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Chapter 4

Effect of sports betting on the integrity of sport

Background

4.1        The association of sport and betting draws attention to the need to ensure the integrity of sport. Areas of risk, such as that posed by exotic betting, were pointed out to the committee, as was the threat of infiltration by organised crime, which can corrupt or apply pressure on individuals to engage in match fixing. This chapter outlines these risks and the responses by the various stakeholders working to protect the integrity of sport.

Identification of the risks

4.2        Particular types of bets, such as exotic bets, have the potential to make individuals more vulnerable to influence contingencies within a match.

Exotic betting

4.3        Exotic betting, often referred to as 'spot-betting', involves wagering on contingencies within a particular event or match. This can, for example, be the number of penalties awarded or points won, and may pertain to a certain player, a certain team or certain time period during a match. Bets can be placed online, by phone or in person prior to an event, or, once the event has started, in person or by phone only.

4.4        Exotic bets are a relatively recent phenomenon in the gambling world, and remain controversial, as it would be easier to target an individual to control the outcome of a contingency within a match than to control the outcome of a match. While emphasising no specific work had been undertaken on this area this general proposition was recognised by Mr John Lawler, Chief Executive Officer, Australian Crime Commission (ACC):

To a certain degree, logic would tell you that, where you have a betting outcome that can be influenced by just one individual, the potential risk to that individual would be greater than to a broader group where one might have to influence a whole team, for example.[1]

4.5        The committee examined the practice during its 2011 inquiry, and noted that there was indeed some cause for concern. The committee concluded:

While recognising that exotic bet types make up a small portion of the overall sports betting market, the committee majority notes that the risks associated with exotic betting have the potential to be damaging to the integrity of Australian sport.[2]

4.6        The committee also suggested that research be commissioned on:

• the risks of exotic betting (for those who bet and or sporting participants); and
• appropriate regulatory responses which will assist sporting bodies with decisions relating to veto power over bet types.[3]

4.7        In a submission to the committee's current inquiry, the Coalition of Major Professional and Participation Sports (COMPPS) advised that exotic betting had been a primary area of focus for a number of years, and highlighted limitations with Victoria's Gambling and Racing Legislation Amendment (Sports Betting Act 2007 (the Sports Betting Act):

At present, there is no requirement on sports betting providers to enter into Integrity and Product Fee Agreements with sports controlling bodies in respect of events occurring outside Victoria. COMPPS members have managed to negotiate agreements covering events outside Victoria with several but not all of the betting providers. However, this cannot be relied upon in the longer term, particularly if sports controlling bodies, acting responsibly in the light of increased integrity risks, wish to enhance the integrity measures contained in such agreements.[4]

4.8        To remedy the problem, COMPPS called for legislation like the Victorian Sports Betting Act to be implemented across all states and territories. In the meantime, the committee heard that individual codes were working around problems presented by lack of legislation at the national level:

Spot betting has to be carefully managed by us. One of the constraints we have on that is that the legislation in Victoria in the Gambling Regulation Act that provides that bookmakers must have an agreement with us to conduct betting on the AFL only applies to events occurring in Victoria and does not apply nationally. We have managed to negotiate with all the bookmakers that our agreements apply nationally however, which is a great result and it is a credit to the bookmaking industry that they are cooperating with us. Through those agreements we manage what types we have on our events. But because we do not have a legislative basis to have those agreements apply to all of our events we cannot push that issue too hard.

Having said that, though, there is a balance in this that is to do with the fundamental issue of prohibition versus regulation. We ban a lot of spot betting types and manage it quite effectively.[5]

4.9        The committee notes that the lack of uniform laws is not a new problem, and progress on this issue is outlined below by the Department of Regional Australia, Local Government, Arts and Sport.

Match fixing

4.10      The committee's 2011 report provided an overview of the problems presented by the phenomenon of match fixing and corruption in sport, as well as legislative and other measures in place to address these problems.

4.11      There is no evidence to suggest that match fixing, although a noted and serious problem in other parts of the world, is prevalent in Australia today.

4.12      The committee noted that COMPPS, speaking on behalf of its members, posited that 'sports betting advertising has no relevant impact on the level of corruption or the incidence of match fixing or sporting fixing'.[6]

The threat from organised crime

4.13      The committee noted concerns about organised crime increasingly identifying individual players and officials as possible targets for corruption. These vulnerabilities and how they may be exploited are outlined below.

