by Bruce Marshall, Goldsheet.com Editor

As it has become part of our “business” nowadays at TGS to pay close attention to the evolving sports gaming marketplace in the states, we think it’s a good time for a reminder to all who partake in these related exercises to have a better idea of how the sports gaming industry is regulated and policed in other parts of the world.

Policed? Isn’t it anything goes overseas, especially in the UK, with its long-enlightened view on gaming, and where bets are taken on almost everything?

You’d be surprised how many people we run into these days in Las Vegas and elsewhere who assume that sports books overseas, England in particular, operate in an environment of loose regulations, where any bet can be placed in any amount, at any time, and sports books operate no different than booksellers, petrol stations, and most everyday businesses. And now with newer-age mobile apps, it is easier than ever to bet, bet, bet as much and how often the consumers wish.

But it’s not quite true. In fact, far from it. And some of the new entrants into the sports book marketplace in the states would be wise to pay close attention to developments overseas in a similar industry that has had decades to ferment. Unlike the states, where related business is nascent in the vast majority of states now partaking.

We suppose the sky-is-blue-everywhere-you-can bet mindset is an expected reaction here in the states as the sports gaming marketplace matures in the post-PASPA era. Understandable; heck, it is dizzying that in effectively 30 months, there are now 22 states (plus the District of Columbia) legally accepting wagers, with several more states in the queue to begin accepting sports bets in the near future! This burgeoning industry also has an incredibly dynamic look; we spoke in last week’s TGS feature story (“Billions–With a “B”) about some of the valuations of several of these sports books that have moved to the forefront in an industry where the machinations, values and stock prices are beginning to more resemble the software sector.

Much of what we have seen in the past 2½ years here in the USA, however, is also the result of various jurisdictions making their own rules and regulations regarding the burgeoning sports gaming industry. From license fees to oversight and everything in between, states are setting their own parameters, independent of one another. With the absence of over-arching federal legislation to establish guidelines for the industry, it is up to each state to set the table within its boundaries.

Of course, all manners of gambling–casino-style, lottery, horse racing, etc.–are subject to various state-imposed guidelines. Yet many normally-shrewd observers in Las Vegas and elsewhere seem to believe the sports gaming business is somehow exempt. We are stunned at the number of people in the sports business, many at the periphery of the gaming mechanics, who equate the burgeoning sports-betting industry as something of a frat party. There are also a handful of new entrants into the industry who apparently believe the same thing. But at some point it will become readily apparent that new-age sports book operators will be dealing with a tighter regulatory environment more closely associated with other traditional forms of legalized gambling.

Looming on the horizon, we suspect...no, make that we guarantee, that consumer protection is soon to become a hot industry topic in the states. As it most certainly is in many jurisdictions overseas...the UK in particular.

Far from the “Wild West” and anything-goes scenario that most patrons in the sports books and these shores envision in the related British marketplace, what is instead the reality overseas is a very, very regulated industry with constant oversight and “watchdog” elements. This is different than the “integrity” industry which oversees the games themselves and constantly on the lookout for compromised results and behavior in soccer, tennis, etc., and present in the states as well, keeping tabs on pro and college sports in the Americas. Instead, these other guardrails imposed by many overseas regulators are at their core designed to protect the consumer at the transaction level...something we do not as readily detect in the various sports books and related businesses here in the states.

Not to sound like we’re ready to ruin the betting fun in the states, but we at TGS suspect it is only a matter of time before the regulators on these shores become more proactive and begin to establish the sorts of uniform safeguards the sports betting side of the gaming industry needs. But, from what we can see in many states during the past 30 months, is too often lacking on this side of the Atlantic.

We thought it would be informative, if nothing else, to highlight some of the recent developments in sports gaming overseas, UK and the EU in particular, where the regulatory bodies are constantly on the watch and actively involved in policing an industry that can too easily prove harmful and destructive if not monitored properly.

