What The US Learn from European Sports Betting

Wagerallsports

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[h=1]What Can the US Learn from European Sports Betting?[/h] By Luke Haward, CDC Gaming Reports
May 18, 2018

Given the seismic shakeup going on in the United States this week with regards to sports betting, it seems a fine time to take a detailed look at the state of sports betting in Europe and consider how our friends over the pond might learn from both our expertise and our mistakes in that field. In this article, we’ll scrutinize the current state of sports betting across Europe, looking at some of the best and worst of the industry. We’ll consider some of the most interesting technological and service-based innovations within sports betting and look at some of the biggest challenges which the sheer existence of the industry brings about – such as the infamous problem of match fixing – and what institutions and bookkeepers across Europe have tried to do about such problems.

The gambling industry inside and outside the US is, of course, currently celebrating the imminent beginning of what will likely be a very lucrative time. Huge potential for investment in the United States has opened up in the wake of the Supreme Court’s decision to overturn the ban on sports betting, although the specifics will vary according to what sports betting laws the individual states pass. Here in the UK – indeed, across most of Europe – sports betting has been widely available and regulated for years, and there are therefore quite a few European firms who can bring their expertise to bear in offering strong products to the newly-accessible market. It’s estimated that the illegal sports betting market in the US totalled over $150 billion annually; it’s not hard to imagine the projections for a legal and regulated market.

So what kind of innovations are we talking about? For starters, the notion that sports betting is simply a matter of fixed odds betting where the bookie takes an edge is an antiquated one. Many operators now have very sophisticated means of analysing the markets, via machine learning and AI interfaces, in the race to offer competitive odds to players without sacrificing their own edge. One of the largest online sports book operators, Pinnacle, voluntarily left the US market in the wake of the Unlawful Internet Gambling Enforcement Act of 2006. At the time, over 60% of their customers were based in the USA. Pinnacle still boasts customers in more than a hundred countries worldwide, and the company claims that its innovative investment into data science strategies to solve betting odds challenges have enabled it to offer much lower odds than much of the competition while maintaining edge and risk margins as an operator. They cite their use of the open-source statistical programming language R as the key to this process, nicknaming it “Excel on steroids” in a recent article they published on the subject.

Apart from data wrangling, much of the innovation we’ve seen in the field in recent years concerns user interface and betting options for the customer. Liam Casey, Chief Executive Officer for Tailorbet, discussed the “holy grail” of sports betting innovation in a recent presentation, stating that this grail would include enhanced personalisation and customization options on the front end of the gaming software, real-time delivery of betting options to markets, and options for the customer to choose pricing and/or content options on display. The emphasis on choice is huge in the current market, with more and more operators looking to offer tailor-made betting options, or even, potentially, a provision for players to set their own odds in betting player vs. player.

One massive switch seen in the industry concerns bets which can not only be placed but amended mid-match, in real time, and which allow bettors to double down, cash out, or reduce bets made in the face of new information during the match (albeit with new rates offered by operators, of course.) These flexible, amendable bets are a huge feature in the current market and seem to be a big hit with punters. At 2017’s Betting on Football Conference, Eoin Ryan, Head of Sportsbook for BetVictor, stated that “… it’s not an exaggeration to say that, for sportsbooks, cash out has been the single biggest innovation over the last five years.” A related function, Bet Edit, offers a way to make bets which are starting to look like foregone conclusions a bit more interesting.

But growing pains are very real, and as the sports betting industry has continued to grow and innovate, some negative consequences and situations have emerged. Let’s now take a look at the dark side of the sector and some of the biggest challenges facing the USA as it officially opens its doors to sports gambling.

Let’s start with a simple example from the world of tennis, on the face of it quite a civilised, tea- and-scones type of affair here in England. This April, an independent task force announced that tennis had been taken over by a “tsunami of corruption” at the lower levels (where, presumably, match-fixing is easier to get away with) that included “serious and substantial match-fixing” taking place. An accompanying survey of 3,200 players found that 14.5% of them admitted having first-hand knowledge of incidents of match-fixing. The task force made several recommendations in its review, two of which – a ban on allowing betting companies to sponsor games and a ban on gambling on lower level matches entirely – are very much controversial suggestions to the established industry.

Match fixing, too, is a problem on a truly epic scale across Europe, and it’s not confined to one sport, either; you can take your pick of scandals across multiple major sports. The Economist published an article in 2017 covering the scale of the issue, in which they quote an International Centre for Sports Security (ICSS) estimate that $2 trillion per year is wagered globally on sports events. ICSS further estimates that criminal groups launder around $140 billion via match fixing and illegal betting systems annually. The article also very saliently pointed out that the most common level for corruption in sports is second-tier, where there is enough money staked to be worth it for criminals but not too much publicity surrounding the matches. Compounding the issue, the budget that bookmakers currently contribute towards anti-corruption measures is, to put it kindly, miserly.

The EU has recognised the scale of the problem and granted funding, under the international betting integrity body ESSA, for three new initiatives to help tackle it. These include the first Europe-wide, athlete-led whistleblowing system, intended to help allow anonymous whistleblowing to take place more easily within the sports world. Betting firms have reached resolutions to work with sports associations in identifying and reporting on cases of possible match fixing issues, which has undoubtedly led to improvements over time regarding how the industry handles such matters. Still it’s a major, ongoing issue, which neither the industry nor regulators have been able to thoroughly deal with.

There have also been a number of scandals in the UK over the past year concerning ad placement within and around sporting events, the worst of which saw gambling sponsors’ ads featured on the uniform shirts of junior players (which, of course, couldn’t help but be viewed by numerous children.) The greater the exposure of the public to gambling sponsors’ messages during a game – either on shirts or via TV ads during breaks in play – the greater the risk, arguably, of the creation of problem gambling cases, partly through sheer normalisation to the presence of gambling as a constant option. Many critics argue, rather convincingly, that the ease and availability of sports betting via online means has greatly exacerbated the scale and degree of risk regarding problem gambling. There are, however, those who contend that, since the scale of problem gambling in the UK has remained roughly level even during the boom in advertising and exposure, this is evidence that increased normalisation does not significantly impact the potential for problem gambling.

All of these issues are the natural consequences of an aggressive industry operating in and around a constant flow of sporting content and something which the US is going to need to pay close attention to in the years ahead. In theory, a legal industry can better protect the public, who may have already been betting illegally; in practice, the potential for legal entities to advertise, offer bonuses, and, potentially, sponsor teams, simply means that more people are exposed to options which may, in some cases, lead to them becoming problem gamblers or addicts. (If there was any argument in favor of the illegal market, it was that, if you wanted to take part in it, you had to look for the means of doing so.) This problem is surely going to increase in scale with legalisation.

This is just a quick tour of the many problems which can come about with a thriving sports betting industry in full swing. The US will assuredly have many significant challenges ahead regarding how to manage these matters and others like them. Still, the optimistic view is that it’s better to have this stuff out in the open, regulated and licensed, than to have it all going on underground, where it would have happened anyway. Plus, this way, the IRS will get their share. Let’s hope they use it wisely.
 

BMR_Brad

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Unless the USA implements a system like the EU where being licensed in one state gives you access to the entire country, then I can't see them learning much from Europe. Better to look at closed state systems that try to protect their local market.
 
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