The Asian Racing Federation (ARF) established an Anti-Illegal Betting Taskforce in 2017, which was renamed in 2020 to the ARF Council on Anti-Illegal Betting & Related Financial Crime. The ARF Council aims to combat illegal betting, which is a global problem linked to organized crime, money laundering, and sports integrity issues. It consists of 24 members from diverse fields; including horse racing and sports integrity, academia, law enforcement, and international organizations.
Illegal betting has grown significantly in Asia due to increased wealth, internet accessibility, and stringent restrictions on legal betting in many Asian countries. Illegal betting is often conducted by transnational organised crime groups. The Philippines has been a major hub for so-called ‘licensed’ (but unregulated) online betting operators since the mid-2000s. However, the COVID-19 pandemic has exacerbated expansion of these operations to other countries like Cambodia and Myanmar due to increased pressure from the Chinese government.
Illegal betting in Asia has evolved over time, with organized crime groups being displaced due to changes in regulations and pressure from authorities. From the 1990s, local illegal betting groups in Hong Kong, Macau, Malaysia, Thailand, and Singapore expanded their operations internationally. The growth of the consumer market in China due to economic development also contributed to the expansion of illegal betting.
In recent years, other massive markets with huge sports fan bases such as India, Indonesia, Malaysia, Thailand and elsewhere have further expanded the market to encompass more than half the world’s population.
Measuring an unregulated, underground market is by its nature very difficult but reliable estimates used by e.g. the United Nations Office on Drugs and Crime put it at as much as USD 1.7 trillion a year in turnover.
ARF Council research has also shown consistently that the market grows at a faster rate than the legal market, as it is not restricted by any limitations as to product offering, advertising, nor price (via taxation).
The other business lines of the organised crime groups involved in this industry and their negative impacts are not limited to Asia but are, by their nature, transnational.
Illegal betting is a core business activity for organized crime groups in Asia due to its high profit margins and low operational risks. It is difficult to prosecute and usually not a high priority for law enforcement.
Transnational organised crime groups often run major illegal betting operations spanning across jurisdictions, and illegal betting is a major source of funding for their other criminal business lines such as drug production and distribution, wildlife trafficking and even modern slavery.
As well as the direct impacts of e.g. drug trafficking on societies, the huge volumes of money generated by illegal betting has to be laundered into seemingly legitimate industries, distorting and corrupting markets. This has been seen across the globe, not just in Asia.
How is Illegal Betting linked to Money Laundering?
Illegal betting facilitates money laundering by offering high payout rates and anonymous transactions. Criminal groups can set up licensed betting sites in offshore betting licensing tax havens to mix proceeds of crime with ‘legitimate’ profits from gambling. Many jurisdictions that specialise in providing licences for these types of operators lack adequate regulatory oversight and due diligence structures and pose financial crime risks.
The complexity of these operations and the international nature of online betting make it difficult for authorities to effectively combat.
Illegal betting is one of the biggest threats to sports integrity as it allows corruptors to profit from manipulating competitions.
The threats to the integrity of racing and other sports from the illegal markets are greater than the legal, well-regulated markets which – either out of self-interest, regulation or both – raise alerts with sports authorities and other bodies or otherwise share information to prevent corruption of sport.
Competent match-fixers use unregulated betting sites to place large wagers without oversight, unlike legal operators who share data on suspicious betting patterns. The massive liquidity and lack of transparency in these markets provide a perfect platform for sports manipulation. Match-fixers can arrange fixes knowing that leading Asian bookmakers have traditionally accepted significantly larger bets on even obscure sporting events. These operators do not share information about suspicious betting activity, unlike licensed and regulated operators. This lack of cooperation and transparency makes it easier for corruption to infiltrate sports and for bad actors to avoid detection.
In racing, the threat is arguably even greater, as one of the biggest online betting sites in the world in terms of amounts wagered specialises in horse racing, allows users to profit from horses losing a race, and is completely unregulated.
As sports betting continues to globalize, it becomes harder for regulators and the public alike to differentiate between online legal and illegal betting. Illegal betting operators often purchase licences in jurisdictions that do not confer legality beyond that jurisdiction, creating a grey area for consumers and regulators. Technology also aids illegal operators, making it a challenge for law enforcement agencies to tackle this problem.
The global nature of online betting has made it difficult to clearly define what constitutes illegal betting. This ambiguity is exploited by illegal betting operators who claim to be ‘licensed betting operators’ because they have purchased licences from certain jurisdictions which specialise as offshore licensing havens. However, these licences provide zero legality in the jurisdictions in which these betting operators take bets. This has resulted in a growing number of jurisdictions offering such betting licences. The widespread misconception among consumers that offshore online betting operators with a licence in a jurisdiction other than where they are located are legal has further compounded the issue.
The danger is that regulators focus on what is visible and easy to understand, and over-regulate the legal market, which has been shown will only drive consumers to illegal markets.
Combatting illegal betting requires collaboration between all stakeholders: the betting industry, government regulators, sporting bodies, law enforcement, financial institutions, and the media. Measures such as consumer education, blocking financial flows to illegal websites, law enforcement training, and athlete betting bans can be effective. However, the fight against illegal betting requires international cooperation due to its transnational nature. There are no quick fixes, but progress is achievable with a sustained, multi-faceted approach.
It's essential to establish a clear, universal definition of illegal betting at an international level. For instance, adopting the definition outlined in the Council of Europe’s Macolin Convention against match-fixing could be beneficial. It's also important to address the misconception among consumers that offshore online betting operators with a licence in a jurisdiction other than where they are located are legal. This requires education and clear communication from authorities and the media.