Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

Fraud in sports: Game fixing

This is the fourth in a series of five posts on the topic of fraud in sports.  The first post, from December 5, was about marathon cheaters and how the frauds they perpetrate are discovered, investigated, and reported.  The second post, on December 12, was about fraud and falsification in the thru-hiking community.  December 19’s post was about fraud in sports gambling and betting. Today’s post will focus on fraud in sports both in history and current-day worldwide via game fixing. The fifth and final post in the series, on January 9, will be about major doping scandals in different sports and will focus on the ways athletes cheated by doping and how their use of performance enhancing drugs were supported or not identified by various institutions.

Game fixing is when a match is played to a final result which is partially or totally pre-determined.  Players, on their own or in conspiracy with others, may do this in an ongoing conspiracy in order to make money for and from gamblers.  Coaches and team administrations may also orchestrate losses for various reasons, including to impact their odds for the next season, including in draft position as well as for a friendlier schedule or playoff access.  For purposes of this post, game fixing also includes institutional operations to spy and cheat by teams personnel and coaches, with or without the cooperation of referees and/or players.


Fraud in sports: Betting and gambling

This is the third in a series of five posts on the topic of fraud in sports. The first post, from December 5, discussed the motivations of marathon cheaters and the methods through which their frauds are discovered and publicized. Last week’s post, from December 12, was about thru-hiking fakers, discussing a collection of imposters and scammers in the long-distance hiking world. Today’s post will be about fraud in sports gambling and betting. The fourth post, on January 2, will focus on sports fraud via game fixing. The fifth and last post in the series, on January 9, will be about major doping scandals in different sports, including novel ways athletes cheated through the use of performance enhancing drugs and systematic efforts to either identify or support these fraudulent actions.

Sports gambling, both legal and illegal varieties, is a widespread social and cultural activity. Sports fandom goes to the core of many communities, in which cities and cohorts are bonded together by the activity of following and watching games or teams or entire leagues. For every spectator who attends or watches games, on a casual or a devoted basis, there are others who take their interest to a more commercial or financial level by engaging in various types of wagering, hoping to make money off predicting game or match developments and outcomes. Legal bets are placed through a bookmaker or sports book, which can be found online as well as in states or jurisdictions where sports gambling has been legalized and a marketplace with service providers within it has emerged. On the other hand, illegal bets are placed through individuals or privately run operations known colloquially as “bookies,” usually operating on a person-to-person, word of mouth basis.

Betting on sports results has led to a number of integrity-sensitive scandals and crises in the sports world. Apart from match fixing, which will be covered in next week’s post on its own, gambling fraud is facilitated through illegal betting and investment scams or other unregulated wagering activities. Fraud in this area can lead to other tangential illegal activity, such as money laundering that is facilitated by the fraudulent wagering transactions, and market abuse or violations of investor protections due to investment scams.

  • Advanced technology and the ever-increasing influence of the internet is impacting every area of human life more each day, and sports betting, as well as the fraud committed through it, is no exception. In this era of “fake news” and controversy about and confusion between fact and fiction on social media and in advertising, credibility of data comes into question. Activities that rely heavily on an empirical basis, such as predictive betting on outcomes of sporting events, are particularly vulnerable to the scourge of data manipulation and falsification. Fraudulent identities, records, and news about players and team developments can spread quickly and destructively with the aid of social media, putting the information bettors rely upon on shaky factual ground:  Fake news, manipulated data and the future of betting fraud
  • The state of New Jersey, bolstered by its desire to give a much-needed tourism and gaming business infusion to Atlantic City and its other gambling venues, is leading the charge to legally defeat the nationwide ban on commercial sports betting at the federal level.   The law being challenged is from 1992 and excludes states where sport betting or lotteries were already legal at that time, such as Nevada and Delaware. One of the principal arguments of proponents of rolling back the ban is that illegal sports betting is facilitated in huge volumes all over the country, and legalizing it would serve to bring that activity under regulatory and supervisory authority, and therefore strengthen risk controls and protections for market participants. In the current regime, the vast majority of sports gambling happens in illicit markets which are vulnerable to fraud and scams and devoid of investor protections that a regulated market could ensure and enforce:  Justices Skeptical of Sports Gambling Ban
  • Another motivation to further regulate and supervise sports gambling comes from the potential that criminals could use betting transactions and proceeds, whether legal or illegal, to conceal and process funds from illicit activities. Sports wagering is a cash activity with high volumes and therefore an attractive fit for criminal operations. Money laundering by organized crime enterprises, for example, is often thought of as taking place through match fixing but in reality happens much more frequently through sports betting. Markets and exchanges in which this betting takes place are often not transparent and therefore are susceptible to and useful in manipulation by criminals. In on-going efforts to ensure that the world of sport is cleaner and transparency wins out over anti-corruption forces, focusing on regulating and improving the efficacy of honest sports gambling markets is a key focus of organizations such as the International Centre for Sports Security:  Betting fraud, not match fixing, is main enemy: expert
  • Conmen and scammers also find their marks under the guise of sports betting operations. In the case of Peter Foster, his fraud involved a betting club that he held out to funders as an investment opportunity. This was an international scheme which purported to be an online gambling service but rather functioned as an offshore syndicate operation where investors’ money was moved out of the country and gambling returns and activities were falsified along with the identities and records of the principals allegedly involved in the operation. Claiming hugely successful investments in different major bets and alleging impressive records, all that definitively happened through the Sports Trading Club was that a lot of investors lost their money in a fraud of the type that is repeated over and over again in any business in which trusting individuals can be attracted to give up some of their funds in hopes of winning big through someone else’s management efforts:  Peter Foster implicated in international betting scam
  • Finally, the world of fantasy sports presents a daunting challenge on all of the above themes – unregulated markets, varying user expectations, and diminished participant protections. Fantasy sports, where users assemble hypothetical teams and play against each other in simulated games and seasons, began years ago in grassroots origins, where participants mostly self-assembled into leagues that they administrated themselves. This system pre-dates the internet and was revolutionized by the advent of online, forum-based league play. In the ensuing years corporate interests came into the community and set up corporations that offered daily or weekly play and uncannily resembled gambling platforms, yet were purportedly for entertainment purposes only and therefore escaped the regulatory scrutiny to which gaming or sports book companies would be subjected:  Scandal Erupts in Unregulated World of Fantasy Sports

