Khalid Ali is watching from across the pond with interest at the ongoing debate between sports leagues and U.S. gaming operators over sports wagering integrity fees.
He’s seen this fight before in Europe.
The secretary general of the European Sports Security Association (ESSA), a sports betting integrity association, said sports leagues sought a cut of the action in Europe. The argument didn’t gain much traction, except for France.
“Sitting here and watching the debate taking place was very reminiscent of when we started,” Ali said during an appearance last week at the Global Gaming Expo in Las Vegas. “You have the betting operators on one side and sports on the other and regulators in between. The only thing I can say is it has taken us a long time to get to where we are.”
So far, professional sports leagues have struck out when it comes to an integrity fee or royalty with the expansion of sports betting in New Jersey, Delaware, Pennsylvania, West Virginia and Mississippi. Some leagues asked for 1 percent of the handle before lowering their request to 0.25 percent, but to no avail. Attention will now turn to Congress for help in getting compensation even if it’s for data provided by sports leagues.
The problem is there other industries that exist on the back of other industries, Ali said. Retail fuel is dependent on car manufacturing industry and they’re not getting a royalty. Lobbyists, by that argument, can only exist because of politicians, he said.
The solution in Europe is starting to take a similar form in the U.S. with commercial agreements between sports teams and betting operators, advertising and exclusive sponsorship deals, Ali said.
“That argument (for a royalty or integrity fee) doesn’t wash,” Ali said. “Fundamentally what you are doing is eating into a low-margin industry and as an operator you’re not going to be able to go out and sign exclusive deals and do sponsorships and advertise because you’re going to have to give a cut to those sports. And it’s going to be one sport that will benefit more than others. It’s not the right model.”
France implemented what it called a sports betting right using the provision of integrity to mandate it, Ali said. The problem was soccer with the primary beneficiary getting 60 percent of the revenue with 20 percent going to tennis and 20 percent split among other sports, he said.
“If you were to translate that in the U.S. market, I would imagine what you would see is one sport would dominate and that’s the NFL and everyone else would be fighting for what’s left over,” Ali said.
ESSA is non-profit association of the 23 leading sports betting operators in the world representing 60 brands. ESSA was created to monitor suspicious betting and to detect, disrupt and report it. It dates to 2004-2005 when in Germany a soccer referee was found to be fixing games for the Croatian mafia, he said.
“As the scandal emerged, a number of European betting operators felt we got lucky this one time but if you’re a match fixer and you want to fix the outcome of a game you’re not going to go to just one operator,” Ali said. “You will put your money into a number of operators.”
They created a network where the traders within companies are monitoring events and if they see anything suspicious, flag it into a system, and raise an alert. The rest of the members are expected to reply within three hours if they have anything to report. An ESSA integrity officer analyzes the data. If there is anything suspicious, the information is passed on to regulators and sports leagues.
In September, the American Gaming Association said it’s had discussions with the sports leagues and its members about forming a similar integrity monitoring association in the U.S.
“We’re speaking with the AGA and some of their U.S. operators here about doing something similar,” Ali said. “It will be very much U.S. focused, run by the U.S. operators, and funded by the U.S. We think that’s important because it has to have a face for this market. This is a very specific and important market, and I don’t think it’s our place to come and do that. We are there to drive the strategic and operational support. I think in the next few months you will see something.”
A U.S. group would be another ally. The European group already works with sports associations across the globe, Ali said. In September, Ali said he took 20 people who make odds for betting operators to Switzerland to meet with the International Olympic Committee.
“I think for ESSA we hope we have something established with our partners here, a monitoring body that is working in cooperation with all of the regulators and the sports,” Ali said. “That could be a bit more challenging, but I hope at one point that will happen.”
The big issue in Europe for Americans to watch right now is Italy in a political setting saying new sponsorship deals between betting operators and soccer teams aren’t valid and it’s looking to end betting shop advertisements as well. They debate has even spread to the UK, Ali said.
Ali, meanwhile, said he likes what he sees happening in the U.S. with the expansion of sports betting since the Supreme Court struck down a federal ban in May.
“I think the way the markets are opening up in New Jersey it’s looking good,” Ali said. “I know the European operators want to come over and sign those deals. Let’s make it happen.”