Betting sport and integrity: past, present and future from a lawyer’s perspective

Numéro 7 | Contrôler et punir

pp. 62-73

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Dr. Madalina Diaconu

Chargée d’enseignement –Université de Neuchâtel
 
Résumé

La gestion des liens entre l’éthique, d’une part, et l’argent, d’une autre part, représente un défi pour toute organisation, et les entités sportives n’y font pas exception. Les problèmes d’intégrité soulevés par les activités des paris exercent une forte pression sur le sport et sur la gouvernance des organisations sportives. Les revenus issus des activités de parís injectés dans le monde sportif par le biais de différents schémas de financement, représentent une source financière vitale pour de nombreux sports. Toutefois, les menaces que ces mêmes activités font naître ne sont pas négligeables. Les organisations sportives dominantes se consacrent aujourd’hui à trouver la meilleure approche dans un environnement de plus en plus complexe et dans lequel elles ne sont plus les seuls acteurs. En effet, les gouvernements, les organes de lutte contre la criminalité, les organisations internationales, les bookmakers, sans oublier le public, sont autant d’éléments à prendre en compte dans cette difficile équation.

En Europe, depuis quelques décennies, la Cour de justice de l’Union européenne (CJUE) a fixé des repères pour le cadre juridique des paris sportifs. La haute juridiction européenne a ainsi établi, sur des bases qui lui sont propres, les limites des prérogatives des Etats-membres dans le secteur des parís en ligne. Par ce biais, la CJUE a influencé la relation entre les entités sportives, d’une part, et les organisateurs de jeux d’argent, de l’autre. Cette jurisprudence est à même de contribuer à la mise en place d’une future stratégie de gouvernance desdites entités, y compris dans le domaine des jeux d’argent.

Cette contribution se propose de présenter un point d’ancrage pour les discussions sur la situation actuelle des paris sportifs du point de vue juridique et de la bonne gouvernance des organisations sportives face aux nombreux défis que soulèvent les jeux d’argent.

Mots clés : Jeux de hasard et d’argent - Paris sportifs - Gouvernance des organisations sportives - Intégrité - Droit européen - Libre circulation des services

Abstact

The interlacing of ethics and money is difficult to handle by any organisation, and sport organisations are not an exception to the rule. Among the economic and commercial pressures on sport and sport governance, integrity issues related to betting are a special category. Revenues stemming from betting activities, which are injected into sports through different financing patterns, constitute a vital funding source for many sports. However, the threats brought about by the same are equally prominent. Major sport organisations have been striving to find the right approach, in an ever-larger and more complex environment, in which they are by far not alone. Governments, crime repression bodies, international organizations, bookmakers and – last but not least – the public, also intervene in this intricate equation.

In Europe, a number of judgments by the European Court of Justice (ECJ) have set over the last decade important milestones as to the framework of sport gambling in Europe. Through them, the highest European court has established, on specific bases, the limits of national prerogatives in the on-line sports betting sector. In doing so, it has also impacted the way in which sport organisations interact with sport betting organisations and can build their future governance strategy, including in the field of betting.

This contribution strives to offer an entry point to the discussion of the current situation of sports betting from a legal point of view and of the governance of sport organisations faced with integrity stemming from betting. In doing so, this article also endeavours to examine the willingness and ability of such organisations to effectively take into account the dynamics of betting within their wider strategic considerations.

Key Word: Gaming-Sports betting - Good governance of sports organisation - Integrity - European law - Free movement of services

Resumen

El entrelazamiento de la ética y del dinero es difícil de manejar por cualquier estructura, y las organizaciones deportivas no hacen excepción a la regla. Entre las presiones económicas y comerciales que suben el deporte y su gobernanza, las cuestiones relacionadas con la integridad de las apuestas forman una categoría especial. Los ingresos derivados de las apuestas, que se inyectan en el deporte a través de modelos diferentes, constituyen una fuente de financiamiento vital para muchos deportes. Sin embargo, las amenazas provocadas por la misma son igualmente importantes. Las principales instituciones deportivas hacen esfuerzos por encontrar el enfoque correcto, en un entorno cada vez más complejo, en lo que intervienen también los gobiernos, organismos y organizaciones internacionales, corredores de apuestas deportivas y - last but not least - el público.

