sports  Security  Association  (ESSA),  representing  the  betting  integrity   interests  of  the  majority  of  Europe’s  leading  licensed  betting  operators,  is  pleased  to  provide  its  views  on  the  government’s   draft   legislation   proposing   the   licensing   of   remote   gambling,   including   sports  betting  and  in  particular  fixed  odds  and  ‘live’  (or  ‘in-­‐play)  betting  as  provided  by  ESSA  members.  

2. We  hope  that  the  government  will  take  into  account  the  information  contained  in  this  document  in  its  deliberation  on  the  scope  and  nature  of  the  proposed  legislation  concerning  betting.  

3. From  the  outset,  we  would  like  to  highlight  that  ESSA  fully  supports  the  policy  objectives  of  the  Dutch  government  with  regard  to  the  reform  of  its  gaming  policy.    In  particular  we  support  the  fight  against  organised  crime  and   the  protection  of   consumers.  We  support   the  provision  of  a  sports  betting  product  for  Dutch  residents  that  is  fair  and  exempt  from  any  manipulation  of  the  sports   event   itself.   It   should   be   noted   that   as   well   as   sports,   the   regulated   European   betting  operators  and  its  customers  are  the  victims  of  corruption  in  sport  and  therefore  have  an  interest  to  preserve  its  integrity.    

4. ESSA   is   aware   that   an   investigation   into   the   nature   and   size   of   match-­‐fixing   has   also   been  ordered  by   the  Minister  of  Health,  Welfare  and  Sport  and   the  Minister  of  Security  and   Justice  and  is  being  carried  out  during  the  consultation  for  this  bill.    

5. As   the   licensed   private   betting   industry’s   integrity   body,   ESSA   is   of   course   very   happy   to  participate   in   that   process;  we  believe   that   it   is   vital   that   all   stakeholders   are   engaged   fully   if  practical  and  proportionate  cross-­‐sector  solutions  are  to  be  found  on  this  important  issue.      

Background    

6. ESSA   was   established   in   2005   by   a   group   of   leading   licensed   online   sports   betting   operators  specifically  to  address  betting  related  match-­‐fixing.  The  organisation  presently  represents  15  of  the   major   European   licensed   betting   operators’   international   online   operations,   including  Unibet,   Ladbrokes,   William   Hill,   bet365   and   bwin.party   to   name   but   a   few,   and   also   the  Association  of  British  Bookmakers  (ABB)  which  covers  over  7,000  UK  betting  shops.    

7. The  organisation’s  mandate   is   to   facilitate   cross-­‐sector   partnerships   and   to   protect   operators,  their  customers  and  sporting  bodies  from  betting  related  corruption  in  sports.  ESSA  does  this  by  coordinating  detailed  intelligence  from  its  members’  customer  base  to  identify,  track  and  trace  suspicious   bets   (the   Internal   Control   System   (ICS)   as   it   is   referred   to   by   operators).   That  

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information  is  then  quickly  passed  on  to  the  relevant  national  regulators  and  sporting  bodies  for  further  investigation  and  action  if  deemed  necessary.  

8. To   facilitate   the   smooth   transmission  of   this  data,   ESSA  has  established  –  without   any   cost   to  sports   -­‐     information   sharing  arrangements  with  over   twenty  major  national   and   international  sporting   bodies   such   as   the   IOC   and   FIFA,   along   with   the   national   gambling   regulators   of  Gibraltar,   Alderney,   Malta   and   the   UK   which   license   remote   gambling.   ESSA’s   information  network  provides  transnational,  even  global,  coverage  and  has  proved  to  be  highly  effective   in  detecting  and  deterring  betting  corruption.      

ESSA  integrity  activity:  protecting  consumers,  sports  and  the  licensed  betting  markets  

9. European   licensed  operators  have  a  clear   inherent  operational  need   to  ensure   the   integrity  of  sporting   events   and   their   associated   products.   ESSA’s   members   work   together   using  sophisticated  risk  assessment  and  security  protocols  to  identify  suspicious  betting  patterns  and  have   access   to   an   unrivalled   body   of   expertise   and   data,   including   transactional   data   on   our  consumers’   betting   activities.   Betting   operators   are   indeed   the   only   persons   in   the   chain   of  stakeholders   that   know   “who   is   betting   on   what”.   That   information   is   communicated   to   the  relevant  authorities  and  sporting  bodies  where  necessary.  

