Foreword
WLA President
One of the World Lottery Associations (WLA) major objectives is to advance the collective interests of its members by acting in a coordinated fashion on lottery-related issues that have a global
dimension. The WLA strives to protect the gaming sector from corruption and criminal activity and maintain the probity of state-authorized lotteries and sports betting operations worldwide.
The core mission of WLA member lotteries is to raise money for good causes. The values of the WLA and its members are based on a commitment to the highest standards of corporate social responsibility and respect for the duly authorized legal systems that determine where and in what form gaming products can be provided to the citizens of a particular geographic region or national territory. This noble mission and our values are under the constant threat of competition from illegal betting operators.
According to the WLA Global Lottery Data Compendium, WLA member lotteries generated sales revenues of USD 284.3 billion in 2020. In contrast, estimates of the revenue from the illegal betting is estimated at up to USD 1,7 trillion annually, according to the 2021 Global Report on Corruption in Sport, by the United Nations Office on Drugs and Crime (UNODC). This is substantially more than the combined revenue of WLA member lotteries. This should give some idea of the dimensions of the problem we are facing. Yet however daunting the prospect might be, we shall continue our efforts to counter illegal betting and related crimes such as money laundering and match-fixing.
Offering lottery and betting services comes with a high responsibility. Lottery and betting products are subject to the oversight of state authorities and are regulated to mitigate their impact on society. The WLA has always advocated a regulated lottery and betting market and strives to support its members within the regulatory framework of their respective jurisdictions. National gambling regulations have been enacted for the protection of consumers, in particular the protection of minors and those with addictive tendencies. Illegal lottery and betting organizations operate transnationally, circumventing the laws governing gaming in the jurisdiction of the consumer, deceiving players, luring minors, and those suffering from gaming addiction.
The rapid expansion of betting via the Internet initially escaped the scrutiny of state regulators, allowing illegal gambling operations to proliferate globally. However, many of our member countries have begun mobilizing against such criminal enterprises. Some countries are passing new laws, and others are enforcing existing laws more rigorously. In the past it has proved difficult to litigate against these organizations as they operate online from offshore companies and have no physical presence in the countries where they sell their games. But thankfully we are starting to see countries implementing IP-blocking of the websites of illegal operations. In order to safeguard the integrity of the lottery and sports betting sectors, and to ensure the protection of our players, we must do what we can to ensure that lottery and betting operations are always conducted through legally regulated channels.
Combatting illegal lottery and betting operations requires international cooperation. The WLA with its network of more than 150 member lotteries around the globe is well placed to provide the framework for such a cooperation.
In the WLA Code of Conduct, the association makes clear its position on licensing and jurisdiction. Article 2 states, “no member shall offer gaming services via electronic commerce services unless it has received the necessary permission to do so by the government or authorities competent to grant such authorization for the territory where the gaming services are made available.” It further states, “Members shall only offer a gaming service to, or accept bets from, residents of the jurisdiction whose government or competent authority has granted an authorization to offer the gaming services concerned”.
Thus, according to the WLA a gaming operator must possess a license in the jurisdiction where the player is located. Anything else is to be considered an illegal betting operation.
As President of the WLA, it is my profound honor to provide the foreword to this informative guide on combatting illegal lottery and betting operations and what we can do together to stop them.
The WLA will continue in its effort to combat illegal lottery and betting operations through the work of its Illegal Lotteries and Betting Committee and its Betting Integrity on Sports & Horse Racing Committee. It is our hope that the world lottery community, together with government regulators, law enforcement, and other relevant stakeholders, can curb and eventually put an end to these criminal organizations.
Introduction
Illegal betting operations pose a grave threat to the stability of the legal lottery and betting market, to consumers, and to the integrity of sports. They undermine the economies of every jurisdiction in which they perpetrate their illicit trade and damage the reputation of state-licensed lotteries around the globe. With the rapid advancements in information technology, most of the illegal bookmakers have moved their operations online, making it difficult to hold them accountable for violating gaming laws of the countries in which they operate.
State regulators have thus far found it difficult to deal with the onslaught of illegal and unauthorized lottery and betting operations, which seem to remain one step ahead of the law. Defending the sovereignty of state-licensed lottery and betting operators has proven to be no easy task.
In the fight against illegal betting operations, a number of vulnerabilities have been identified by the Financial Action Task Force (FATF), the intergovernmental watchdog for global money laundering and terrorist financing, and MONEYVAL, the Council of Europe’s monitoring body for assessing compliance with international standards for countering money laundering and combating the financing of terrorism. Significant among these is the wide-spread use of cryptocurrencies. Owing to the speed of transactions that they provide, their capacity for allowing cross-border transactions without physical presence of the client, and the ease with which multiple accounts and cryptocurrencies can be set up and used, have been recognized to be a prime facilitator of illegal gambling.
Considering the gravity of illegal betting and the threat that it poses to the industry, it is essential that we clearly define the phenomenon, seek to understand its nature, and strive to address it effectively and decisively.
With this in mind, the WLA Executive Committee formed the Illegal Lotteries and Betting Committee (ILBC) in 2018. The ILBC is mandated with the task of reviewing the tools and resources available for helping member lotteries combat illegal gaming within their respective jurisdictions.
The scourge of illegal betting is tied in, or related to, other criminal activities that affect society on a broader scale. Chief among these are money laundering and the manipulation of sports competitions, also known as match-fixing. The link between illegal betting and corruption in sports has been long established. As such, the WLA made sports integrity one of its top priorities and it has stepped up its efforts in the fight against match-fixing in recent years.
The Betting Integrity on Sports & Horse Racing Committee, originally established in 2019 as the Sports Betting Integrity Committee, is dedicated to furthering the interests of WLA members that provide sports betting, and to preserving the integrity of sport by leading the fight against match fixing and illegal betting.
These Committees work together to ensure that lottery and sports betting operations around the globe operate within a legal and regulated environment, and that they operate with integrity, transparency, and with the greatest possible protection of their players in mind.
The objective of the guide is three-fold. First, it serves to help WLA member lotteries to understand the nature of illegal betting operations, how they function, and why they are a threat to the state-authorized lottery and betting sector. Second, it provides WLA member lotteries with insight as to how they can best combat illegal betting operations in their respective jurisdictions. And finally, it reveals how illegal betting operations and corruption in sports are linked and why it is essential for the lottery and betting sector to make the integrity of sports a priority.
Andreas Kötter
Chair, Illegal Lottery and Betting Committee
Jean-Luc Moner-Banet
Chair, Betting Integrity on Sports & Horse Racing Committee