June 16, 2011 5:23 pm

Anti-corruption: Technology key to catching fixers

Another quarter, another betting scandal. This time a Fifa football referee has been accused of wrongdoing after suspicious betting in an international friendly between Nigeria and Argentina this month.

The international football association is investigating after it was alerted to a huge swing in odds for a fifth goal towards the end of the game, with the score at 4-0 to Nigeria. Five minutes of added time went up on the fourth official’s board, but the referee added more time and awarded a disputed penalty to Argentina.

The most pointed aspect of the incident was not the decision by a referee, Ibrahim Chaibou, already under investigation by football’s world governing body for a match in which a “fake” international team was fielded. It was the fact that the net which has been cast across the betting industry to catch suspicious betting patterns seems to be working.

Unlike many previous betting scandals, Fifa would probably have been monitoring the betting activity in real-time thanks to technology it shares with betting companies.

Immediately after the match, Fifa said: “This match between Nigeria and Argentina was one that we had an active interest in, and forms part of a wider ongoing Fifa investigation.”

One of those pieces of technology, Betmon, was developed by Betfair, and used by more than 40 sports organisations globally to track suspicious betting patterns. The software allows real-time access to see online betting activity in each sport, letting sporting authorities to monitor bets on specific events.

Betfair has been at the heart of the fight against illegal online betting since it signed its first memorandum of understanding with a sporting authority in 2003. The company guards the details behind its betting integrity system intensely, but the Financial Times understands the system uses a combination of vigilance by trained analysts, tip-offs from customers, an electronic warning system, forensic computing and a network of sports authorities that can access Betmon remotely.

From this, Betfair and the sporting authorities can identify wrongdoing in cases like that of jockey Dean McKeown who was banned from riding for four and a half years in 2008.

He was banned after an investigation into suspicious betting practices found the jockey had conspired to lose races. He has since tried to lift the ban with a High Court appeal but this failed.

Betfair is not alone in looking to a mixture of technology and collaboration. Since 2008, many European bookmakers have signed up to the European Sports Security Association (ESSA), which monitors irregular betting patterns across the continent and reports suspect activities to the appropriate authorities.

“From the bookies’ point of view, they are trying to protect themselves from anything suspicious. But a lot of the problems are coming from inside sports – players and officials linked to that particular sport,” Khalid Ali, secretary-general of the ESSA says.

“The main reason is that there has never been a major focus on tackling corruption in these sports,” he adds.

Bureaucracy continues to be a stumbling block in clearing up match and game fixing, both at sporting authority and governmental level.

One betting industry insider told the FT: “The biggest concern is that betting companies are getting very little feedback from sporting authorities.

“They find suspicious betting patterns, they hand over the evidence, and that is often the last time they hear about it.”

In the UK, which as one of the biggest consumers of gambling with the most relaxed gambling laws in the world and is at the forefront of combating wrongdoing, the government set up a Sports Betting Integrity Panel to monitor progress made in eradicating illegal gambling and to push for changes. It is expected to issue a report at the end of this month, but since its last report in 2009 the online betting world has grown, and continues to move towards becoming bigger than all other forms of taking bets, including high street stores and telephone bets.

Last year, for example, William Hill recorded revenue online of £251.5m ($407.5m) , just under a quarter of all revenue across the business. Net revenue in online sports betting grew 95 per cent year-on-year.

The next test will be the Olympics in London, which has already been raised as a concern by Jacques Rogge, president of the International Olympic Committee, a sporting organisation that has been at the front of highlighting the problem of illegal betting.

“We had monitoring in Vancouver [2010] and in Beijing [2008] and there was no sign of illegal betting in either of those Games. But it would be naive to say this could not happen at the London Olympics. Of course, I am worried it could happen. We have to be ready,” Mr Rogge said recently.


Uefa: Financial rule changes threaten to put clubs out of their leagues

As the transfer window opens for another season, clubs at the top of the biggest leagues in Europe are counting their pennies because, by the end of the 2011-12 season, they must balance the books if they want to play in Europe.

Under Uefa’s club licensing and fair play rules a team is not allowed to record a deficit of more than €45m ($64m) a season for the next two years. After that they must break even or face a ban from all Uefa competitions. Losing a place in the Champions League through financial laxity could cost a club upwards of £50m, a devastating sanction.

Based on their most recent published accounts, Manchester United, Barcelona, Chelsea, Liverpool and Manchester City are among the European elite that would fall foul of the regulations. However, unlike their English rivals, Spanish teams Barcelona and Real Madrid are unlikely to have problems balancing the books. El Clásicohas a number of fiscal advantages over Premier League counterparts. First, the pair can negotiate TV rights individually rather than as a packaged league. This has cost other clubs in Spain, but has helped Real Madrid and Barcelona overtake Man United to become the two largest clubs in the world by turnover. Last year Real Madrid generated £72.7m more revenue than Manchester United.

Spanish clubs also do not need to pay their players as much. Players there pay about 22 per cent tax on earnings, rather than about 50 per cent in the UK.

Italian clubs will have difficulties with the rules. In general, the Italian football business model has been based around one generous benefactor per club and clubs such as AC Milan will no longer be in a position to compete on the European stage.

Juventus, however, are an exception. Ironically, it was a corruption scandal in 2006 that has helped them comply with the changes. That scandal led to relegation and a complete overhaul of the club that leaves them in profit.

Big spending benefactors are a concern in England, too. Since Roman Abramovich bought Chelsea in June 2003, the club’s net spend on transfers has been £388.2m. In this period, Chelsea have consistently posted a multimillion-pound loss in their annual accounts – ranging from £44.4m to £140m – which has been paid off by Mr Abramovich.

Last year, 11 clubs had a wage bill that was more than 75 per cent of turnover, while two clubs – Manchester City, bankrolled by Sheikh Mansour bin Zayed Al Nahyan of Abu Dhabi, and Blackburn Rovers – actually spent more on players’ wages than they earned.

And salaries remain on an upward spiral. Deloitte’s last Annual Review of Football Finance showed that in the 2009-10 season Premier League revenues increased by 2 per cent to £2.03bn, and are expected to breach £2.2bn in 2010-11, but total wage costs rose 5 per cent, or £64m, to £1.4bn, accounting for an average of 68 per cent of revenues, a rise of 1 per cent from 2009-10.

Clubs looking to find ways to trim their losses under the financial fair play rules do have get-out clauses. Expenditure such as youth development, stadium infrastructure and community development is excluded, as is depreciation on tangible fixed assets. In the case of Chelsea, for instance, analysts estimate about £10.2m a year is spent on a youth set-up, while another £9.1m can be set aside for depreciation on tangible fixed assets.

As the rules take three seasons to kick in, the betting markets for next year’s Champions League have a familiar feel. Winners Barcelona are strong 2/1 favourites behind Real Madrid (5/1), while the four English clubs – Man Utd (7/1), Man City (12/1), Arsenal (9/1) and Chelsea (20/1) – take up the next four places.

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