10. ESSA’s  members  offer   tens  of   thousands  of   sports  betting  markets  each  week  with  millions  of  bets  assessed  and  taken.    The  annual  cost  of    risk  management  and  compliance,  both  in  terms  of  Internal  Control  Systems  (ICS)  and  on  sports  betting  product    per  member  is  easily  a  few    million  EUR  per  year1.  However,  our  integrity  figures  for  2012  show  that,  after  detailed  examination  of  the  intelligence  surrounding  the  109  alerts  raised  by  ESSA  members  during  that  timeframe,  only  6  were   found   to  be  of   sufficient  concern   for  a   referral   to   the   relevant   sporting  and   regulatory  authorities.  That  is  slightly  less  than  2011,  where  8  cases  were  referred.  These  numbers  are  very  much  in  line  with  the  numbers  provided  by  regulatory  bodies  in  Belgium,  France  or  the  UK2.  

11. The  figures  demonstrate  the  value  of  the  sophisticated  detection,  deterrent  and  risk  assessment  protocols  our  members  employ.  In  short,  corruptors  are  generally  steering  clear  of  ESSA’s  well-­‐regulated  and  vigilant  sports  betting  operators  where  detailed  audit  trails  are  created  resulting  in  criminals  leaving  a  detailed  ‘digital  fingerprint’  from  which  we  can  act  accordingly.  

12. It  is  important  to  understand  that,  unlike  other  detection  systems,  only  ESSA  (and  its  regulatory  and  sporting  partners)  has  access   to   the  crucial  detailed   information  surrounding  the  amounts  and   locations   of   the   transactions   of   its  members’   consumers   (“who   bets   on  what””).  We   are,  therefore,   and   unlike   other   early   warning   mechanisms   that   simply   follow   from   the   outside  perspective     changes   in   odds   or   betting  markets,   able   to   fully   evaluate   all   of   the   information,  including  the  underlying  betting  trends,  required  to  properly  assess  suspicious  betting  patterns.      

                                                                                                                         1  Excluding  other  costs  e,.g.  for  bookmakers  the    negative  financial  results  on  product  levels  .e.g.  favourites  winning  2 Belgian  Coordination  unit  (voetbalcel)  reported  18  reports  in  3  years.  The  French  Regulator  (Arjel)  investigated  in  the  period  June  2010  and  May  2013,  70  events  and  referred  4  to  sports  governing  bodies  for  further  follow-­‐up,  and  the  most  recent  data  of  the  Sports  Betting  Intelligence  Unit  of  the  UK  Gambling  commission  makes  reference  to  93  disclosures,  of  which  49  have  been  closed  where  the  information  has  been  referred  to  external  agencies  or  where  the  commission  was  unable  to  substantiate  suspicions.    

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13. ESSA’s  integrity  figures  clearly  demonstrate  the  value  of  our  policy  of  facilitating  positive  cross-­‐sector   partnerships   with   remote   gambling   regulators   and   sporting   bodies.   Our   approach   has  been  particularly  successful  in  driving  the  criminals  away  from  Europe’s  highly  regulated  betting  markets,  thereby  creating  a  safe  and  secure  environment  for  our  customers.  

14. Our   expertise   is  widely   valued,   and  we   are   currently   engaging   closely  with   the   IOC,   European  Commission  and  Council  of  Europe  to  explore  possible  cross-­‐sector  transnational  policy  actions  to   address   match-­‐fixing.   It   is   vital   that   the   licensed   betting   industry   is   fully   engaged   in   such  processes  if  meaningful,  practical  and  proportionate  solutions  are  to  be  implemented.  

15. ESSA  has  also  identified  player  education  as  a  key  element  in  this  area  and  is  a  founder  member  of   the   betting   industry’s   player   education   programme   begun   in   2010   with   EU   Athletes.   That  programme  has  recently  won  additional  funding  from  the  European  Commission,  which  will  see  the   project   expanded   to   reach   15,000   players   in   10   sports   across   13   European   countries  between  January  2013  and  June  2014.  