En Europa, una serie de sentencias del Tribunal de Justicia de la Unión Europea (TJUE) ha establecido esta última década algunos hitos importantes en materia de apuestas. A través de ellos, el más alto tribunal europeo ha instituido los límites de las prerrogativas nacionales en el sector de los apuestos. Al hacerlo, también ha impactado la forma en que las organizaciones deportivas interactúan con los corredores de apuestas y la manera en que pueden construir sus estrategias de buena gobernanza.

La presente contribución ambiciona ser un punto de entrada a la discusión jurídico sobre la situación actual de las apuestas y sobre la buena gobernanza de las organizaciones deportivas frente a las debatas sobre su integridad.

Palabras Claves : Juegos de Azar - Apuestas - Gobernanza de las organizaciones deportivas - Derecho europeo-Libre movimiento de servicios

I. Introduction

Betting is probably as old as mankind; it was in any case known to the primitive man (Arnold, 1978). Ancient sources, such as Homer, describe antique races and the bets placed on them, and we can only imagine the intense betting activity that probably surrounded the first Olympic chariot races, introduced in 680 BC during the XXVth Olympic Games.
Nowadays, bets can be placed – legally or illegally – on numerous races, such as greyhound races, motor and car races, cycling, the marathon, yachting races etc., on fighting sports engaged into by humans, e.g. wrestling, boxing, taekwondo, muay thai, etc., or animals, such as dog or cockfighting, but also on other sports, such as football, rugby, cricket, basketball, tennis, hockey etc., and even on non-sporting events.

Betting activities have a close link with sports. Revenues stemming from betting, which are injected into sports through different financing patterns, constitute a vital funding source for many sports organisations . However, the threats brought about by the same are equally prominent.

The interlacing of ethics and money is difficult to handle by any organisation, and sport organisations are not an exception. Among the economic and commercial pressures on sport and sport governance, integrity issues related to betting are a special category. Major sport organisations have been striving to find the right approach, in an ever-larger and more complex environment, in which they are by far not alone. Governments, crime repression bodies, international organizations, bookmakers and – last but not least – the public, also intervene in this intricate equation (Villeneuve, Diaconu 2011).

In Europe, a number of judgments by the European Court of Justice (ECJ) have set over the last decade important milestones as to the framework of sport gambling in Europe. Through them, the highest European court has established, on specific bases, the limits of national prerogatives in the on-line sports betting sector. In doing so, it has also impacted the way in which sport organisations interact with sport betting organisations and can build their future governance strategy, including in the field of betting.

II. A legal definition of betting

Sport betting can be described as wagering on the outcome of sporting events. In general there are two different kinds of sports betting games: the toto style games ("pools") and the oddset style games.

Toto or pools games, particularly popular in Europe, are parimutuel games, mainly on the outcome of a number of matches. Three main kinds of toto are largely available: the "1-X-2", select betting and result betting.

Oddset betting, first launched in the Scandinavian countries, is becoming very popular all over Europe. It implies fixed odds, the punters do not compete against each other but directly against the company. If predictions are correct, the odds are first multiplied with each other and then with the amount of the stake. There are different kinds of oddset betting, such as "long list" betting , "winner betting" and "result betting" .

The advent of the Internet brought a spectacular increase to the betting sector (Miller, 2001). One major change was the introduction of betting exchanges, who act as online intermediaries between individual bettors, allowing them to bet against each other . The punters can either take the traditional role of backing the bet offered by somebody else, or they can also act as "bookmakers" themselves and lay bets. Similar person-to-person (p2p) models (e.g., eBay or Napster) already demonstrated the immense impact they can have on an industry.