Vulnerabilities

4.14      The committee discussed the infiltration of sport by organised crime with the ACC. While the ACC has not conducted specific in-depth analysis of the relationship between organised crime and online gambling, it has nonetheless identified vulnerabilities for the sector through its broader work on methodologies used by organised crime:[7]

Whilst the ACC board has not specifically asked for the ACC to conduct a specific in-depth piece of work on organised crime and online gambling, we see threats and vulnerabilities for the sector through our broader work on organised criminal targets and methodologies used by organised crime, such as money laundering.[8]

4.15      The committee heard that understanding how organised crime operates and to what end is key to understanding the vulnerabilities that exist:

There is a strong motivating source here for organised crime in making money, and they do that in a sophisticated way. These are people that buy in professional facilitators. They are people that run corporate enterprises and mix legitimate and illegitimate assets together. They are people that understand risk and return. They look to accumulate as much money as they can and, through money, power.[9]

4.16      Organised crime syndicates, active in illicit drug markets, exploit all available opportunities to infiltrate legitimate markets in order to disguise sources of income. Where there are revenue streams, there will be organised crime seeking to infiltrate them. This includes professional sport:

...There are very few areas that you could refer to me where you would not find organised crime...

So it is with professional sport. They have an opportunity to work within markets, illicit drug markets, and they do that to very good effect. They also are involved in gambling activities to disguise often the sources of illegitimate income, and this is a mixing of the legitimate and the illegitimate together. I think that has been well documented for many years in this country. The horse racing industry is one case in point, notwithstanding lots of good work being done by the regulators and people working in the horse racing industry to enhance the integrity but it is very difficult to root out organised crime when they actually become entrenched.[10] 

4.17      The sporting world holds an added attraction for organised crime: a valuable opportunity to be seen with popular individuals who have celebrity status in the community:

From that association, they get access to individuals and people with whom they would normally not have access—people in positions of power and authority in the community.[11]

Methodologies employed

4.18      The committee sought views on the methods organised crime uses to infiltrate professional sports. Mr John Lawler, Chief Executive Officer of the ACC, explained how and why individual athletes are targeted:

I mentioned the issue of risk and return. One of the risks for return for organised crime is vulnerability. For example, if we take the border environment or the maritime environment, one of the things they will look to do is corrupt officials working in those areas so they can circumvent the risk controls that have been put in place by governments to protect the border.

So it is with the sports. Organised crime will look to make introductions or associations; sometimes they will come through third parties. They can come in a multitude of ways. But what we see, typically, is the introduction of professional athletes to illicit substances, and that is a direct interface with organised crime. We then find that that illicit association, that vulnerable association, is being used by organised crime to get their hooks into that particular person and corrupt them. They can corrupt them in the early stages, through the provision of information about who might be going to play in a particular game or in a particular role. It might extend to match-fixing, where contrived outcomes are formulated and indeed applied. It can have much broader implications, where people can be drawn into much more serious—if that is not serious enough—and much broader criminal activity on behalf of organised crime. Once people are corrupted, vulnerable and compromised, then they are at the mercy of those organised crime members.[12]

4.19      AFL representatives also offered insights:

The classic way to approach players or others is to get their hooks into them based on gifts, free meals, drink cards. They get them on the hook. They ask people to give them some inside information, for example. Every rort that ever occurred in world sport started with inside information. They do not jump straight into match fixing.[13]

4.20      Mr Lawler added that neither athletes nor sporting codes were equipped to handle the sophisticated methods applied by organised crime:

Professional athletes, professional sporting codes and sports in this country are not equipped to deal with that level of penetration and that level of sophistication by organised crime, which is why the commission and law enforcement have worked with the sporting codes to help them understand the vulnerabilities and then respond to those threats they might be confronted with.[14]

4.21      Similar points were echoed by COMPPS, whose submission added that sporting bodies are limited to contracts, rules, regulations and codes of conduct in influencing players and officials:

They do not have police powers and achieve their influence over players and officials by way of comprehensive contracts, rules, regulations and codes of conduct. The sports will focus on their players and officials and will continue to concentrate their efforts on codes of conduct, education processes, intelligence gathering, surveillance and investigation.[15]

4.22      In recognition of the fact that they do not have enforcement powers, COMPPS members have been actively lobbying for sport-specific legislation addressing integrity issues, including:

