Sports Betting: Legal, Commercial and Integrity Issues

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Sports Betting: Legal, Commercial and Integrity Issues Sports Betting: Legal, Commercial and Integrity issues SPORTS BETTING: legal, commercial and integrity issues FOREWORD The relationship between the betting and sporting sectors continues to raise a number of issues which need to be addressed properly. These issues tend to be associated with calls for increased funding from the sporting sector and concerns about the threats that betting may pose to the integrity of sporting events. It had perhaps been the case that the licensed gambling industry had been dealing with these matters in piecemeal fashion and, within the RGA, we took the decision to try and adopt a more coherent and co­ordinated approach. We have frequently called on regulators and government departments around Europe and elsewhere to base their approach on evidence­based policy making. It was clear therefore that in developing our own policies in this area we should do exactly that. This report, which looks at the situation in the EU as a whole, is the culmination of that process and provides what we believe to be an excellent analysis of all of the available information, the vast majority of which has been derived from data that is in the public arena. Given the interest in these subjects it was decided that the report should be published even though it was originally intended solely to be a report to the RGA. Aside from the report, a number of recommendations that flow from it have been made to the RGA. For what should be understandable reasons they are purely for internal consideration and have not been published. From the outset we acknowledged that the report should be an objective one that did not contain any pre­existing views held by the RGA or its members. It followed that the author should come from outside of our organisation. In the circumstances we were extremely fortunate to agree with the UK Department for Culture, Media & Sport (DCMS) that we could take one of its officials, Jason Foley­Train, on secondment for a limited period to undertake this project. Jason has a decade of experience of sporting and betting issues within government in relation to domestic and wider European policy, and so no learning curve was required which might have been necessary had the work gone elsewhere. Both personally and on behalf of our members I would like to thank him for producing this report. Secondments from the public to the private sector are fairly commonplace, but we must also thank DCMS for what I understand is the first such placement into the gambling industry. In relation to this we are anxious to stress that any views expressed in the report are solely those of the author and cannot be taken as a reflection of the position of DCMS or HM Government in general. In addition, I would like to express our gratitude to all those who responded substantively to the consultation exercise that formed an early part of this project. Finally, we hope and believe that this report will serve to inform any wider debates about these matters and we commend it to anyone who seeks to look at the issues fairly and objectively. CLIVE HAWKSWOOD RGA Chief Executive For further information or to download copies of the report, please visit the RGA website at: www.rga.eu.com Copies of this document are available in alternative formats on request: Head Office London Brussels Office 6th Floor Chaussée de Wavre 214d High Holborn House 1050 Brussels 52­54 High Holborn Tel. +32 (0)2 626 95 72 London WC1V 6RL Tel. +44 (0)207 831 2195 CONTENTS Chapter 1: Executive Summary 1 Chapter 2: Introduction 5 The Remote Gambling Association 5 Scope and Nature of the Report 6 The Global Gambling Market: Sports Betting 8 Sports Betting: Concerns and Relevant Documentation 10 FIFA 10 UEFA 11 European Non­Governmental Sports Organisations 12 Sports Rights Owners Coalition 12 Independent European Sports Review 13 European Commission 13 European Parliament 14 Council of Europe 14 Chapter 3: Consultation Process 16 Approach 16 Questionnaires 18 Promotion of the Consultation 19 Written Responses 19 Sporting Bodies 21 Governments and Regulators 23 Non­RGA Betting Operators and Trade Associations 25 Other Interested Parties 26 Oral Discussions 27 Chapter 4: Legal 29 The European Union (EU) 29 EU Gambling Laws 29 ECJ Case Law: Gambling Judgements 32 EU Directives: The Exclusion of Gambling 39 The Specificity of Sport 40 Chapter 5: Commercial 42 State Aid, Taxation and Offshore Locations 42 State Aid 42 Taxation and Offshore Locations 47 Sponsorship, Advertising and Other Commercial Betting Revenue 57 Sponsorship and Advertising 58 Other Betting Revenue 67 Arguments for Additional Payments to Sport 73 Professional Sport 74 Grassroots Sport 85 Chapter 6: Integrity 89 Background: Corruption and Bringing Sport into Disrepute 89 Doping 90 Cheating 92 Financial Irregularities 92 Match­Fixing (Non­Betting Related) 94 Match­Fixing (Betting Related) 95 Suspicious Betting: Response from Sports 96 Suspicious