Depending on the jurisdiction some, or even all of these types of gambling, are deemed illegal in principle (Institut Suisse de Droit Comparé, 2005/2006; Diaconu, 2010). Certain countries have simply banned all sport betting, mainly for religious reasons (Lewis, Jarvis 2012). Others have legalized only certain types of gambling, for example on horse races as it is case in Canada or in the United States where the Professional and Amateur Sports Protection Act of 1992 makes sport betting illegal in most States.

In countries where sport gambling is legal, the regulatory pattern ranges from the State monopoly to a license system or to a fully liberalized market. The most liberalized jurisdictions in Europe are those of Malta, Gibraltar and the United Kingdom, where one can freely bet on sport, or even on other events such as the national elections.

III. The European law approach and its evolution

An additional concern is posed at the supranational level by European Union (EU) law. Indeed, intra-European betting and gambling services are covered by the provisions of European law (especially articles 43 and 49 EC Treaty, which enshrine respectively the right of establishment and the free provision of services).

The European regulatory environment for games of chance has been fairly tense over the last decades. Given the lack of consensus at political level, games of chance are presently not harmonized at the EU level and the regulation of gambling is still fragmented along national borders. Games of chance were notably excluded from the scope of Directives 2006/123/EC (the Services Directive), 2007/65/EC (the Audiovisual Media Services Directive) and 2000/31/EC (The Electronic Commerce Directive).

In the absence of specific gambling regulations at this level, the European Court of Justice (ECJ) – in its role of interpreter, judge and guardian of the European law – has established the main guidelines governing this sector. It is interesting to see that proportionally to its activity the ECJ has issued an exceptionally large number of judgments with respect to gambling . When read together, the guidelines established by the Court over the past 20 years illustrate a remarkable fluctuation in the judges' approach towards this thorny issue.

Indeed, the first cases (Schindler, 1994; Läärä, 1999) gave the Court the opportunity to define gambling as a service within the meaning of the EC Treaty and to qualify restrictive national legislations as a barrier to the free movement of services. But it is not until the Gambelli case in 2003, followed by Placanica in 2007, that the Court established more specific and precise criteria for determining in which conditions such particular restrictions are compatible with Articles 43 and 49 EC Treaty.

With these last two judgments, the Court tightened the regulatory knot around national monopolies, which it had previously comforted during the nineties' with its Läärä jurisprudence. As a result, it became harder and harder for monopolistic bookmakers to justify their monopoly in the light of the European law.

However, in a landmark judgment from the ECJ Grand Chamber in 2009 (Liga Portuguesa), the Court underlined the unprecedented dangers of online gambling and concluded that Article 49 EC allows a Member State to prohibit bookmakers (such as Bwin) which are established in other Member States from offering bets via the internet within their territory. In this case, the monopoly position held by the Portuguese lottery was considered to be justified by the objective of combating fraud and crime and proportionate to reach these objectives. The recent rulings in the Sporting Exchange, Ladbrokes and Zeturf cases confirm the Court's approach in Liga Portuguesa.

Alongside with the Court of Justice, the European parliament and the EU Council also expressed their views on gambling and betting.

The European Parliament did so on at least three occasions: the first was a resolution addressing the issue of gambling as sport revenue generator ; the second endeavoured to tackle the issues surrounding the integrity of Internet gambling ; the third and most recent was a report dedicated specifically to gambling services in the internal market .

The EU Council also takes interest in the gambling sector; the current debates focus on possible coordinated actions against illegal gambling in the Member States .

Finally, the irregularities of betting also constitute a theme of interest for the Council of Europe, which in April 2012 published a report on the need to combat match-fixing at a global level and in an integrated manner (Council of Europe, 2012).