• the introduction of a national, comprehensive, uniform and consistent regulatory and legislative approach to online and non-online gambling;
• the introduction of specific criminal penalties for corruption in sport. We note and welcome the introduction of the NSW Cheating at Gambling Act 2012 and have been consistently urging State and Territory Governments to honour the commitment that they gave us as part of the National Policy on Match-fixing in sport in June 2011 to introduce mirror legislation; and
• via an extension of the Gambling and Racing Legislation Amendment Sports Betting Act 2007 (Vic) nationally, the granting to major sports of the right to veto types of wagering that compromise the integrity of their sport. We have been urging State and Territory governments to honour the commitment they gave as part of the National Policy on Match-fixing in Sport in June 2011 to introduce mirror legislation.[16]

Responses to the threat from organised crime

4.23      The committee notes that a considerable effort is being expended to ensure that the threat to integrity in sport is addressed before the problem escalates further. Government agencies, sporting codes and their umbrella organisations and legal wagering operators each have a role to play in ensuring a rapid response is in place. These are outlined below.

Response from sporting codes

4.24      The committee discussed the characteristics of an effective response to threats from organised crime with the ACC. The ACC spoke highly of measures being put in place by the AFL, NRL and other sports since the release of its 'Drugs in sport' report.[17]

4.25      The committee understands that the ACC is pleased with the general direction sporting codes have been taking in response to the identified threats.

I think it is unreasonable to expect everybody to be absolutely in step across all sports across the country. But, I think what we have seen is a quite profound shift to acknowledging that integrity of sport is very necessary in this country, and all the codes we have had dealings with have moved at a pace to actually put in place and commence processes to harden the environment against organised crime...I think the sports fans, the sports participant and the broader community can be pretty pleased that that is happening.[18]

4.26      COMPPS stated that its members were alive to the risks presented by organised crime and are taking active steps to protect the integrity of their sports:

The COMPPS members are alert to the integrity risks that arise from betting on their codes and have taken many steps to attempt to minimise the chances of their players or officials being corrupted. This includes product fee and integrity agreements which, inter alia, facilitate the flow of information from betting operators to sporting organisations so that sporting organisations become aware of irregular or suspicious betting activities in relation to their sports.[19]

4.27      Mr Malcolm Speed, Executive Director of COMPPS, provided the committee with an update on three major events which occurred in the sports betting landscape since the committee tabled its 2011 report:

Firstly, the New South Wales government has adopted its cheating at gambling legislation that imposes heavy penalties for sport betting related crime. Most of the other states and territories, but not all of them, are on their way to replicating this. There has also been progress in relation to the legislation that is going to be modelled on the Victorian legislation that deals with product fees and sporting organisations and betting operators being approved operators.

The second thing that has occurred is that the Ryan Tandy case in New South Wales has largely been completed. We have seen a major sport—the NRL—the betting operator and the police deal with Australia's first match-fixing case, although some parts of that case are back in court in Sydney tomorrow. By way of comment, it is fair to say that that case involved...organised crime, but it was badly organised crime. The fix was thwarted by the opposing team, betting operators were alerted to it and immediately investigators were engaged and the perpetrators easily identified. I think the major problem that the sports face from that case is that the penalties that were imposed did not reflect the seriousness of the crime.

The third thing that has happened is that the sports have been alerted by the Australian Crime Commission to the risk and perhaps the inevitability that properly organised crime will seek to be involved in match fixing or spot fixing. They have been further alerted to the risks imposed in this area by illicit drugs and performance enhancing drugs. The sports take this very seriously. Together with government, law enforcement agencies and betting operators they are addressing these concerns and they will fight to maintain their excellent records in relation to betting related integrity issues.[20]

4.28      The committee notes from ACC evidence that positive action is evident:

I would like to say at the outset that it is very pleasing to see the robust measures which the Australian Football League, the National Rugby League and other Australian sports have announced since the public release of the drugs in sport report to make their players and the community safer. The report is having the desired effect.[21]

AFL and NRL integrity units

4.29      The committee notes that both codes have dedicated integrity units charged with protecting integrity in sport, and considers this to be a step in the right direction.

