By doing so, this sets the parameters for regulation and provides a point of reference for legal action. It also helps lay the foundation for consumer protection laws to establish an action plan for thwarting unfair competition against state-licensed lottery and betting operators.
The lottery sector’s approach to betting is based on legislation that falls within three regulatory models: monopoly, license, and prohibition. These models may differ depending on the distribution channels.
The Macolin Convention
The International Convention on the Manipulation of Sports Competitions (CETS 215), also known as the Macolin Convention, is a legally binding, international treaty set up by the Council of Europe in 2014. It aims to establish a legal framework for the prevention, detection, and sanctioning of the manipulation of sports competitions, and to promote the cooperation of all relevant stakeholders in this endeavor.
Article 3.5 a defines illegal sports betting as “any sports betting activity whose type or operator is not allowed under the applicable law of the jurisdiction where the consumer is located”. This definition has been applied by the European Court of Justice and is also applied in the European Union.
Moreover, it clearly establishes the difference between legal and illegal betting operators.
Legal betting operators can offer gambling services to consumers, if they have been granted an authorization (license, concession, exclusive rights) within the jurisdiction of the purchaser of those services.
Illegal betting operations, on the other hand, are those that offer gambling services without having been granted such an authorization within the jurisdiction of the purchaser of those services.
Establishing a regulatory body
Effective sharing of information and resources is paramount for tackling the issues of illegal betting.
It involves working with diverse stakeholders, including law enforcement and monitoring associations such as the Global Lottery Monitoring System (GLMS). GLMS is an international association of state lotteries which aims to safeguard the integrity and core values of sports from corruption, specifically, from the manipulation of sports competitions. Its global membership and partnering with sports federations, law enforcement agencies, national platforms and gaming regulators enables it to provide services including legal the facilitation of cross-border information sharing and the detection and analysis of suspicious betting activities that could question the integrity of sport competitions. The European Parliament resolution on match-fixing and corruption in sport of March 14, 2013 (2013/2567(RSP), called on EU Member States to set up regulatory bodies to identify and combat illegal activities in sports betting and collect, exchange, analyze, and disseminate evidence of match-fixing, sports fraud, and other forms of corruption in sports, in Europe and beyond.
This was reflected later in Article 9 of the Macolin Convention, which encourages the designation of a regulatory supervisory authority to track and monitor sports betting operations within their jurisdictions, to compel reporting, and to exchange information in a timely manner with all stakeholders, in order to clarify who is offering sports betting within their jurisdictions.
Taking measures against illegal betting
Authorities must be equipped with effective tools to take measures against illegal betting within the law of their jurisdictions.
Article 10 of the Macolin Convention says that “Each Party shall adopt such legislative or other measures as may be necessary to prevent conflicts of interest and misuse of inside information by natural or legal persons involved in providing sports betting products”. It goes further to define the key role of sports betting operators, public authorities, and other stakeholders, which includes:
- Fully respecting any regulatory limitation set by national legislation
- Participating in national platforms with the view of active co-operation between all stakeholders, facilitating the exchange of relevant information
- Participating in awareness raising among their owners and employees, as well as in education, training, and research, to bolster the fight against the manipulation of sports competitions
- Reporting irregular or suspicious betting to relevant authorities as stipulated in Article 9.1 “…entrusted with the implementation of sports betting regulation and with the application of relevant measures to combat the manipulation of sports competitions in relation to sports betting…”
- Regulating the gaming market
With a view to combating the manipulation of sports competitions, Article 11 of the Convention offers public authorities the following measures to address illegal sports betting in accordance with applicable laws of the relevant jurisdiction:
- Closure or direct and indirect restriction of access to illegal remote sports betting operators, and closure of illegal land-based sports betting operators in the Party’s jurisdiction
- Blocking of financial flows between illegal sports betting operators and consumers
- Prohibiting advertising for illegal sports betting operators
- Raising consumer awareness of the risks associated with illegal sports betting
Blocking Internet provider access is considered an effective practice for stopping foreign operators, largely offshore based, from offering online sports betting in a jurisdiction where they are not licensed to do so. Often their foreign headquarters allow them to evade monitoring by authorities and to defy the country’s law.
In Switzerland, offering money games from abroad is illegal under the Federal Act on Gambling and subject to prosecution under criminal law. The Swiss gambling supervisory authority (GESPA) and the Federal Gaming Board (FGB) have legal mandates to publish blocklists of domain names which offer unlicensed foreign money games. Internet service providers in Switzerland are then obliged to take measures to prevent access to these domains (DNS blocking).
Under the Telecommunications Act of 1997, the Australian Communications and Media Authority (ACMA) can ask Internet service providers to block websites that contain illegal online content, such as prohibited online gaming services. This also covers breaches of the Interactive Gambling Act of 2001, which includes online betting services which do not have a valid Australian license and publishing ads for such services.
Website blocking is a commonly applied measure. When users try to access a blocked gambling site, they are redirected to a landing page set up by the regulator that informs them about the illegality of the online gaming offer they are trying to access. This type of consumer warning is an important first step, as many consumers are unaware of the illegality of certain websites. It is also important to establish advertising restrictions and run campaigns to raise consumer awareness.
