IBIA Optimum Betting Market report makes for very interesting reading

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The International Betting Integrity Association (“IBIA”), formerly known as ESSA (Sports Betting Integrity), has collaborated with H2 Gambling Capital to produce a very interesting report entitled “An Optimum Betting Market: A Regulatory, Fiscal & Integrity Assessment” (that can be download below).

The purpose of the collaboration was to examine a range of different regulatory models for betting globally and to evaluate the relative strengths and weakness of those markets. Twenty jurisdictions were chosen representing regulatory frameworks for betting across six continents and covering differing licensing models. Consideration was also given to the necessity for, and effectiveness of, betting product restrictions, along with the cost of match-fixing to the regulated betting sector globally.

The report describes the “ten pillars of an optimum betting market” as follows:

  1. Betting available through land-based and online channels
  2. Unlimited or market maximising licence numbers
  3. Licensing fees to reflect regulatory costs
  4. Robust but practical player protection measures
  5. Betting taxation in 15-20% GGR range
  6. No overly burdensome additional taxation
  7. Wide product offering – multiple channels: fixed odds, pool
  8. Wide product offering – permitted bets: no significant restrictions
  9. Betting integrity protocols
  10. Balanced advertising and sponsorship parameters

Key findings in the report are:

  • Of 650,000 sports events offered on average by IBIA members, 99.96% had no integrity issues. This translates into 1 betting alert for every 2,700 sporting events.
  • Up to 99% of betting turnover is wagered on markets that are also available pre-match, negating any supposed integrity benefit from prohibiting in-play betting on regulated markets.
  • In football, 9 out of 10 (91%) of all IBIA alerts took place on primary betting markets. With only one suspicious alert on secondary markets for every $2.2bn of turnover.
  • Over 50% of betting alerts from IBIA members in tennis were on match or sets, with only 5% of alerts on points only betting.
  • 92% of basketball and 84% of football alerts from IBIA members were generated by customers in a different country to the potentially corrupted match, thereby circumventing any betting restrictions.
  • The top seven football competitions account for less than 25% of total regulated betting turnover globally, with $110bn wagered on matches outside of these main leagues.
  • 1 in 5 of all suspicious betting alerts in football involve reports from IBIA members’ retail outlets, evidence that this is not an issue that can be considered exclusive to online.
  • The global regulated betting industry loses around $25m per annum from match-fixing.

In terms of ‘the global betting market’, the report’s below graph evidences the IBIA’s statement that:

Betting is a high turnover, low margin business. The global regulated market generated $74.1bn of gross win in 2019 (from c.$490bn in turnover), which is forecast to increase to $105.7bn by 2025e (from c.$770bn in turnover). This represented 16% of all gambling gross win in 2019. However, betting is the fastest growing gambling segment and is forecast to grow at over double the rate of the overall gambling industry over the next five years.

Global Betting Turnover and Gross Win 2012-25e (US$bn)

In relation to the twenty selected jurisdictions, an interactive map can be found on the IBIA website here and a comparison tool can be accessed here.
Ranked in terms of points rating assessed by reference to the five assessment criteria, i.e. regulation, taxation, product, integrity and advertising (in relation to which +80 points = “attractive market”, +70 points = “moderate to challenging market” and less than 70 points = “very challenging and/or underdeveloped market”), those jurisdictions are as follows, with the report’s summary in relation to each shown in italics:
  1. Great Britain (93 points): Robust regulation, moderate operator costs and taxation. Represents one of the earliest pieces of online gambling legislation and remains one of the best examples of regulation globally. Forecast to retain high operator numbers and channelling rate.
  2. Malta (88 points): Primarily an international operating hub. Wide betting product range permitted, and integrity measures recently strengthened. Attractive tax, including potential for significant reduction in corporation tax. Will continue to attract operators.
  3. Denmark (86 points): A robust but balanced regulatory framework has established one of the more successful markets in Europe. However, the move away from moderate GGR tax is a negative and, as the government has conceded, is likely to see onshore channelisation fall.
  4. Nevada (85 points): Long-established and successful regulation. Initial licensing cost is potentially sizeable but mitigated by an extremely attractive GGR tax and wide product offering. Requirement to show ID at land-based premises before beginning online betting is outdated.
  5. Sweden (83 points): Positive market on recent initial opening with a good regulatory and fiscal balance attracting a significant number of operators. However, a lack of clear operational guidance resulting in fines being imposed and new product restrictions are negatives.
  6. New Jersey (82 points): Instrumental in repealing PASPA and progressive stance on regulation. Good GGR tax base and strong on integrity. Rejection of the sports data mandate and integrity fee. Linking online licences to land-based premises may restrict market potential.
  7. Spain (79 points): A relatively positive regulatory and fiscal framework attracting a sizeable number of operators with a growing onshore channelisation. This may however be undermined by overly stringent advertising restrictions leading to reduced market oversight and taxable revenues.
  8. Italy (77 points): Well-established market which, through a balanced framework offering wide consumer choice, has steadily reduced the number of consumers betting offshore. Overly stringent advertising restrictions may reverse that positive onshore channelling trend.
  9. Netherlands (77 points): Unlimited online licences and strong regulatory focus on player protection likely to attract a sizeable number of operators. However, continuing land-based monopoly added to a high online GGR tax and product restrictions likely to impact channelling.
  10. Germany (76 points): Long-awaited regulation of one of the largest markets in Europe immediately attracting licensees. However, the turnover-based tax and in-play betting restrictions may cause consumer channelling issues hindering regulatory oversight and fiscal returns.
  11. Colombia (76 points): An emerging online market with a moderate GGR tax and wide product offering means that Colombia is likely to attract more international operator interest. Would benefit from continuing to strengthen its framework, notably on betting integrity.
  12. France (72 points): Robust regulatory framework and strong on betting integrity. But high tax burden, restriction on betting product offering and additional product limitation of a land-based monopoly. Unattractive market with a low number of licensed online operators.
  13. Poland (72 points): Unlimited licensing for land-based and online betting and no restrictions on the types of bets offered. However, burdensome high turnover tax and sports betting right have contributed to relatively low licence numbers and impacted consumer channelling.
  14. Kenya (71 points): Ability to offer a wide betting catalogue and attractive GGR tax are hampered by other tax burdens, expensive licensing, lack of responsible gambling and integrity measures. Market stability issues also present challenges for international operator investment.
  15. Mexico (70 points): Unlimited licences, wide betting product offering and ability to advertise betting services is attractive. However, this is set against a dated law primarily focused on land-based gambling with a relatively high tax burden and lack of market integrity measures.
  16. Australia (69 points): Fragmented framework between states and federal government with a restriction on online in-play betting. Reasonable GGR tax, but sports fees significantly increase the fiscal burden resulting in low operator numbers and high offshore channelling.
  17. Portugal (68 points): The high turnover tax burden makes Portugal an unattractive market with a low number of licensed online operators and a land-based monopoly. Unlikely to attract many new operators and sizeable player channelisation offshore expected to continue.
  18. Argentina (61 points): Retail betting available and some emerging provincial online licensing. A fragmented market, limited online licence availability and a lack of integrity measures are a challenge, but local and international operators are showing interest in the market’s potential.
  19. Canada (47 points): Repeal of the federal single sports bet prohibition and Ontario signalling that online licences will be available for private operators is positive. However, integrity challenges and provincial monopolies remain, with offshore challenging likely to continue.
  20. India (9 points): Whilst betting is widespread across India it is mainly prohibited and therefore unlicensed and unregulated. Player protection and market oversight is therefore absent, as are fiscal returns. The unregulated market and related criminality will continue to flourish.