16. The  education  programme  is  built  around  a  code  of  conduct  which  outlines  a  number  of  guiding  principles,   such   as   know   the   rules;   never   bet   on   your   own   sport,   be   careful   with   handling  sensitive  information;  never  fix  any  part  of  a  game;  and  report  anyone  that  approaches  you  to  fix  a  game3.  It  is  underpinned  by  face  to  face  tutorials  with  athletes  speaking  to  athletes  about  the  dangers  of  manipulating  matches  for  financial  gain.      

The  realities  of  match-­‐fixing  

17. The  reality  of  modern-­‐day  match-­‐fixing  is  that  it  is  conducted  on  a  global  scale  by  sophisticated  organized   criminal   groups   who   primarily   target   unregulated   betting   markets,   notably   in   Asia.  This   is   a  position  which  has  been   recognised  by  a   range  of  parties   such  as   the   IOC,  Council  of  Europe,  European  Commission  and  more  recently  Europol4.    

18. Whilst   regulated  European  betting  markets  are  safe  environments   for  consumers,   the   licensed  betting   industry   has   long   understood   the   limitations   of   a   segregated   betting   market   across  Europe.   As   a   result,   ESSA   and   others   within   the   sector   have   focused   on   cross-­‐jurisdiction  measures  to  protect  consumers  and  sports  alike.    

19. This  was  most  recently  demonstrated  by  the  ‘statement  of  intent’5,  signed  by  the  major  betting  operators,  IOC  and  the  British  Gambling  Commission  prior  to  the  London  2012  Olympic  Games.  Under   that   agreement,   operators   located   both   inside   and   outside   of   the   UK   reaffirmed   their  commitment  to  report   information  to  the  UK  authorities,  to  not  take  bets  from  IOC  accredited  individuals  and  to  ensure  that  their  monitoring  systems  were  manned  24/7  during  the  Games.    

20. The   licensed   betting   sector   endorsed   this   non-­‐statutory   approach   even   though,   as   the   British  Gambling  Commission  has  stated,  the  threat  to  the  Games  and  British  consumers  was  relatively  “low”6   and  where   the   industry   had   seen   no   instances   of   betting-­‐related   integrity   breaches   in  

                                                                                                                         3  http://www.euathletes.org/media-­‐press/news-­‐from-­‐eu-­‐athletes/eu-­‐athletes-­‐news/article/eu-­‐sports-­‐commissioner-­‐supports-­‐eu-­‐athletes-­‐and-­‐online-­‐betting-­‐industry-­‐education-­‐program-­‐against-­‐ma.html?tx_ttnews%5BbackPid%5D=361&cHash=41604e129ff634c813751e6b8d6feb18  4  https://www.europol.europa.eu/content/results-­‐largest-­‐football-­‐match-­‐fixing-­‐investigation-­‐europe    5  http://www.rga.eu.com/data/files/Press2/statement_of_intent_for_betting_operators.pdf    6  Page  20  -­‐  Gambling  Commission  Annual  Reports  and  Account  2011/12  

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past  Olympics  (albeit  the  are  example  of  some  non-­‐betting  related  fixing).  However,  the  licensed  betting   sector   viewed   this   as   an   important   joint   action   -­‐   as   it   has   done  with   regard   to   other  major  sporting  events  -­‐  with  benefits  for  all  stakeholders.    

21. ESSA  believes  that  such  multi-­‐party  agreements  have  the  potential  to  be  far  more  effective  and  have   greater   impact   than   national   legislation,   which   can   only   bring   a   limited   number   of  operators  within  its  statutory  scope.  Indeed,  it  is  fundamental  to  remember  that  the  corruption  of  sporting  events  is  widely  acknowledged  to  be  primarily  driven  by  the  unlicensed  market  and  criminal  elements  operating  in  Asia  and  therefore  outside  of  national  European  legalisation.  

