Online sports betting and gaming: goalkeeper compliance

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Fairness, equality, discipline: these are some of the values promoted by the<fn sport.>{[(|fnote_end|)]}, tragically mocked by darkly-intentioned sports bettors.

In addition to its recreational dimension, sport can also be a lucrative business for fans through online sports betting and gaming.

The considerable growth of this type of entertainment, and the size of the capital it generates, is nevertheless accompanied by a real fear that it may be used by organized crime to orchestrate the rigging of sporting events and money laundering, making sport a high-risk sector for money laundering and the financing of terrorism, according to Tracfin.1)TRACFIN report – Trend and analysis of BC/FT risks in 2019-2020.

Despite the current health crisis, online gaming sales reached 1.2 billion euros in 2020.

Sports betting alone recorded sales of 228 million euros, despite the cancellation of a number of sporting competitions that are usually the subject of online betting, such as the UEFA Euro soccer tournament and the Summer Olympics.2)


Online poker: high momentum maintained during containment (+36%)

To what extent is sports betting, originally a form of entertainment, likely to harbor financial crime products?

  • Online sports betting: a sector weakened by the risk of money laundering

From the outset, the question arises as to why financial criminals invest in the online gaming market, particularly in sports betting.

Thanks to their media coverage and popularity, sporting events generate substantial capital via sports betting.

A sector that concentrates so much money is bound to be vulnerable to financial misconduct.

As a result, sports betting was brought within the scope of anti-money laundering legislation by Act no. 2010-476 of May 12, 2010, which made online gaming operators subject to compliance rules 3)

The National Gaming Authority (ANJ), as the institution responsible for regulating gambling and games of chance, is the only body empowered to grant approval to operators offering physical or online sports betting.

Ordinance no. 2019-1015 of October 2, 2019 reforming the regulation of gambling and games of chance pursues as its main objectives the integrity of gambling operations and the prevention of fraudulent or criminal activities that may take place 4)

To put it simply, sports betting can be a vehicle for money laundering, with offenders wishing to give their “dirty” money a licit tinge by integrating it into a legal circuit via sports betting wagers.

Their stake, made up of illegally obtained money, will be laundered through the winnings of the bet.

By betting, they will more or less recover their stake. By bribing a link in the professional sports chain (athletes or sports event organizers, for example), they can be certain of the winner’s identity, bet on his or her victory and receive the winnings.

It’s vital to protect the integrity of sporting competitions from rigging, which can harbor corruption and money laundering, since “dirty” money will be laundered through rigged winnings.

The stoppage of competitions and their timid resumption in the wake of the current health crisis has put a financial strain on professional sports players, making them more vulnerable to the risks of corruption.

  • How are online sports betting and gaming used to launder money?

Among the sectors plagued by money laundering, sports betting is particularly hard hit by the use of a number of techniques.

The offender can bet on the favorite, or even on all possible outcomes. The payout may be smaller, but the bettor is almost certain to recoup his stake, since there’s a good chance that the favorite will win. His stake, originating from illicit funds, will thus be laundered through the winnings.

Small bets are not controlled and winnings from these games are deemed to be legally obtained.

To launder money from sports betting, the offender may resort to bribery.

Thanks to it, he bets on a team he knows is already winning, and thus recovers his stake. For him, it’s a question of limiting chance to better launder money by bribing all the players in the world of sport to rig the result of the match.

The circuit is disconcertingly simple: dirty money finances the bets, laundered through the winnings.

Detecting money laundering in sports betting can come up against a number of practical obstacles.

In fact, some sports betting operators allow winners of numerous tickets for small winnings to combine them into a single cheque. The amount will not necessarily appeal to the bank, which may believe that the funds were legally obtained 5)

  • The need to subject sports betting operators and professional sports players to compliance rules

Given the risk of money laundering crystallized by the sports betting and gaming sector, it is essential to establish a preventive framework to combat the commission of such acts, to which operators and players in professional sports will be subject.

In fact, it is considered that sport, despite being identified as a risk sector for money laundering, nevertheless remains “insufficiently involved in AML/CFT” according to Tracfin6)Tracfin Report: Trends and analysis of BC/FT risks in 2019-2020.

For this reason, gaming and betting operators are subject to customer due diligence and suspicious transaction reporting obligations (article L. 561-2, 9° and 9° bis of the French Monetary and Financial Code).

When the winnings exceed a certain amount, the player can recover them from the operator, after checking the legality of the operation, particularly with regard to the fight against money laundering (article L. 561-13 CMF).

Act no. 2010-476 of May 12, 2010 brought online gaming operators into the fight against money laundering.

They are thus subject, on the one hand, to an obligation of vigilance and customer identification from the moment a player applies to open an account, and on the other hand, to obligations to report suspicions (article L. 561-15 of the French Monetary and Financial Code) if the operator knows, suspects or has good reason to suspect that the winnings are the proceeds of an offence punishable by a prison sentence of more than one year, participate in the financing of terrorism or present the characteristics of tax fraud.

It should be noted that online gaming operators can only obtain ANJ approval to operate if they can demonstrate “their ability to meet their obligations in terms of the fight against fraudulent or criminal activities, in particular money laundering and the financing of terrorism”.

This control continues a posteriori, as the operator will be subject to ongoing monitoring by the ANJ.

In the event of failure to meet these obligations, approval may not be renewed and disciplinary action may be taken. In the event of a serious lack of vigilance on the part of the operator, the ANJ will notify the public prosecutor in accordance with article 40 of the code of criminal procedure, and criminal proceedings may be initiated against the operator for money laundering 7)

Given the cross-border dimension that characterizes the risks of sports betting and gaming being used for money-laundering purposes, European cooperation is essential to counteract them.

With this in mind, a number of international projects have been launched, such as the 2014 Magglingen Convention on the Manipulation of Sports Competitions, the Fix the FixingErasmus +, instigated by the Council of Europe, focused on the fight against match-fixing, or the KCOOS+ project (Keep Crime Out Of Sport) launched in 2018 integrated into the fight against the manipulation of sporting competitions.

France set up a national platform to combat the manipulation of sporting competitions in 2016, bringing together various players from the world of sport, the ANJ, the National Financial Prosecutor’s Office, the French Anti-Corruption Agency (AFA), and TRACFIN among others, to promote the collection and transmission of information with a view to detecting fraud.

The Copenhagen Group, for its part, brings together national platforms for better coordination and pursues the objective of generalizing the suspension of bets as soon as they present serious indications of fraud 8)Tracfin Report: BC/FT trends and risk analysis 2019-2020.

Numerous institutions such as the AFA and the OECD have stressed the importance of including corruption prevention in the world of sport. Some sports organizations, such as FIFA and UK Sport, have decided to tackle this issue9)

In response to these abuses, the offence of sporting corruption has been created under articles 445-1-1 and 445-2-1 of the French penal code, punishable by five years’ imprisonment and a fine of 500,000 euros.

1 TRACFIN report – Trend and analysis of BC/FT risks in 2019-2020
6 Tracfin Report: Trends and analysis of BC/FT risks in 2019-2020
8 Tracfin Report: BC/FT trends and risk analysis 2019-2020

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