A study by the International Betting Integrity Association (IBIA) suggests that softer restrictions and wide availability of sports betting products reduce the risk of exposure to sports betting related fraud on unlicensed markets.
“Whilst politically attractive, this study confirms that bet restrictions are a blunt and counterproductive instrument,” said IBIA CEO Khalid Ali. “They don’t prevent betting, they just drive it into the unregulated market where most of the problems with sports integrity arise."
This comes on the heels of Sportradar’s Integrity Report exhibiting that 99.5% of sporting events are untainted by match-fixing, pointing to the transparency in the legal market as a key driver of this.
The IBIA study, prepared by H2 Gambling Capital, touts the benefits of liberal sports betting regulation for sports integrity, consumer protection and tax revenues. Its central finding marks a strong correlation between the wide availability of sports betting products and the proportion of consumers who place bets with onshore regulated sports betting operators (known as the channeling rate). In other words, the more products offered by online sportsbooks in legal, regulated markets, the more people use them and the less they use offshore options.
More products, less risk
H2’s Director David Henwood noted that one of the main reasons customers use offshore betting sites is because "they offer a broader range of product than available onshore.”
Products like in-play live betting or prop betting are very popular and heavily impact the channeling rate for sports betting sites. Yet, online sportsbooks in Ohio and Maryland had to pull college player prop bets from their respective catalogs in recent weeks. The NCAA submitted a formal request for Ohio sports betting to do so, while the regulators that govern sports betting in Maryland cited potential harassment as the reason for pulling the props from the Old Line State.
Henwood added that such restrictions are “basically counter-productive” and that the markets that have generally opened their onshore provision to a broad product choice are most successful in limiting offshore play.
Missed opportunities
The study forecasts just under half (47%) of all online sports bets will be placed in-play (or live) in 2024, and pointed out the effect restrictions on these wagers can have on a jurisdiction’s channeling rate and tax revenues.
For instance, Great Britain has a much higher onshore consumer channeling rate of 97% because it allows a wide range of betting products. Meanwhile, Australia and Germany both restrict in-play wagering, and their channeling rates are just 75% and 60%, respectively.
The study also forecasts that Australia would gain an additional $1 billion in incremental tax revenues, and Germany an additional $400 million, over the next five years if they permitted online live betting markets.
This puts a considerable spin on stringent regulations like those seen in the Massachusetts sports betting market. Just before Super Bowl LVIII, the Massachusetts Gaming Commission voted to not add bets on the Super Bowl coin toss to the catalogs of online sportsbooks in Massachusetts ahead of the big game.
The results of this IBIA study showcase plenty of evidence that this is a detrimental decision at the macro-level.
“The conclusions are clear: if you want to protect consumers and sports from corrupters, while maximizing tax revenues, then allowing a wide range of sports betting products is essential," Ali said.