22. ESSA   is   working   closely   with   European   Commission   in   this   area   to   promote   cross-­‐sector  partnerships  as  it  develops  is  recommendation  on  match-­‐fixing.  We  are  also  active  in  the  Council  of   Europe’s   deliberations   as   it   progresses   towards   an   international   convention   on   this   issue.  Both  organisations  are   seeking   to  establish   international   cooperation  and  sustainable  dialogue  between  regulators,  sports  and  operators  as  key  compound  to  address  a  transnational  issue.        

23. We  support  practical  and  proportionate  solutions  and  as  such   it   is  also   important   to  recognise  that  to  manipulate  a  sporting  event  criminals  seek  the  cooperation  of  corrupt  sportspeople  and  will   look   for   opportunities   to   exploit   deficiencies   in   the   governance   of   sports,   notably   those  lacking  sufficient  rules  and  enforcement  mechanisms  and  with  poor  financial  records.    

24. ESSA  believes  that  more  action  is  required  to  identify  and  address  why  sportspeople  engage  in  corruption   if  workable  and  effective  measures  are  to  be  employed   in  this  area.  For  example,  a  report  in  2012  by  FIFPro7,  the  global  players’  union,  found  that  of  3,357  professional  footballers  surveyed   in   Eastern   Europe,   41.4%  did   not   have   their   salaries   paid   on   time,   5.5%  had   to  wait  more  than  6  months  and  2.2%  had  to  wait  more  than  a  year  for  their  salaries  to  be  paid.    

25. Such  poor  governance  issues  within  sport  have  undoubtedly  contributed  to  players  being  more  vulnerable   to   approaches   from   corrupters.   Any   policy   to   address  match-­‐fixing  must   take   into  account  all  of  the  components  that  contribute  to  this  issue,  and  that  means  deficiencies  within  sport   itself.   It   is   vital   that   any   action   be   the   result   of   a   detailed   evidence-­‐based   analysis   that  involves  all  stakeholders  if  effective  solutions  are  to  be  identified  and  implemented.  

26. It  is  also  important  to  understand  that  betting  consumers  are  potentially  adversely  impacted  by  all   forms   of   match-­‐fixing,   that   is   betting   and   non-­‐betting   related.   We   are   not   in   any   way  suggesting  that  the  legislation  should  be  expanded  accordingly,  but  there  is  a  danger  within  this  debate  that  we  become  preoccupied  with  the  betting  aspect  of   this  corruption  and   ignore  the  many  examples  of  non-­‐betting  related  match-­‐fixing  in  sport  which  are  not  being  addressed.    

27. After   all,   sporting   related   match-­‐fixing   also   has   an   adverse   impact   on   betting   markets   and  consequently   consumers.   It   also   attacks   the   fairness   of   those   sporting   competitions   and  outcomes,  thereby  adversely   impacting  on  those  that  have  bet  on  those  corrupted  events.  For  example,  whilst  we  have  no  indication  of  any  betting  related  corruption  during  the  2012  London  Games,  there  were  unfortunately  non-­‐betting  related  incidents,  notably  in  badminton.  

                                                                                                                         7  FIFPro  Black  Book:  http://www.fifpro.org/img/uploads/file/FIFPro%20Black%20Book%20Eastern%  20Europe%20WEB%20DOWNLOAD.pdf  

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28. A  report  by  Coventry  University  in  20118,  which  evaluated  the  prevalence  of  corruption  in  global  sport  between  2000  and  2010,  employing  a  database  of  2,089  cases  of   corruption   (96%  being  doping  related  -­‐  contrary  to  the  comments  from  certain  sports  it  remains,  statistically,  the  major  source  of   sporting   corruption)   found   that   non-­‐betting   related  match-­‐fixing   represented  nearly  half  of  all  match-­‐fixing   (which   itself   represents   less   than  3%  of  all   sporting  corruption).  That   is  not   to   deflect   from   betting   related   corruption,   it   is   simply   an   acknowledgement   that   match-­‐fixing  is  a  wider  issue  than  just  betting  and  potential  solutions  also  need  to  recognise  that.  