Even perhaps the most-visible examples of sports betting advertising in UK sport, shirt sponsorships for many of English Premier League and other Football League sides, are coming under scrutiny. In July, the BBC reported comprehensively on a House of Lords subcommittee report that EPL and Championship-level teams in England should not have sports book sponsorships on their shirts.

Not to be accused of being completely draconian, we suppose, the House of Lords said it was initially targeting just the EPL and Championship (the top two levels of soccer in England) and not the lower-tier sides, who might have problems replacing the advertising income the sports books provide teams. Those entries in the lower Divisions One, Two, etc. would have until 2023 to gently phase out sports book sponsorships.

These are also not inconsequential threats to the bigger teams, as sports book shirt advertising is big business in English soccer. This season, half of the 20 Premier League clubs and 17 of 24 Championship clubs are sponsored by bookmakers.

According to the BBC, the recommendations are part of a 192-page report warning more needs to be done to prevent gambling-related harm, with the Gambling Act 2005 under review by ministers. Among other concerns, campaigners believe betting has been normalized within football and can lead to addiction.

The committee's recommendations also state: "There should be no gambling advertising in or near any sports grounds or sports venues, including sports programmes."

As the BBC story noted, the Lords report also mentioned how a 'whistle-to-whistle' ban on gambling advertising from five minutes before to five minutes after a match "is of very limited use when viewers, including children, can throughout the match see a plethora of gambling advertising on shirts and on the perimeter — and when they are in any case likely to be watching outside that whistle-to-whistle time."

James Grimes, a former gambler who runs the charity The Big Step which is tackling football's relationship with gambling, said: "We welcome the recommendation to remove gambling sponsorship and advertising in the Premier League immediately. We've been calling on government and football to reduce gambling exposure to children, in order to prevent young people going through the same thing that I did. Gambling advertising in football is at saturation point and it's normalised harmful products and practices to young people. No child should be exposed to adult products as prevalently as it is with gambling in football.

"Premier League football has a responsibility to prevent gambling exposure to its young fans, which make up a quarter of its audience."

Now, before sounding the alarms, none of this is actually law yet in England. Just recommendations. But for those who believe the relationship between sport, soccer in particular, and legalized betting overseas is a smooth one need to think again. Instead, more accurately it can be said sport is constantly in a battle with the gaming authorities in England and elsewhere.

This also serves to illustrate what might be coming for the proliferating number of sports books here in the states. Expect them somewhere down the road to have to start dealing with the types of hurdles such as these recently mentioned in England and reported by the BBC.

Lest, however, one believe it is only stray consumer advocates, a report from the sometimes-stodgy House of Lords, mere voices in the wilderness from the UK mainstream, suggesting reforms and safeguards, note that actual regulators are constantly in clamp-down mode, too, with sports betting often a target. Several recent examples of significant penalties imposed by the UK Gambling Commission suggests what sort of regulatory atmosphere we might come to expect here in the states in coming years.

One such example came in the case of Triplebet, which operated a betting exchange and a remote casino under the trading name “Matchbook.” In February, according to a report issued by the UK Gambling Commission:

“The Commission has, today, published the reasons for suspending the licence of online gambling business Triplebet. Its operating licence was suspended, with immediate effect, on February 17 as part of a package of sanctions for social responsibility and money laundering failings.

“The investigation found serious failings in Triplebet's approach to anti-money laundering, the monitoring of business relationships and due diligence checks into members of gambling syndicates. Serious failings were also found in the operator’s approach to social responsibility. In one case a player was able to gamble a large sum of money over the course of two days without any interaction whatsoever. Another player who registered, played and then self-excluded on the same day was subsequently able to reopen his account six months later. He then played for 10 hours a day on consecutive days and lost a large sum before self-excluding again, without any monitoring or interaction taking place.

“In addition to the suspension, which will remain in place until Triplebet can prove it has implemented the remedial measures required by the Commission, the operator will pay a £740,000 fine.