IV. The opportunities and pitfalls of sports betting for sport organizations

Betting-related funding is fundamental for sports. In many European states, sport organizations are at least partly financed through a tax or levy on state-run or state licensed gambling or lottery services, while private bookmakers contribute as sponsors of certain sportspeople, clubs, leagues or federations. According to a recent study by the European Commission, of the total budget for grassroots sport, national governments (via the funds channelled from lotteries and other budget allocations) contribute 5.3 billion Euros (7.4% of the total), while the revenue from the compulsory levies on state lotteries, betting and gambling operators that is channelled to grassroots sport is estimated at 1.1 billion Euros (2.2% of the total budget for grassroots sport) .

However, as the press abundantly revealed it, the dark side of sports betting also has its influence on sports. Through its indissoluble link to sports, betting can imply a higher risk of fraud or corruption for the sporting event on which it takes place. Periodic scandals regarding the manipulation of sports events on behalf of bookmakers or bettors, or for the direct gain of players or officials themselves, have been exposed in newspapers editorials since 1774 and continued to emerge in the twentieth and twenty-first centuries (Forrest et al., 2008).

The situation seems to have worsened nowadays, with the advent of the Internet and modern communication technologies. Indeed, online betting is by definition freed from geography, while regulation is not. In 2001, an official report noted that "highly questionable and overly corrupt practices" in legal bookmaking operations require tighter regulation in Great Britain (Stationary office, 2001).

From a legal point of view, betting and gambling related crime is a complex concept which lacks an accepted definition and a typology for categorizing various offences. Moreover, such offenses differ largely from country to country. They range from small offenses caused by the bettors' attitude -especially juvenile offenses and problem gamblers (Allcock, Grace, 1990)- to serious crimes such as embezzlement of large sums of money (Doley, 2000), corruption, large scale match-fixing and other forms of fraud (Hill, 2008), money laundering (Viren, 2008) etc.

In addition to these problems, illegal betting also subtracts money from taxes and the public purse in general. Finally, illegal betting bears unacceptable societal concerns, since it does not apply any measure aimed to reduce gambling addictions.

The responses given by sports organizations are relatively recent. While many organizations have enacted binding rules striving to preserve ethics in their activities and the activities of their stakeholders, a few also put in place surveillance and intervention mechanisms in order to fight against this phenomenon and preserve their integrity and public image.

At the international level, we mention for example the IOC's Code of Ethics, which in its clause A.5 prohibits "all forms of participation in, or support for betting related to the Olympic Games, and all forms of promotion of betting related to the Olympic Games", and the IOC recommendations on sports betting of June 2010 . A Working Group on Irregular and Illegal Betting in Sport was also created in March 2011.

At a national level, several sport associations, such as the English Football Association, recently updated their rules on betting in order to tackle the issues which are detrimental to the image and reputation of sports.
As for surveillance and intervention mechanisms, it is worth mentioning here the systems put in place by the UEFA, the FIFA and the IOC.

1. The UEFA established in 2004 an internal alert system based on an informal field network, now called the Betting Fraud Detection System, which signals eventual irregularities in the betting patterns on UEFA matches. It is effective for all first and second division matches of the UEFA member associations as well as for the Champion's League matches, that is some 29 000 matches according to UEFA .

The FIFA and the IOC have set up private companies (the Early Warning System for the FIFA and the International Sports Monitoring for the IOC) which perform live analysis of the the sports betting market and enable them to promptly alert the sport organisations' deciding bodies in case of suspicion. FIFA has also signed an agreement with Interpol for a term of ten years and it plans to deploy its own investigators in Asia, the Americas and the Middle East.

inally, education programs such as the SportAccord Sports Betting Integrity Education Programme, launched in April 2011 together with the European and World Lotteries , are set up by sports organisations in order to raise awareness among athletes, their entourage and referees and warn all stakeholder, especially young people, of the dangers of match-fixing and of irregular betting.