29. One  concern  about  the  current  Dutch  Gambling  Bill  is  that  there  is  no  mention  of  a  requirement  for   operators   to   report   any   suspicious   betting   patterns.   We   would   highly   recommend   the  inclusion   of   a   unit   that   deals  with   reports   of   betting   related   corruption,   similar   to   the   British  Gambling   Commission’s   Sports   Betting   Intelligence   Unit   (SBIU).   The   SBIU   collects   information  and  develops  intelligence  about  potentially  corrupt  betting  activity  involving  sport.  Members  of  the  SBIU  receive  information  from  a  number  sources  which  includes  (but  is  not  limited  to)  alerts  from   operators   about   suspicious   activity   on   betting  markets,   concerns   from   sports   governing  bodies  or  tip  offs  through  a  confidential  intelligence  line  9.    

The  myths  about  ‘live’  and  online  betting  

30. There  is  a  growing  and  unsubstantiated  view  that  match-­‐fixing  can  be  addressed  by  limiting  the  betting  markets  offered  by  licensed  and  regulated  operators,  and  in  particular  what  some  have  inaccurately   termed   ‘high-­‐risk’   bets   such   as   in-­‐play   betting.   These   assertions   lack   detailed  supporting  evidence  and  misunderstand  the  intricacies  of  the  market  and  consumer  behaviour.  

31. Firstly,   corrupters   actually   seek   to   manipulate   the   more   mainstream   markets   with   higher  financial  liquidity10  which  clearly  could  not  be  banned,  and  any  attempt  to  do  so  would  have  the  undesirable   effect   of   pushing   consumers   towards   the   unregulated   market,   which   has   no  transparency  or  accountability  and  would  be  virtually  impossible  to  monitor,  detect  and  disrupt  suspicious  betting  activity.  Furthermore,  an  unattractive  betting  offer  under  local  Dutch  licenses,  e.g.   range   of   events   and   quality   of   the   product,   would   have   a   material   negative   effect   on  consumer   value   and   undermine   channelling   of   Dutch   online   betting   consumption   to   Dutch  online  licenses.  

32. Secondly,  as  Europol  and  others  have  detailed,  match-­‐fixers  bet  primarily  on  the  Asian  market  which  is  often  unregulated,  as  such  is  not  subject  to  any  product  restrictions  or  impossible  to  get  information  from    in  terms  of  “who  is  betting  on  what”.  There  is  simply  no  evidence  to  support  limits  on  regulated  betting  markets,  which  would  be  an  unjustified  restriction  on  trade,  based  on  unsubstantiated   integrity   grounds.   Such   market   limitations   would   put   European   licensed  operators  at  a  clear  disadvantage,  be  of  no  benefit  on  integrity  issues  and  above  all  undermine  the  government’s  policy  to  protect  consumers  and  fight  crime.  

33. Indeed,  the  British  Gambling  Commission  conducted  an  examination  of  the  potential  regulatory  risks  for  both  the  betting  and  sporting  sectors  in  relation  to  the  availability  of  betting  markets.  As  

                                                                                                                         8  See  http://www.egba.eu/pdf/Report-­‐FINAL.pdf    9  http://www.gamblingcommission.gov.uk/licensing_compliance__enfo/intelligence/sbiu.aspx  10    i.e,  money  in  the  market  which  will  define  their  return  of  investment  to  corrupt  a  sports  event.  A  betting  market  with  little  liquidity  is  less  attractive  to  potential  corrupters.    However,  betting  markets  with  more  liquidity  also  provide  transparency  and  the  availability  of  information  on  markets  is  an  important  risk  assessment  factor  and  therefore  more  difficult  to  manipulate.    

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an  independent  regulatory  authority  which  oversees  one  of  the  most  significant  betting  markets  in   the   world,   it   has   access   to   a   considerable   amount   of   betting   information,   along   with   the  knowledge  and  expertise  from  both  the  licensed  betting  and  UK  sporting  sectors.    

34. The   wide   ranging   consultation   conducted   by   the   British   Gambling   Commission   on   integrity,  including  a  specific  paper  on  ‘in-­‐running’  (live  or  ‘in-­‐play’)  betting,  resulted  in  the  publication  of  two   position   papers11.  With   regard   to   the   argument   for   limiting   betting   markets   on   integrity  grounds,  the  Commission  which  “works  on  the  principle  of  risk  based  regulation  and  must  act  in  a  proportionate  manner,”  determined  that   it  was  “not  persuaded  that  there  is  a  sufficient  case  for  restricting  types  of  bets”.  ESSA  fully  supports  this  evidence-­‐based  analysis.    

