Tuesday, 5 January 2010

Match fixing, corrupt betting, and insider trading

Sky News came in this morning to interview me for a piece they are doing ahead of the African Nations Cup. They wonder if enough is being done to deal with match-fixing issues in sport, and they are talking, among others, to Declan Hill, whose book The Fix alleges rife corruption in football..Sky want to know if FIFA are doing enough to keep corruption out.

I get asked a lot about corruption in sport, and I always tell broadcasters the same thing: personally, I don't believe that there is as much corruption in sport as the media seems to fear, but I take the view that there is always the risk of corruption, and therefore any sport should be doing everything it can to safeguard against those risks. Measles isn't rife, but that doesn't mean that you don't inoculate yourself against it to make sure you don't get it.

In a sporting context, that means taking every possible feed from bookmakers, whatever they can offer. Personally, I don't think that information about volumes bet is very helpful, if you don't know what has generated those volumes, which is why I think that, for example, FIFA's Early Warning System (EWS) doesn't do a lot protect sport. If it was all that was available, it would (just) be better than nothing; but personally I find it strange that when sports are offered the named information they need, they don't take it. Unfortunately, though, politics gets involved: some sporting bodies won't take named information from Betfair because of concerns that to do so would somehow be endorsing the company. Imagine that in a drugs context: one company can test for every drug; all the other companies can test for a subset... Would the sporting body really refuse to take information from the stand-out company, just so as not to be seen to endorse it?

That aside, a big problem at the heart of this debate, as I told Sky News, is that 'match fixing' has become a term which covers any multitude of "sins" which differ significantly by degree. For me, there is a huge difference between match fixing (paying someone involved in a sporting context to secure an outcome that would not otherwise happen, for financial reward) and "betting with inside knowledge". The former is clearly corruption; the latter, while at times black and white, has a huge grey area which exercises people to different extents.

As an example: people always quote me the time when Harry Rednapp was named manager of Portsmouth as a 'clear example of inside information'. For me, it was nothing of the sort: Rednapp was trading at 1/100, which means that to win £1, you had to bet £100. That isn't "inside information": that means that it was broadly known that he was going to get the job, and the only question was whether he would live long enough, and not have a huge row in the interim, to allow the appointment to be announced.

Imagine you had been the BBC reporter sent to Fratton Park on the day he was appointed. You know there's a press conference to announce a new manager; and you see Harry Rednapp cross the road with the chairman, half an hour before the scheduled start. Doubtless, you know more - by virtue of your position (both job-wise and in geographic terms) than I would have done sitting in my office in Hammersmith; but if I, in my office, had been prepared to risk £1 to win £100 that between crossing the road and sitting in front of the cameras, something would go wrong, then wouldn't that have been my privilege? And if you'd decided that it was a sporting certainty (and that such a thing does exist), and had been prepared to risk £100 to win £1, wouldn't it have been yours?

Wherever you stand on that, you cannot, surely, equate a bet on that with a bet on a match whose result has been 'bought'? And yet, the two things are continually linked by the media as 'corrupt betting' - so much so, in fact, that the day Rednapp was named, the volume bet on Betfair actually led Five Live Sport!

In my view, until we see the difference between these two things, we will never get to the heart of the true problem of 'corruption in sport' (which, I think, should be defined in this context as cheating for financial gain, rather than cheating to make money betting, given that the latter is a subset of the former). That is, recognising that the source of the big corruption scandals of the sort discussed by Declan Hill in The Fix, or being debated now as a result of UEFA's Champions League investigation, is not the licensed betting market; but the unlicensed, illegal, one.

In the world of drugs, there are two obviously separate worlds: there's the world of pharmaceuticals, and there's the world of illegal drugs - cocaine importation, etc. The first is legitimate, and licensed; the second is clearly illegal, damaging, and has all sorts of harmful knock-on effects.

The two worlds are clearly separate. Sadly, there is no correlation that can be made which allows us to track how much cocaine is imported by looking at aspirin sales in Boots. But were there to be, it would make it no more logical to pin the former on the latter; the latter would merely be giving an indication of the former's prevalence.

In betting, there are also two worlds: the legitimate, licensed industry, which provides a platform for people to express a view (sometimes once in a blue moon, sometimes hundreds of times a day) on a given event; and the illegal industry, which exploits the basic human desire to express a view and put money behind it to make money corruptly, securing the outcome of a sporting contest by buying someone or some people involved. The latter is not a bet at all: it's the achievement of a financial return through a certain, bought, corrupt, outcome - a financial return funded, in turn, by people betting, legitimately, on an outcome they don't know has been bought.

There is no more in common between the corrupt acquisition of money and licensed betting than there is between Boots and cocaine (i.e., zero), but the difference is that in betting, the legitimate market can mirror, and give indications of, what is going on in the corrupt market. This is because the corrupt market is being funded by people who aren't involved in the 'fix' at all. They are just betting with someone who, by virtue of being unlicensed and unanswerable to no-one, can build up huge positions in favour of one particular outcome, such that it makes financial sense to secure that outcome by paying a portion of the money that can be made, to someone who can affect the result.

So, what's the solution?

Well, there are only two reasons why you would want to bet into a black market: either because you cannot get access to a fair price in the legal market (assuming that such a thing exists in your jurisdiction); or because you're a crook. So, make sure that everyone who wants a legitimate bet has legal access to a product he wants at a price that is fair, and Bob's your uncle: you suck the liquidity out of the black market, and make it more difficult for people who want to make money corruptly to do so. Bingo!

Odds on this happening across the world in 2010? Before 2020?...



2 comments:

  1. Legendary American racehorse gambler Pittsburgh Phil once said:

    There is enough natural inconsistency in horse racing without having it forced upon the public by unscrupulous men, yet there is not one-tenth of one per cent, as much crookedness on the turf as it is given credit for.

    It's just much easier for people to jump on the conspiracy theories such as match-fixing rather than understand that a proper 1/5 shot should only win five out of every six times....

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