How does illegal sports betting work and what are the fears?
- 19 February 2013
- From the section Business
Betting and sports have been bedfellows for centuries. But the relations between the two have been deteriorating.
The biggest setback has come from the rise of illegal betting.
The industry has grown not just in terms of revenue, but also in its reach, and there are now fears over its influence on the outcome of sporting events.
The allegations of match-fixing across various sports have once again got sporting bodies and lawmakers across the globe worried and they are trying to find ways to counter the sector's growing might.
How big is the illegal gambling industry?
Very big. In fact it is huge.
According to some estimates, the industry could be worth as much as $500bn (£320bn) per year.
To put that in context, it is more than 50 times the annual profit of Toyota, the world's biggest carmaker.
Most people believe that a huge part of those betting revenues are generated in Asia.
However, because much of the industry is illegal, and there are no official transaction records, it is difficult to give an accurate estimate of its total size.
What is the attraction of illegal betting?
There are various reasons behind it. But in most cases it is a combination of factors that attracts the gamblers.
In some countries, the most basic reason is a ban on sports betting.
Meanwhile, in others some of the illegal betting syndicates offer better odds for a sporting event, making the payout in case of a winning bet, more attractive.
In some cases social stigma also plays a role, especially in countries where online betting is barred.
If a gambler wants to place a bet through the legal channels in those countries, then he or she would need to go a physical location. In doing so, there is always a chance of the gambler being noticed by someone who they may not want to know about their gambling habit.
On the other hand, most illegal syndicates operate in a very discreet manner, not least to protect their own identities.
And once a mutual trust has been established, many syndicates even agree to take bets over the phone and then collect or deliver the cash later on.
So how does the industry work?
It is a very secretive and complex network that works at various levels.
The so-called 'bookies' who take the bets from the gamblers are just the tip of the iceberg.
They get the odds from people above them and then take the bets based on those numbers. Their job is collect the cash from the gamblers and make the payments depending on the outcome of the wager.
Above them are the people who manage a group of bookies that operate in various parts of a city or even a state.
They get their information and odds from a completely different set of individuals who are above them in the chain.
The very nature of the industry means it is structured in such a way that it makes it extremely difficult or even impossible for people on the ground, the bookies, to know who is the person two layers above them in the chain of command.
That is also one of the key reasons why lawmakers have found it very tough to crackdown on the big players in the industry.
So what makes it illegal, after all it is just a bet?
Well, there is no specific definition of illegal betting as it may vary from country to country depending on each nation's laws.
Take for example, Singapore. It is legal to go to a 'Singapore pools' store and place a wager on a football match. But online sports betting is banned and considered illegal here.
Over in India, sports betting in any shape or form is considered illegal.
While the definition of illegal betting may vary across countries, the one common factor is that most nations consider placing a bet with an unregistered bookmaker or so-called bookie as illegal.
What are the concerns about it?
There are many and at various different levels. To begin with, it is against the law.
At the same time, all the transactions are unaccounted for and cost the government's hundreds of millions of dollars in lost tax revenue.
They also hurt revenues and profits of legal bookmakers, as better odds attract gamblers away from them.
But perhaps, the biggest concern that has emerged in recent years has been that illegal betting syndicates are increasingly indulging in 'match-fixing' to influence the result of a sporting event.
The fear is that these syndicates use financial rewards as a means to get players, or in some cases even teams and officials, to play in a such a way that they achieve a pre-determined result.
The bookmakers, having prior knowledge of the final outcome, can then influence the odds in a way that it nets them maximum profit.
"It is the equivalent of having insider information," says James M Dorsey, a scholar at S Rajaratnam School of International Studies in Singapore.
"If you already know what the outcome of match is going to be, it becomes a different ball game altogether."
Not only is this illegal, but also against the very spirit of playing sports.
These fears have been fanned further after Europol alleged that 680 football matches played around the world have been fixed by criminal networks.
It said that some 425 match officials, players and criminals were suspected of being involved in the fixing.
Over the past years, there have also been allegations of match-fixing in sports such as cricket.
The fear is that if not controlled, illegal betting and subsequent match-fixing may do irreparable damage to various sports.
Are there any risks involved for gamblers?
The obvious answer is yes.
One of the biggest ones is that there are no records of any transaction taking place. It is all based on mutual trust.
Though most bookies do end up giving the payouts - they have to do so to remain in business - but there is always the chance of someone refusing to pay up if a bet goes drastically wrong.
There is no channel of appeal for a gambler who has lost the money as the bookie is their only contact and they cannot go to the police for obvious reasons.
At the same time, there is always the risk of becoming too greedy, especially if one is placing a bet over the phone.
A gambler may bite the bullet and place a bet well beyond their means in the hope of winning. But if the outcome goes against them, the pressure from the bookies to pay up can be relentless and in some cases extreme.
Finally, given the spread of match-fixing, the gamblers never know if they are being enticed into a making a bet, the outcome of which has already been decided to be against them.