Why prohibiting betting markets ties the hands of the licensed market

As countries around the world were plunged into lockdown, punters turned towards the more niche betting markets such as Belarussian football, table tennis and lower-league Swedish football.

But one issue that arose, in the case of the Swedish market, was the growing concern that the lower tiers of football may be more susceptible to match-fixing and betting corruption – which led to the Swedish gambling authority introducing a ban on markets for lower league games.

Speaking on a panel entitled ‘Market forces – when are bets too risky to take?’ on day two of Betting on Sports Europe – Digital, Gustaf Hoffstedt, Secretary General at Sweden’s BOS.NU, highlighted his contempt towards banning such markets, stating that it would simply open the floodgates for the unlicensed betting operators.

He said: “In Sweden, we had a very particular situation during the lockdown. Lower tiered football teams continued to play, but since there was a global lockdown, the type of games that they were participating in seemed to get a lot of global interest. Referees and even players’ parents were receiving phone calls from places like Sydney and Hong Kong from people that wanted to bet on those games. They had almost nothing else to bet on. That, as you can imagine, created a lot of frustration in Sweden.

“As a consequence, it contributed to a decision made by the Swedish Gaming Authority to prohibit betting on lower football tiers. Whether that was a wise decision is yet to be seen. I am less enthusiastic about prohibitions such as that on a policy level. One reason for that is because I believe liquidity is what attracts corruption. In lower levels, liquidity is not as high as it is in some of the top-flight leagues.The main problem with prohibitions like this is that there is still a demand to bet on those lower leagues in Sweden.

“But from 1 January 2021, locally licensed operators will not be allowed to offer those bets. You don’t have to be super smart to figure out where those bets will go instead! They will most likely be adopted by the global unlicensed operators, which is a huge problem when it comes to monitoring Swedish football. Licensed operators do cooperate, and of course contact law enforcement when they detect something suspicious.

“I’m not confident that unlicensed operators share that interest to cooperate with competitors nor law enforcement. For that reason, to prohibit those betting markets for regulated operators is almost like putting needles in your eyes, you will become totally blind to what happens below the surface.”

Hofstedt was joined on the panel by Oliver Lamb, Head Sportsbook Controller at Kambi and Gilles Maillet, Director of Sports Integrity at LFDJ. The session, which was sponsored by Kambi, was moderated by Scott Longley, CEO of Clear Concise Media.

Lamb expressed a similar view to Hofstedt, explaining that the country’s regulators are running the risk of ‘tying the hands of the regulated market’ if they prohibit particular betting markets.

He said: “We know that in terms of the UK market, if you were to apply the Swedish rules coming into force which limits betting to the top four divisions of any football league worldwide, there will be situations where the fifth divisions – or conference as it used to be known in the UK – are still quite attractive from a betting perspective. Like the top four, lower leagues are also very competitive.

“If we put these rigid structures in place, there’ll always be these scenarios where you’ve tied your hands and you’ve tied the hands of the licensed betting market as well. One of the rules in Sweden is that you can’t offer not just top four divisions, but teams for those top four divisions. So if one of these lower league teams goes on to compete in the Cup, local operators won’t be able to offer markets on whether they might win.

“If you can’t offer markets on televised games, you’re in big trouble. Local people that want to bet on their local team won’t be able to do so within the licensed market. Many will leave it, but there will always be a small percentage which may bet via the unlicensed market. Even though you’re trying to protect the integrity of sports, you may be benefitting the unlicensed operators.”

Trying to avoid offering markets on lower league games, according to Mailet, seems to be the ‘wise thing to do’ but industry stakeholders should still continue to try and combat the unregulated market to ensure that their customers are gambling safely.

He added: “This all comes down to how states are fighting against illegal operators. Just because we hear cases of people driving on the road without a licence or insurance doesn’t necessarily mean that we should forget about any code of conduct on the roads. Personally, I do think it’s wise to try to avoid betting on the lower leagues, or even on the higher leagues in some countries where the average salaries of players is quite low.

“We have to fight against illegal operators – that’s what’s in the law. I can testify that a large number of states are doing a very good job at doing so. There is no country in the world where there are zero illegal operators, but there are cases where the market is nearly entirely legal and you can offer a safer betting environment for your customers.

“You can also protect your clients by not offering bets which are too risky. Yes, illegal bookmakers do exist, but that doesn’t mean that we should stop fighting against betting corruption.”