Betting: Response from Governments, Regulators and European Institutions 100 Suspicious Betting: Comparison with Doping 103 Doping and Betting 103 The WADA Model: A Global Approach 106 Meeting the Challenges 108 Information Sharing: Memorandum of Understanding 108 Integrity Models: The ABB and ESSA 111 Restricting Bet Types 112 Integrity Payments 114 Training and Education 116 Future Stakeholder Dialogue 118 Chapter 7: Conclusions 121 Appendices 123 SPORTS BETTING: legal, commercial and integrity issues 1 Chapter 1: EXECUTIVE SUMMARY 1.1 The development and evolution of new technologies has made a considerable impact on the operation of every sector of the global economy. The affect upon the licensed gambling industry has been no different in that regard, opening new product platforms and access to a wider consumer base. 1.2 It has also created a highly competitive gambling market which has considerably benefited consumers, but which has created new challenges for legislators and regulators who have previously exercised complete control over gambling products within their jurisdictions. 1.3 This has raised concerns amongst sporting bodies who perceive that the increased availability of betting on sport opens up new threats to the integrity of sporting events. International and national sporting bodies seek to control the betting product and to obtain increased revenues from licensed gambling operators that offer betting on sporting events. 1.4 To this end, many sporting groups continue to lobby Member States and European institutions for some form of statutory reform that would provide them with new rights to improve their already favourable fiscal position, which includes State aids and taxation benefits. 1.5 In general, they would also like those reforms to give them control over the types of bets that can be offered, believing that certain bets are more likely to lead to corruption than others. In some jurisdictions there are fears that the introduction of new betting licensing regimes will serve to reduce the income that sports currently receive from state gambling monopolies. 1.6 The aim of this report has been to assess these matters objectively, within the wider context set out above, in order to help the Remote Gambling Association (RGA) to develop a cohesive strategy for addressing these complex and often inter­related issues, notably within the legal and economic framework of the European Union (EU). 1.7 Indeed, these sports betting issues have permeated into the political debate at both national and international levels. The professional sporting movement has been particularly proactive in pressing its case through various forums where the focus has been on the promotion of sport. 1.8 However, neither the RGA nor the wider licensed gambling industry has been invited to participate in the detailed discussions that have taken place. As such, there must be a serious risk that the policy considerations of these issues have not been balanced or properly informed. 1.9 To assess fully the validity of the opinions that have been advanced in relation to sports betting, the RGA determined to engage in discussions with sports betting stakeholders with a view to collating the principal points into a central resource (this report) and to strengthening the dialogue and relationship between the betting and sporting industries. 1.10 The subsequent written consultation invited 239 stakeholders to respond to a range of commercial and integrity questions aimed at: sports; governments; gambling operators; and other interested parties. The consultation sought to obtain information regarding the basis of the commercial arguments present by sports and to consider the existing integrity mechanisms. 1.11 Overall, the response was limited both in number and in the information advanced, notably in relation to the professional sporting sector. There is, however, considerable material within the public domain that provided more than sufficient information for a detailed assessment of the legal, commercial and integrity aspects surround the sports betting debate. 1.12 The European Commission has rightly determined that sport is subject to EU competition law and internal market provisions in so far as it constitutes an economic activity (with the specificity of sport being assessed on a case­by­case basis), and has rejected a general exemption as proposed by the Independent European Sport Review, funded by UEFA. 1.13 EU case law provides that gambling is a service and subject to the application of the Treaty, notably Articles 49 and 56 TFEU (ex Art. 43 and 49 TEC). The Database Directive and judgements surrounding its application to sporting data such as fixtures lists, determined that this data amounts to creation and not investment, which does not fall within the scope of the protection of the Directive. This means that this potential source of revenue for professional sports can be nowhere near as high as they would like, or in some cases, had expected prior to the ECJ’s ruling in BHB v.
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