Check back in two weeks, Tuesday January 2, for the next to last post in this series of five, which will be about game fixing, describing game-throwing conspiracies by players or institutional operations to spy and cheat by teams and coaches.


Round-up on compliance issues in sports

Sports and business are close partners all over the world. From this intimate relationship between athletics and commerce comes a huge variety of compliance issues. Huge revenues are made by individuals and organizations connected to all sorts of sporting events, ranging from professional leagues in the United States to the Olympics or other international competitions, and everything in between. For fans, there are demands from all directions for their attention and money. For organizations such as league administrations and companies that work servicing the sports industry, ethical issues are aplenty in their consumer and trade practices.

  • Doping has been a hot topic in competitive sports since the public controversies over the use of performance-enhancing substances in baseball in the 1990s and early 2000s. Since then, revelations surrounding high-profile athletes and even national athletic programs that have engaged in doping have been unrelenting. The one constant is that testing and ongoing oversight programs seem to be unable to effectively eliminate doping practices. Agencies charged with oversight over doping testing are often insufficiently supervised or resourced. In the meantime, the doping trade is continually innovating and moving into new markets, such as Ethiopia:  Inside the doping hotspot of Ethiopia: dodgy testing and EPO over the counter
  • The summer’s heavily reported-on transfer of Neymar from FC Barcelona to Paris Saint-Germain has opened up the black box of transfer protocol among elite football players and their clubs and managers. Uefa, European football’s governing body, faced tremendous public, club, and league pressure to scrutinize the trade and contract negotiations for fair play considerations. As record-breaking deals are being made by clubs, transfer rules and good faith conduct in those deals are being questioned more closely than ever:  Record Neymar transfer threatens to shake up elite football
  • The system of discipline employed by the NCAA is well-known by all college football fans. These disciplinary actions range from probation from eligibility and bans from playing in championship bowl games to restrictions on recruiting and reductions in scholarship funding. However, is this discipline fairly applied or effective in reducing or eliminating future violations? Public opinion has long been that the NCAA singles out certain institutions for sanctions while turning a blind eye to others, possibly based upon how much attention the discipline will get in the media – so is the real purpose of the discipline not really deterrence, but just naming and shaming? The efficacy of the discipline in doing much more than causing embarrassment is uncertain, throwing the whole enforcement scheme into question:  How Damaging is Probation?
  • The NFL has been the subject of ongoing academic and medical criticism for its handling of the medical issues surrounding repetitive head injuries suffered by players. Studies in brains from deceased players indicate overwhelming evidence of damage consistent with chronic traumatic encephalopathy (CTE), a disease which impats the brain with devastating consequences, similar to Alzheimer’s. The NFL has historically pushed back against the evidence and even refused to let players see their medical records, with their defensive motivations clear – football is big business, and if people are afraid to let kids play football, or feel it is immoral to do so, because of concussion issues, then the future of that business is in doubt:  Head Games: The Moral Calculus of Football and CTE
  • As sports and business go together, so do sports and another major revenue exploiter: gambling. While the rules of athletic bodies often prevent players from gambling to avoid match-setting, it can’t be ignored that the tone of much of the culture around watching sports, at least, is dominated by betting companies. Gambling advertising regulations in sport are certain to be considered in response to the obvious commercial pressures that come from these advertisements which are splashed all over stadium interiors and television broadcasts:  High stakes for gambling firms as pressure grows to curb role in sport

Like the markets and the economies of the world, sports are becoming increasingly globalized as well. As athletes move around the world from one country to the next to work and compete, and as business standards are translated across cultures, expectations and norms become all the more complicated. The business of sports is sure to be a growth area for compliance considerations as the entertainment aspect of athletics continues to expand.