4.30      Mr Brett Clothier, AFL Integrity Manager, provided the following overview:

I would like to give the briefest of overviews about the AFL integrity unit. I was appointed to the position of Integrity Manager of the AFL in August 2008. At the time that was the first position of its kind in professional sport in Australia, the racing codes aside. That appointment allowed the AFL to really get ahead of the curve in relation to protecting the integrity of sport before a series of major occurrences occurred in world sport that really brought the issue of integrity in sport to further prominence. So we feel we have been able to get ahead of the curve and put really sound building blocks in place in terms of how we run our program.

We have got a very strong investigations and intelligence-gathering capability and we believe that we are viewed by law enforcement in this country, by government and by international sports as having a very credible and effective integrity program when it comes to professional sport...[22]

4.31      The early establishment of the AFL's integrity unit ensured a proactive approach to various threats to the integrity of their sport, but representatives acknowledged that their response was a work in progress:

I think the AFL is way ahead of the game in terms of protecting the integrity of sport. We were aware of many of the risks that emerged in the ACC report, so we were not taken as much by surprise as maybe some were. But there are always matters that you can learn from and show that you can harden up your environment. So we are not ashamed to say that we are taking those on board and acting on them.[23]

4.32      Similarly, the NRL established its own unit in early 2013, which is overseen by Judge Tony Whitlam QC during the development and implementation stage.[24] The difference between the NRL and AFL integrity units was explained for the committee:

The way our system works is a little different to the AFL. We require clubs to conduct a minimum of 140 tests across two grades each year—in fact, some clubs go well beyond that. The policy works on the basis that for a first offence a player has a suspended fine of five per cent of his wage, has to undergo compulsory counselling, and has to receive a written employment warning. Now if at that point that player has already had two written employment warnings, that could clearly cost him his job. For a second instance, that player would be suspended for 12 weeks. So there is not a long process during which a problem stays hidden, and there is a specific, club based committee that actually oversees the player.[25]

4.33      The NRL added that work was underway in terms of deciding how best to address integrity issues in future:

We are in the process of designing the integrity unit structures going forward. It is a redistribution of the way we deal with integrity within our game, and that is one of the factors the integrity unit is taking into account.[26]

4.34      The integrity units regularly make recommendations[27] and are charged with pre-empting and addressing threats such as those identified by the ACC. Their approach includes extensive education processes which are designed to safeguard against regulation breaches:

We have a very extensive education process which covers all of our rules and regulations. Every player and every member of the football staff at every club receives education every year about this topic; not just, 'you can't bet, don't bet', but also about the dangers of organised crime and about the dangers of people trying to approach them and get them on the hook—to groom them, effectively. Those education sessions are extensive and are provided every year to players.[28]

4.35      The NRL's work in terms of its drug testing regime, for example, showcases their commitment to improving safeguards and outcomes:

There are a number [of improvements] and I have to say at this stage they are not formalised, but we are in close consultation with ASADA. They include the introduction of a blood passport program, which is seen as an international standard. The blood passport program on its own is not the thing that will be the be-all and end-all. In relation to testing, we have a great lab in Australia—or a very good lab in Australia—in Sydney. But there are more advanced tests overseas. We are looking at utilising some of those on some of our samples. So they would be the basic principles that we are doing in the program at the moment. There are some more additions in terms of working with the players. It is important to note that players, in many ways, cannot be made to undergo drug testing, particularly when it comes to illicit substances. There is a level of cooperation that relates to this. So we need to work through this with the players association. We are in the process of that and they have been cooperative to date with those discussions. We are looking at strengthening things like illicit substances testing. We have a very good program, but we think we can strengthen it and that is what we are looking to do.[29]

4.36      On 16 May 2013, the AFL and the AFL Players' Association announced proposed amendment to the AFL Illicit Drugs Policy following the release of the latest player testing results which showed a significant increase in failed tests for the 2012 season. The proposed amendments will restrict players' ability to self-report instances of illicit drug use, instead introducing more targeted testing at more targeted times, and increased levels of hair testing during the high-risk off-season.[30]

Response from governments

4.37      The committee received a submission from the Department of Regional Australia, Local Government, Arts and Sport (DRALGAS) which provided an update on the implementation of key initiatives since the committee's last inquiry. This included an update on the commitment by state and territory governments to introduce criminal offences for match fixing[31] which  highlighted that:

• on 12 September 2012, New South Wales passed legislation to criminalise specific match fixing behaviours;
• on 29 November 2012, South Australia introduced similar match fixing legislation; and
• Tasmania and Victoria have announced their intention to introduce similar legislation.[32]