V. Conclusion and perspectives

The uncertainty of a competition's result is crucial for the very survival of that sport. Indeed, no one would watch, participate into nor encourage their children to practice a sport reputed to be corrupted and where matched are fixed in advance. The sports movement is thus the main actor in the fight against corruption and match-fixing. Moreover, when such cheating is used for betting purposes, the first direct losers are legal bookmakers, public or private; they, too, are concerned by a phenomenon which largely surpasses their field of activity. Finally, governments and international organisations are also a central actor in order to ensure efficiency of measures aimed at combating fraudulent betting.

Legal approaches to betting and match-fixing differ greatly in Europe and across the world. Therefore, common solutions agreed at international level, such as the creation of an international body or the adoption of an international agreement tackling these issues, although constructive, would certainly face numerous practical difficulties. For the moment, close co-operation and coordination of existing mechanism seems to be the preferred way , alongside with a potential effort to harmonize criminal law relating to sports (Council of Europe, art.cit.). Time will tell if such measures are sufficient to tackle the challenges of irregular sports betting.

References

Allcock, C., Grace, D. (1990), Pathological gambling and impulsivity. In M. Dickerson (Ed.), National Association for Gambling Studies. National Conference (3rd: 1988), The proceedings of a bicentennial conference on Australian Gambling (pp. 227-232), 1990 Canberra: NAGS.
Arnold, P. (1978), The Encyclopedia of Gambling. The game, the odds, the techniques, the people and places the myths and history. Glasgow/London : Collins Publishers.
Beckwith, M. (1940), Hawaiian Mythology. New Haven : Yale University Press.
Council of Europe, Committee on Culture, Science, Education and Media (2012), Doc. 12891 - The need to combat match-fixing (rapporteur: Ms Anne Brasseur), 05.04.12.
Diaconu, M. (2010), International Trade in Gambling Services. The Hague : Kluwer Law International.
Doley R. (2000), Want to make a bet? Gambling and Crime in Australasia. Australasian Centre for Policing Research, retrieved on http://www.acpr.gov.au.
Forrest, D., McHale, I., Mcauley, K. (2008), Risks to the Integrity of Sport from Betting Corruption. Report for the Central Council for Physical Recreation by the Centre for the Study of Gambling, University of Salford, February 2008.
Hill, D. (2008), The Fix: Soccer and Organized Crime. Toronto, McClelland and Stewart.
Institut Suisse de Droit Comparé (ISDC), (2005/2006), Les jeux de hasard dans l'Union européenne: Panorama de droit comparé et implications sur la libre circulation des services. (http://ec.europa.eu/index_fr.htm), retrieved on http://ec.europa.eu/internal_market/services/gambling_fr.htm.
Lewis, E., Jarvis, T. (2012), Gambling and Islam: Clashing and Co-existing. Brigham Young University, retrieved on http://www.math.byu.edu/~jarvis/gambling/student-papers/eric-lewis.pdf (30.04.2012).
MECN, (2004), Betting Exchanges - The eBay of the Betting Industry A new Era of Betting in Europe?. retrieved on http://www.mecn.net/Publications/Betting_X/betting_x.html (15.04.2012).
Miller, Lori K. (2001), Online Sports Gambling - Regulation or Prohibition?. 11 J Legal Aspects Sport 99.
Schudelaro A. (2003), Electronic Payment Systems and Money Laundering. Risks And Countermeasures In The Post-Internet Hype Era. Nijmegen, Wolf Legal Publishers.
Sports Business (2008), Study on the Contribution of the Gambling Industry to the Funding of Sports in Two Member States - the UK and France. Final Report, 18 November 2008, retrieved on http://www.eu-ba.org/en/studies/sportsfundingstudy.
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Viren, M. (2008), Introduction. In : Viren M., Gaming in the new market environment, Basingstokes, Palgrave Macmillan.

