• Monday, July 15, 2024
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Illegal betting markets yield $1.7tr revenue annually

Proliferation of sport betting platforms

A huge amount of illegal sports betting is estimated to be happening every year that can attract organized crime and that can be connected to match-fixing, according to a recent report from the United Nations Office on Drugs and Crime (UNODC).

The amount of money gathered on illicit betting markets has been pegged between $340 billion and $1.7 trillion annually, the review says. However, the size of the legal sports betting market in 2020 was calculated to be around $40 billion.

According to the report, the huge volume of bets being made through illegal and unregulated markets is “such that it is highly attractive to transnational organized crime groups” as a way of investing and laundering dirty money, and some of it could be undermining the integrity of sporting events as well.

“Illegal betting is a major driver of corruption in sport and has a direct relationship with the manipulation of sports competitions. Illegal betting takes place in both grey and black markets and the licensing framework for grey-market operators is often opaque, especially in the context of online betting platforms and jurisdictions offering bets on events taking place in other jurisdictions,” the UNODC study says.

What is illegal sports betting?

Illegal sports betting is referred to any sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located. The sports betting market has been categorized into three which include, White market, Grey market, and Black market.

White market: This comprises betting operators licensed to operate in all jurisdictions in which they take bets, and act as responsible corporate citizens.

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Grey market: In this market, operators are licensed in at least one jurisdiction but take bets in areas where betting product is illegal.

Black market: These betting operators are unlicensed in any jurisdiction and by definition, organised criminal groups.

Also, Illegal betting has now moved online.

Illegal betting operators produce illegal betting website agents, illegal bet placement results into instant messaging, as well as illegal betting transactions give rise to e-payment providers. This move has opened up emerging threats which include betting exchanges and cryptocurrencies as medium of exchange.

Why is illegal sports betting on the rise?

The report says that illegal betting is a particular problem in Asia, but that it may be on the rise in Africa and South America too. At any rate, there are a few reasons for the boom in illegal sports betting.

One factor is increased internet use over the past years, which has made watching and wagering on sporting events easier for many people. Those internet connections also make it possible for punters to log on and place a bet with an online sportsbook that may be operating outside the law of the country where the bettor lives.

“The Internet has allowed the operators of online gambling platforms to reach larger audiences in locations where gambling is considered illegal. The operators often exploit existing political or legal situations to strategically host online gambling platforms in these locations where they cannot be easily spotted by local authorities,” the report notes.

Another growing issue is the adoption of cryptocurrencies such as bitcoin, which “offer a reliable and almost untraceable international money transfer mechanism” that can be used for sports betting.

In Africa, Nigeria is considered the country with gambling as an extremely widespread activity in the continent. Sports betting, particularly soccer, is what Nigerians seem to have a passion for so much that some surveys suggest that one-third of the population bet on sports regularly,

Gambling in Nigeria is regulated by the National Lottery Regulatory Commission. The legal games are lottery, land-based casino, and sports betting. While roulettes, dice games, and non-skilled card games are illegal. The law regulates slot machine activity and only licensed operators can provide slot machine gambling.

According to the report, illegal betting is more appealing because the commercial attractiveness of illegal betting operators will always be higher than that of their legal counterparts. They can offer a wider variety of availability products and credit markets, stronger online product distribution, as well as easier and better pricing.

However, the report makes several recommendations for how governments can scale up their detection and reporting of illegal sports betting and related money laundering.

One is “ensuring national legislation includes laws that appropriately criminalize illegal betting and related manipulation of sport competitions, including obliging betting operators that offer betting on sports events to report instances of suspicious betting to regulators.”

Also, enhancement of product coverage to ensure supply of legal betting products meets public demand to minimize loss to illegal betting. A well-detailed research into illegal betting markets in order to improve internal and external understanding of illegal betting risks.

Other recommendations include enforcing action against illegal betting operators, close collaboration between local and international stakeholders, among others.