“Since January the Commission has suspended the operating licences of Stakers Limited, Addison Global Limited and International Multi-Media Entertainments Limited.”

Gambling Commission chief executive Neil McArthur said: "We have repeatedly made it clear that operators must put player protection at the forefront of their activities and ensure that they have effective anti-money laundering processes in place. We will not hesitate to use our regulatory powers, including the suspension and revocation of licences, if we need to do that to protect consumers and the public from gambling related harm.

“Any operator that doubted that we were ready and willing to use the full range of our regulatory powers should think again. All operators need to learn the lessons from this case and our other enforcement cases.’’

The UK Gambling Commission report continued:

“The Panel identified deficiencies in: a) Triplebet's anti-money laundering policies, b) the implementation of such policies its monitoring of business relationships, c) its approach to account to account transfers, and d) in its due diligence regarding members of gambling syndicates.

“Triplebet's licence and the Money Laundering Regulations 2017 require operators to establish and maintain policies to manage effectively the risks of money laundering and terrorist financing. The Panel found that Triplebet's anti-money laundering policies were deficient as they failed: a) to set out the objective circumstances which would trigger a risk reclassification for customers, b) to set out the specific enhanced due diligence measures which would be implemented for particular categories of high risk customer, c) to provide guidelines for when source of funds and/or source of wealth investigations should be undertaken, and d) to require customer interactions and monitoring to be adequately recorded.

“Triplebet failed to update its anti-money laundering policy between November 2014 and October 2017. It also failed to ensure that its policies, procedures and controls were being implemented effectively. Although it claimed that it had relied on staff to ensure that its policies and procedures were being implemented effectively, it had failed to give its staff sufficient guidance on implementation or to monitor or manage them sufficiently.

“Triplebet's licence and the Money Laundering Regulations 2017 required ongoing monitoring of business relationships, including, where necessary, the customer's source of funds. The Panel found that Triplebet did not conduct appropriate ongoing monitoring of business relationships in several respects, including the following: a) monitoring did not place sufficient emphasis on addressing anti-money laundering risks, b) there was insufficient recording of outcomes of monitoring, and c) monitoring did not always result in appropriate steps being taken in accordance with Triplebet's procedures, which resulted in too little emphasis on obtaining documentary evidence, including evidence relating to source of funds.

“In several cases, customers had been permitted to gamble very large sums without any checks of their source of funds or source of wealth. In one case, a customer put at risk over £2 million in a single day without any source of funds or source of wealth being required. In another, a customer deposited and shortly afterwards withdrew a large sum of money without any gambling activity, a risk factor for money laundering, yet Triplebet had carried out no checks on the customer other than to verify his identity and address one year earlier.

“Triplebet was unable to produce documentation demonstrating ongoing monitoring in a number of cases in which players were gambling large sums of money.

“In the case of its top ten customers gambling on the betting exchange: a) checks were confined to basic checks of identity and address checks, b) no risk profiles had been prepared, c) the customers' source of funds had not been checked, d) there was a general failure to record monitoring, e) there was no record of meetings or interactions, f) there were no records of conference minutes or records of any assessments as a result of meeting those customers.

“In one case, Triplebet had failed to conduct any enhanced due diligence or source of funds checks on a customer who had lost $714,000 over a year, before the Gambling Commission raised concerns about tainted funds linked to a family member who had been convicted of gambling-related offences.”

And on and on it goes. It should be noted that Triplebet eventually remedied its deficiencies and, in July, had the suspension of its license lifted. But this is only one of countless violations and license suspensions and other disciplinary action for various gaming operators in the UK, plus scores of others in the EU, in this calendar year alone. Much of it emanating from sports betting.

What these and other examples from overseas should suggest is that sports gaming is a serious business that demands more scrutiny than much of the consumer base here in the states realizes. Ongoing reminders to our audience and the general public about the responsibilities of those involved in this industry, either from the sports betting end or peripheral businesses in the gaming sphere, will continue in upcoming TGS issues.

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