35. There  is  also  a  unsubstantiated  view  that  online  betting  creates  corruption  in  sport.  Again,   it   is  important  to   i)  acknowledge  that  match  fixing   is  not  something  new  and  continues  to  occur   in  land-­‐based  betting  and  ii)  to  differentiate  between  the  licensed  and  unlicensed  sectors.  Licensed  online  betting  has  actually  facilitated  increased  security  for  sporting  bodies,  consumers  and  the  licensed   betting   market.   Modern   digital   technologies   have   allowed   us   to   develop   far   more  efficient   and   effective   anticorruption   measures,   notably   customer   verification   details   (KYC)  electronic   non-­‐cash   payments   and   digital   fingerprints   leaving   a   perfect   audit   trail   for  examination  and  prosecution.  .  

36. ESSA’s  integrity  figures  are  a  clear  example  of  this;  all  regulated  online  transactions  are  traceable  and  operators  are  therefore  able  to  spot,  in  real  time,  any  irregular  betting  patterns  and  respond  accordingly.   What   we   have,   via   licensed   online   betting   platforms,   is   access   to   new   evidence  channels  and  increased  facilities  to  identify,  trace  and  punish  those  that  would  seek  to  corrupt  sporting  events  with  a  view  to  financially  defrauding  licensed  operators  and  their  consumers.  

Conclusion  

37. European   licensed  operators  have  a  clear   inherent  operational  need   to  ensure   the   integrity  of  sporting  events  and  their  associated  products.  The  modern  digital  technologies  we  employ  have  allowed  operators  to  develop  more  efficient  and  effective  anti-­‐corruption  measures.  Such  tools  should   be   harnessed   through   practical   and   proportionate   cross-­‐sector   and  multi-­‐jurisdictional  partnership  agreements  as  demonstrated  during  the  20102  London  Olympic  Games.  

38. Indeed,   betting   related   match-­‐fixing   is   an   issue   and   danger   which   cannot   be   addressed   in  territorial  isolation  and  there  is  growing  realisation  that  there  is  a  need  for  greater  cooperation  between  stakeholders  and  the  establishment  of  betting  intelligence  units  focused  on  protecting  consumers,  sports  and  regulated  betting  market  from  attacks  from  criminals.    

39. It   is  vital   that  any  solutions  are  practical,  proportionate  and  evidence-­‐based   following  detailed  discussions  with  all   stakeholders.   Implementing  arbitrary   limits  on   regulated  European  betting  markets  would  be  an  unjustified  restriction  on  trade  and  be  of  no  clear   integrity  benefit  given  that  this  activity  is  primarily  perpetrated  by  criminals  using  the  unregulated  Asia  betting  market.  Solutions  must  also  include  a  range  of  activities,  including  addressing  poor  sports  governance.  

                                                                                                                         11  http://secure.gamblingcommission.gov.uk/pdf/Betting%20integrity%20policy%20position%20paper%20-­‐%20March%202009.pdf  &  http://www.gamblingcommission.gov.uk/pdf/In-­‐running%20betting%20position%20paper%20-­‐%20March%202009.pdf  

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40. ESSA   is  of   the  firm  opinion  that  the  Dutch  reform  of   its  gambling  bill  will  enable  the  structural  cooperation  between  the  key  stakeholders   (sports  –  state  –  operators)  and  concludes  that   the  provision  of  online  betting   services  under  Dutch   license  will   strengthen   the   shared  concern   to  preserve  the  integrity  of  sports.  

41. Besides  sharing  its  expertise  in  the  legislative  process  going  forward,  ESSA  would  be  delighted  to  discuss  establishing  an  information  sharing  agreement  with  the  Dutch  regulatory  authorities  as  part  of   that  process,  as  we  have  established  with  comparable  bodies   in  other  countries  which  license  remote  gambling  such  as   the  UK,  Malta,  Gibraltar  and  Alderney.  We  are  of  course  also  open  to  similar  discussions  with  any  national  sporting  bodies.