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Hungary speech

I’m in Budapest, where I have just given a speech at the EU Sports forum in my capacity as Chairman of Integrity in Sport Ltd – the same organisation for which I did the World Football piece for BBC World Service that I posted in media earlier in the week.

The other speakers in the session I was part of were Mathieu Moreuil, who heads European Public Policy for the English Premier League; Tjeerd Veenstra, Director of de Lotto and the European Lotteries Association; and Simon Taylor, Director of the Professional Players’ Federation.

If you’re interested, here is the text of it. The introductory lines relate to Dr. Declan Hill introducing me by saying that I had spent years fighting the people on the panel, in particular Mr. Veenstra.

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Thanks Declan… Well it’s true that I’ve been speaking at events like this for a while now, and that we’ve had a lot of disagreements… But I am always struck by how much the protagonists on either side agree with. For example, one line I pulled out of Mr. Veenstra’s speech that I can 100% agree with is that, “the integrity of sport is more important than revenues from sports betting.” But then, you’re right that there are lines that strike me the other way, too. An example of that might be when he implied that it gave credence to his viewpoint that, “the EU is in line with the model that we are trying to protect and trying to sustain”. European – indeed world – governments have spent centuries trying to protect and sustain established models, and this month of all months should show that ultimately, it’s what the people decide to do that really matters…

But I’m grateful for the kind introduction, although I should point out at the outset that I am not here as an apologist for the betting industry, or indeed even necessarily as an advocate of it: I stopped working in betting the better part of a year ago. I like to think that I am here as a pragmatist, but that will be for you to decide… But at least I am certainly here as someone who has spent almost the entirety of his professional career in the internet age.

It’s professional career has taken some interesting turns, but it has been predicated on two pieces of advice which I would like to try to apply to the questions before us today.

The first was a piece of advice I was given repeatedly as I grew up, by a little old man who lived next door to my family home. He was a record producer and song-writer, although the relevance of that to a debate which encompasses how people should be paying for the use of intellectual property is pure coincidence.

He used to say to me that if you spent your life pursuing money, you wouldn’t make any; and if instead you spent your time doing what you were good at and what you enjoyed, the money would flow out of the bottom.

It is with that in mind I suggest to you my basic proposition which is that it is, in my view, a mistake for betting to be seen by sport as a means of making money if in doing so it reduces – as I believe it does – the ability to keep in the public sphere the vast majority of betting that takes place.

Indeed, I think it is a mistake for sport to think about making money in any context, before it has established proper governance across each and every single one of its properties. And if that sounds a strange thing to say, I would direct you not only to the length of the Cricket World Cup which is currently being played, but to two football matches which took place recently, in Turkey.

They were organized by a Third Party organisation, and they finished in a 2-1 win for Bolivia over Latvia, and a 2-all draw between Estonia and Bulgaria. Every single goal was a penalty, and the referee (who by coincidence, I am told, was Hungarian, but is otherwise unknown; and who had been brought in by the Third Party organisation based in Thailand to officiate) insisted on one of the penalties being re-taken after it was missed. I am reliably informed that the probability of a referee awarding seven successive penalties, all of which are scored, without a goal being scored in between, is around 1.5million to 1.

The matches raised eyebrows in a betting context because there had, it transpired, been heavy money backing three goals or more in both games.  And the story was carried in the media as showing the spectre of match-fixing once again raising its ugly head.

But if you look at this situation dispassionately, is it really possible to consider it in the same light as one would a fixed result in a proper competition between two teams playing under the jurisdiction of a sport’s governing body?

I claim no expertise here in fixture-management. I do not know what the reasoning is behind organizing two meaningless international matches through a Third Party in a neutral country. But my perception, which I would imagine is shared by many football fans like me, is that it was organized to make money. And it was bet upon to make money in turn.

In this sort of context, I think that the debate about whether there should be monopoly systems of betting because some people believe that they are able to deliver a larger portion of the betting return to sport is meaningless.

And I think the debate about whether those licensed betting operators which offer bets on sport in jurisdictions where there is no longer a monopoly betting provider should contribute a proportion of their takings to the sport which is putting on the event is, at the very least, rather getting ahead of ourselves. Surely, the first thing we need to address is not ‘where should the money go when it has been made’, but ‘how is money being made and is it money that we want’? Or, to ask the question another way, “should the first priority of a governing body of sport be to establish that sport is played for sport’s sake?”

I know sport is big business, of course. But the reason it is big business is that people idolize sportsmen and women for the brilliance of their achievements and the demonstration of their talent. It doesn’t need me to tell you that: there won’t be a person in this room who doesn’t understand that that is why elite sport is marketable and second-tier sport is not so easily so. What that means, for me at least, is that sport has become big business by following the mantra that I used to be told by the little old man next door: it does what it is good at, and the money flows as a result.

That isn’t to say that I don’t think that it will go on to make good money from the fact that well-governed sport becomes, in turn, an interesting product for licensed betting operators to ply their trade. But for me, the natural flow of betting money should come from sponsorship. And it does. There are currently 4 shirt deals in the English Premiership from betting providers, and there have been others in the past. There are ten in total in England, and 18 across Europe as a whole. And there is a number of official bookmaking partner deals which are also, obviously, commercial.

Focusing instead on having a share of profit on the basis that you are putting on a show means that you raise costs for one set of betting operators over another without giving a commensurate upswing in commercial advantage; and – crucially, for me – the two camps in question are the visible, legal and licensed industry on the one hand, and the unlicensed industry on the other.

Of course, I accept that the licensed industry, by definition, has costs over and above those paid by the unlicensed one. And I reiterate that I am not here to fight the betting industry’s cause: I spent along time doing that, and others can fight that battle now if they want to.