 


 

Notes

[1] See among others Study on the Contribution of the Gambling Industry to the Funding ofSports in Two Member States – the UK and France, Final Report, 18 November2008, prepared by Sports Business (retrieved on http://www.eu-ba.org/en/studies/sportsfundingstudy).

[2] This means that the customers haveto choose 3 or more matches out of a list of - for example 90 - matches. Theodds combination for this 3 matches creates the bet. Some companies also offer"doubles" and even "singles".

[3] Here the punters have to predictthe winner of a special event, for example the winner of a Formula 1 race orthe winner of a tennis tournament.

[4] The customers have to predict theexact result of – for example – a football match. There is one odd for everypossible result.

[5] For a detailed study, see a reportby MECN, Betting Exchanges – The eBay ofthe Betting Industry A new Era of Betting in Europe?, 2004, retrieved onhttp://www.mecn.net/Publications/Betting_X/betting_x.html. (15.04.2012).

[6] The main judgments in this field are: ECJ case C- 275/92, Schindler,judgment of 24 March 1994, ECJ case C-124/97, Läärä and others, judgment of 21September 1999, ECJ case C-67/98, Zenatti, judgment of 21 October 1999, ECJcase C-6/01, Associação Nacional de Operadores de Máquinas Recreativas (Anomar)and Others v. Estado português, judgment of 11 September 2003, ECJ caseC-42/02, Lindman, judgment of 13 November 2003, ECJ case C-243/01, Gambelli andothers, judgment of 6 November 2003, ECJ cases C-338/04, C-359/04 and C-360/04,Placanica and others, judgment of 6 March 2007 ; ECJ case Case C-42/07,Liga Portuguesa de Futebol Profissional and Bwin International Ltd, formerlyBaw International Ltd v. Departamento de Jogos da Santa Casa da Misericórdia deLisboa, judgment of 8 September 2009 ; ECJ case C-203/08, SportingExchange Ltd (Betfair) v. Minister van Justitie, judgment of 3 June 2010 ;ECJ case C-258/08, Ladbrokes v Stichting de Nationale Sporttotalisator,judgment of 3 June 2010 ; ECJ case C-46/08, Carmen Media Group, judgmentof 8 September 2010 ; ECJ case C-64/08, Engelmann, judgment of 9 September2010 ; ECJ cases C-447/08, Sjöberg, and C-448/08, Gerdin, judgment of 8July 2010; ECJ case C-212/08, Zeturf v. Premier ministre, judgment of 30 June2011 ; ECJ case C- 347/09, Dickinger and Ömer , judgment of 15September 2011 ; ECJ cases C-72/10, Costa,and C-77/10, Cifone, judgment of 16 February 2012.

[7] EuropeanParliament resolution of 8 May 2008 on the White Paper on Sport(2007/2261(INI).

[8] European Parliament resolution of10 March 2009 on the integrity of online gambling (2008/2215(INI).

[9] European Parliament resolution of15 November 2011 on online gambling in the Internal Market (2011/2084(INI).

[10] On May 11th, 2010 the EU CouncilPresidency notified its Progress Report on the legal framework for gambling andbetting in the Member States, retrieved on http://register.consilium.europa.eu/pdf/en/09/st16/st16571.en09.pdf (retrieved on 15.04.2012).

[11] http://ec.europa.eu/internal_market/top_layer/services/sport/study_en.htm (retrieved on 15.04.2012).

[12]http://www.olympic.org/Documents/Conferences_Forums_and_Events/2010-06-24_Final_Recommendations_IOC_Seminar_Eng.pdf (retrieved on 15.04.2012).

[13] http://www.uefa.com/uefa/footballfirst/matchorganisation/disciplinary/news/newsid=884729.html (retrieved on 30.04.2012).

[14] http://www.sportaccord.com/en/news/index.php?idContent=15186 (retrieved on 15.04.2012).

[15] http://www.olympic.org/news?articleid=151887 (retrieved on 30.04.2012).