4.38      In relation to the provision for sports to be able to veto certain bet types, Victoria has the legislation in place while New South Wales, South Australia and Tasmania are working towards implementation in 2013.[33]

4.39      DRALGAS also provided an overview of the new National Integrity of Sport Unit (NISU) within the DRALGAS Office of Sport.[34]

4.40      NISU was established on 9 October 2012, and is currently working with sporting codes, the betting industry, state and territory regulators and justice and law enforcement agencies to ensure that:

• sports have systems in place to monitor and report on players' and officials' activities;
• sporting codes have education programs in place to prevent match-fixing;
• a betting industry standard for information exchange is developed;
• there is a national approach to regulation;
• consistent criminal legislation is implemented; and
• a rapid, nationally coordinated response is available assisting sporting codes experiencing integrity issues.[35]

4.41      NISU has also established an online resource for stakeholders, with further integrity tools currently in development. These include:

• an anti-match-fixing policy template and a template code of conduct;
• a sports betting integrity agreement template to support sports to enter into integrity agreements with betting agencies;
• a betting industry standard for information exchange between betting agencies, sports government and law enforcement; and
• an education program, with resources developed by Netball Australia with funding from the government.[36]

Scrutiny of betting markets

4.42      The committee acknowledges that the wagering providers play an important role by identifying irregular bets or betting activity and drawing it to the attention of relevant authorities. For example Betfair noted:

...Betfair considers that by encouraging Australian consumers to transact only with Australian licensed and regulated wagering operators, we are ensuring that sports governing bodies have unfettered access to bets placed on their sport for the purposes of integrity management.[37]

4.43      The role is valued by sports. As put by representatives of the AFL:

As an integrity manager my biggest fear is gambling that occurs offshore in legitimate markets. The particular risk for Australia is through Asian markets and, as you know, Indian markets for cricket and other matters. I feel much more comfortable as integrity manager of the AFL knowing we have a strong, healthy, well-regulated local environment. That is something I feel very strongly about. Before I started with the AFL I worked in integrity in racing for five years. I am well connected with people who work in this area internationally. I think that is the biggest risk for sport. It is not something that I have to even in my own mind weigh up against any commercial consideration or anything like that. That is totally irrelevant to me. I would prefer for us to have a healthy and vibrant wagering industry that can advertise responsibly and ethically, with the right balance.[38]

Committee view

4.44      The committee is pleased to note the action being taken by all stakeholders to protect the integrity of sport. The committee commends the initiatives being implemented by sporting codes in relation to the threats and vulnerabilities identified by the Australian Crime Commission. This work will provide further assurance to the public that integrity is the main concern for sporting bodies.

4.45      The committee also notes the work and undertaken by the government to put in place an appropriate policy framework for integrity and to work cooperatively with stakeholders to address issues of concern. It particularly notes the resources available and the integrity tools under development.

4.46      The committee also acknowledges and supports the scrutiny that properly licensed wagering operators are bringing to the otherwise borderless, global-wide world of sports gambling to identify potentially illegal activity. Opportunities to gamble through legitimate operators cut the risk of involvement by unregulated operators and help draw irregular betting to the attention of authorities for action.

Betting and amateur sports

4.47      During the course of this inquiry the committee became aware of the introduction of online gambling to amateur sporting events, with reports of betting agencies offering live odds on amateur competitions in Canberra.[39] The committee notes that the events in question involve interstate and overseas betting agencies introducing their product to Canberra-based amateur sporting competitions, and shares community concerns.

4.48      Amateur sports are not well resourced to address the integrity risks and threats that this brings. It is precisely this lack of resourcing that makes amateur sports vulnerable and creates an opportunity for corruption such as match fixing.

Committee view

4.49      The committee is extremely concerned at emerging reports of amateur sporting competitions being targeted by betting agencies. It is clear to the committee that amateur sport, which is not well resourced, requires assistance to address integrity issues. To this end, the committee suggests that the government, in consultation with stakeholders, draw on the integrity resources and tools being developed by the National Integrity of Sport Unit (NISU) for the professional sporting codes, to develop appropriate tools and resources targeted for amateur sports.

Recommendation 8

4.50      The committee recommends that the DRALGAS Office of Sport, in consultation with stakeholders, develop appropriate tools and resources that amateur sport can use to increase the awareness of participants to the risks and threats to the integrity of their sport.

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