But, again trying to be pragmatic about it, I would advocate that the lower the differential that exists between the costs of the two markets, the better for anyone whose interest is in keeping the amount of black market betting down to the lowest level possible. And top of that particular list, in my view, should be the people responsible for the governance of sport.

I can understand the frustrations of people who feel that they put on a show and other people leech off them, but I think it is hard not to draw a distinction between an artistic creation like a song or an image, and the existence of something. And I think we have to be realistic that people using the latter is the way of the world. The reality is that business ideas spring up on the back of industries all the time, without the new idea paying a fee. Unless your product is a physical product, there is no obvious way of charging everyone for it, even if you refuse to draw the distinction which I suggest is sensible.

I’d support my point by suggesting that any derivative business – in which you can include, as a minimum, any business that is involved in consultancy, insurance, advocacy, opinion-distribution or news coverage – will by definition only exist because of the previous existence of something else. And the question I would ask is whether it makes sense, in a virtual world, to seek to impose a cost for the existence of something that can be enforced only with the co-operation of the end provider, if as a result you encourage a larger proportion to go underground than would otherwise do so.

So, I think the question that we need to answer is whether we would prefer to have clean sport or profitable sport, if I can ask it while stressing that we are not talking about binary outcomes, but about not taking every obvious opportunity to make money if doing so threatens the other objective. I don’t run a sport, but I know that if I did, I’d prefer to be passing up a percentage of bookmaking profits if it meant that I could bring a larger proportion of betting into the more transparent world of the licensed environment.

The second piece of advice which I have tried – not always successfully – to adhere to in my business career has been to ‘control the controllables’.  As I did with my little old man from next door, I’d like to consider how that piece of advice relates to the debate about betting and sport.

It seems to me that the great focus of the last decade, both of the media and of governing bodies of sport as apparently scandal after scandal has been revealed, has been the dramatic increase in betting around the world.

In my view, the Pakistani betting scandal was a turning point in media attitudes to betting, because it appeared to be the first time that the overwhelming majority of the press recognized the distinction between the legal market and the black market. But until that scandal, the increase in visible internet betting – by which I mean the rise of companies like Bwin, Bet365, Betfair, Betclic, and many others – has consistently been seen as a threat to the integrity of sport.

I think that when something explodes as dramatically as internet betting did, it is a natural response to link its explosion to any apparently similar phenomenon which arises concurrently. I think that is even more true when vast sums of money are involved, because the movement of vast sums of money is often considered to be a game-changer. But in this instance, I think the rise of a legal betting market, and the visibility of large sums of money, obscure a fairly obvious point, which is this: the number of people actually in a position to affect the outcome of a sporting contest is limited today, as it always has been, to those who are directly taking part.

The controllables for sport, therefore, have to be the people under their jurisdiction, who are involved in a match. The bits that cannot be controlled, in turn, are the growth of markets and the proliferation of the opportunity to bet – the democratisation, if you want, of betting. It seems self-evident to me that sport should therefore be focusing strongly on that still relatively small group of people.

Most things in life are a matter of on individual’s assessment of the balance of risk and reward.

What is your perception, today, of how that balance lies in the world of corruption in sport, and how does it differ from country to country and sport to sport?

How could we change that perception, and therefore the perception of those taking part who probably share it, to tilt the balance dramatically in favour of risk?

I’d be surprised if many people here argued with the thought that right now, perception is that rewards are potentially great, and the risks of being caught are probably low. But I think people who have that perception would be in turn be surprised by what you can do today with technology.

So I think the answer to my second question, as in so many things, lies in education – education, in this case, of the players and officials, in the issues that are directly relevant. I firmly believe that if sports educated those under their jurisdiction so that they knew the rules, the likelihood of being caught breaking them, and the penalties for doing so, then the temptation to go down the route of corruption will be significantly reduced.

These, at least, are top-level thoughts on the subject in my allocated ten minutes. I hope that they provoke enough questions to lead to an interesting debate.  Thank you.

Posted in Betting industry, Regulation.

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2 Responses

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  1. TSchaffer says

    hi mark,

    i was in budapest when you gave the speech, but had to leave after it, so i couldn’t ty to talk to you afterwards. my question to you would be: how do you think the availability of more private betting companies would influence matchfixing that is rooted in things that happen in southeast asia?

    best regards
    Tom Schaffer
    derStandard.at

  2. MD says

    Hi Tom

    I think the answer lies in the point I was trying to make when Declan told me I was going off the subject being discussed.

    The issue is that ultimately you have only two reasons to bet into the black market: that you cannot get a fair price and a fair product in a legal market; or because you are a crook. If you can take all the legitimate betting out of the black market, you drain it of much of its liquidity. And in the process, you leave behind the people who are in for nefarious reasons.

    There are lots of people who just want to be able to have a bet at a price which reflects the chances of an outcome, but who cannot because their governments insist that they bet at prices artificially inflated by the existence of monopoly betting systems in their home countries. France was until recently a case in point: when the PMU started, it had a margin of 2%. Now, it has a margin of about 30%, and the only reason for the inflation of its margin is that it has operated like any monopoly would. It can charge what it likes.

    But today, in an internet world, operators can’t just charge what they like, because consumers can go and find a price that they think is fair. If they’re being charged 30% for the same bet that someone just over the border might be paying 2% for, they think there is no good reason why they shouldn’t bet at 2%. So, they go off and find someone who will offer them the price and take their bet.

    The answer to your question, then, is that the growth of betting companies which can offer a fair bet at a fair price in a licensed environment can, in my view, only help reduce corruption. The south-eastern markets are corrupt because they are completely opaque and they are given their liquidity by people who just want a fair bet. If you take all those people and put their bets into a transparent, regulated market, you leave nothing for the black market to thrive on.

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