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Review: UNODC highlights important issues in its first-ever ‘Corruption in Sport’ report

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Recently, the United Nations Office on Drugs and Crime (UNODC), released its first edition of “Global Report On Corruption in Sport”. Among other things, the report highlights key transformative trends that affected sports, and notes that Illegal betting and manipulation a major threat to integrity of Sports. Here is a review.

Sports form an integral part of human culture. They act as a source of entertainment, promote a healthy lifestyle, provide jobs, are key to the economy, develop a culture of identity, provide connection among people, etc. among other things.

With the increasing popularity of various sports, there has been an influx of money which has also created scope for different forms of corruption.

Recently, the United Nations Office on Drugs and Crime (UNODC), released its first edition of “Global Report On Corruption in Sport”. The report was prepared by UNODC’s Corruption and Economic Crime Branch (CEB).

The report was developed by UNODC based on the request from the Conference of the State parties to the United Nations Convention against Corruption (UNCAC)’s eighth Session in Abu Dhabi in 2019.

As per the resolution on Safeguarding Sport from Corruption, it requested UNODC to:

Source: UNODC’s Global Report on Corruption in Sports

In the introduction to the report, UNODC states that there is a substantial increase in criminal activities in sports, influenced by a range of factors.

Source: Introduction to UNODC’s Global Report on Corruption in Sport

Globalization and Technology are among the key transformative trends that affected the sports

In the report, five key transformative trends are highlighted that have affected the sports sector in recent times. These trends contribute towards potential risks of corruption in sports with their linkage to the expansion of sport and economic innovation.

Globalization
A major trend over the past two decades across different sports disciplines is their globalization. Increased audiences for events like the Olympics and FIFA Football World Cup are a reflection. More than half of the World’s population over the age of 4 years have watched the 2018 FIFA world cup. Major Football clubs have developed market strategies of promoting their clubs beyond the national borders.

As per some estimates, as of 2018, the Sports industry is valued at $488.5 billion (Sport-specific products) and around $756 billion (including related sectors like transportation, entertainment, etc.) However, the benefits of these are not available beyond the elite sports, which are marred with financial difficulties and prone to corruption risks.

Financial Precarity
The report observes that there is an increasing trend of disparity and uncertainty in the revenues earned between the sports and within the sports. A major portion of the earnings is limited to top players or to top leagues.

As per a report by International Tennis Federation, out of the 14 thousand professional players, only around 600 managed to break even before the coaching costs.

In Football, the five top leagues account for 75% of the revenue in European football as of 2018. This increased from 69% in 2010.

SourceEvolution in Sports related to Corruption from Global Report on Corruption in Sports

The uneven revenue distribution, fewer post-career prospects, etc. can tempt players to make easy money during their last appearances and indulge in corrupt acts, notes the report.

Technology: Sports Betting
In the modern era of sports, betting and sports are linked to each other. In a few countries, sports betting is made legal.  As of 2020, Betting operators are the second most important main-shirt sponsors for European Football clubs. The betting markets have now expanded to non-European markets like Brazil, India, the USA, etc.

The adoption of the internet has revolutionised the betting industry through online betting. This has opened new options to betting operators like – placing multiple bets, placing bets beyond the jurisdiction that they have licenses, etc.  The betting markets have turned into unregulated marketplaces and also create a scope for competition manipulation.

Source: Evolution in Sports related to Corruption from Global Report on Corruption in Sports

Technology: Rise of e-sports
E-sport audience has increased from 380 million in 2016 to 557 million in 2021. However, this space is still unregulated, and the integrity largely depends on each game producer. Because of this, e-sports are vulnerable to two types of corruption – the competitiveness and stakes involved make them equally susceptible to corruption like traditional sports and secondly, the virtual nature of the sports make them vulnerable to structural manipulation.

Administration and Autonomy of sports
Sports are largely composed of organizations that have a private non-profit status and operate based on a private contractual legal framework. The report observes that, while many anti-corruption initiatives are launched, the sports organizations do not have the capabilities of law-enforcement authorities. This hinders their ability to effectively implement anti-corruption compliance initiatives.

The report also identified three major Corruption risks in sports

Illegal betting and manipulation are a major threat to integrity of Sports

The Global report on Corruption in Sport identifies various means by which the integrity of the sports is being compromised. Organised crime, manipulation of competition, abuse, gender disparity are a few of the aspects impacting the integrity of the sports. The report identifies illegal betting as a serious threat and warns about the resultant manipulation.

The report observes that illegal betting is only a major driver in corruption in sport but also a major channel for money laundering. It is estimated that the amount of money laundered in one year is between $800 billion to $2 trillion. While legal betting is valid and prevalent in many sports, there is also a growing market for illegal betting.  The sports betting activity is categorised into – White Market, Grey Market & Black Market.

Source: Illegal Betting and Sports from Global Report on Corruption in Sports

The growth of the internet over the last two decades has contributed towards massive growth in illegal betting.

  • As per estimates, around $140 billion is laundered through sports every year.
  • The amount wagered on illegal betting markets is between $340 billion to $1.7 trillion.
  • 80% of the sports and racing bets are made illegally.

The report also highlights the approaches through which illegal betting is used for money laundering.

Source: Illegal Betting and Sports from Global Report on Corruption in Sports

The report further highlights a few incidents where there was a crackdown on illegal betting:

  • In 2015, police in Italy took action against a corporate crime syndicate that used a network of 1,500 betting shops and 82 internet sites with companies in Austria, Malta, Romania & Spain.
  • In October 2020, 77 people were arrested for using Tether, a Cryptocurrency linked to USD for cross-border transactions and money laundering worth 120 million Yuan.

The Global Report on Corruption in Sport further elucidates the measures taken by different countries like – China, the Philippines, Malta, Australia, etc. to combat illegal betting and using sports as a means for money laundering.

The report also notes the advent of Cryptocurrencies as a means for money laundering and illegal betting. The incident in China serves as an example.

India also has seen incidence of Illegal betting & money laundering

As per Europol, approximately 65% of the worldwide betting market is in Asia, of which the illegal & unregulated sectors are ten times larger than the regulated markets. Although the Report does not specifically state the prevalence of illegal betting in India, there are many incidents over the years that show the existence of illegal betting in India.

In India, only betting on Horseracing is legal, and remaining betting activities are considered illegal. The legality of sports betting in the country is based on the State-specific laws.  The two major laws governing it are Public Gambling Act of 1867 and Information Technology Act 2000.

The advent of franchise sports tournaments like the Indian Premier League (IPL), Indian Super League, etc. have created new avenues for sports betting. There are incidents of arrests of people involved in betting on these leagues, especially the IPL. A few years ago, there was a major Spot Fixing & Match Fixing scandal in IPL, which has resulted in the ouster of two franchises – Chennai Super Kings & Rajasthan Royals for a period of two years. There were also previous instances where Indians & cricketers of other nationalities were alleged to be involved in International Match-fixing.

While there is demand from certain quarters to make betting legal in India, as the international examples show, the legal framework could just be a front for illegal activities and corruption involving money laundering. Hence a careful consideration is required before coming up with the necessary regulatory framework.

Featured Image: Betting in Sports

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