ANJ issues seven warnings in return player rate row

The cases were first opened before the sanctions committee on 22 September 2022.

ANJ stated that, in 2021, seven operators had breached rules prohibiting sports betting operators from redistributing over 85% of stakes back to players.

Violation of this would infringe upon article 13-II of an amended law from 12 May 2010, and article 27 of a decree made on 4 November 2020. The prohibition is meant to prevent excessive gambling, money laundering and terrorist financing.

The sanctions committee decided to bring forward the consequences after evidence was presented that the operators had violated the return player rate cap.

The operators have the option to appeal this decision within two months.

Earlier this month, ANJ noted “significant progress” in anti-money laundering action plans it reviewed. Under French law, all licensed operators in France must provide action plans detailing action against fraud, money laundering and terrorist financing.

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Finnish police probe gambling operator over marketing

According to an investigation by the National Police Board, the operator, the identity of which was not disclosed, carried out multi-channel, Finnish- language marketing in the country. 

Police noted a key part of the marketing effort was sending text messages to consumers in mainland Finland, including to a number of minors that were not of legal age to gamble. 

Marketing also appeared on several websites targeted at mainland Finland, such as Finnish-language affiliate websites, while a number of social media influencers, who are only well known to people in the country, appeared in the marketing.

Any advertising of gambling is illegal in Finland, with the exception of current monopoly Veikkaus. All other forms of gambling, other than those services offered by Veikkaus, are also illegal in the country.

The Police Board has contacted the operator over the matter. Dependent on its response, the police may seek to impose a fine in response to the illegal marketing.

Worrying activity 

“According to the Police Board’s information, the text messages were not related to existing customer relationships, but on the contrary, they aggressively aim to expand the customer base of gambling sites,” National Police Board lottery administration chief inspector Johanna Syväterä said.

“The receiving of text messages has therefore not been based on one’s own choice and the target group seems to have been randomly selected. 

“We find the marketing of gambling aimed at minors on purpose or through carelessness to be particularly worrying. Marketed online casinos offer especially fast-paced automatic games, which are estimated to cause particular harm and gambling addiction. 

“The reports made by citizens have been of paramount importance in the allocation of control work. A significant part of the administrative measures originates from the notifications we receive.”

No Limits

The case come after the National Police Board earlier this year launched a national campaign to raise awareness of illegal marketing and encourage more consumers to report incidences to the police.

The campaign highlighted the financial, social and health problems related to gambling, with messages appearing on social media platforms such as Instagram and TikTok.

According to the National Police Board, one significant impact of the campaign was a one-third increase in the number of marketing-related notifications to the police, which it in turn said helped direct surveillance to where marketing is most active. 

“We believe that one of the main goals of the campaign, lowering the reporting threshold, has also led to the fact that we were able to intervene early on the text message marketing that has now come to light,” Syväterä said.

End of monopoly

Last week, a government study into international comparisons with the Finnish monopoly system argued that maintaining the current regime was “not a recommended option”.

Instead, the study outlined two potential options for lawmakers in Finland. The first option, based on the Norwegian model, would be to grant the regulatory authorities significantly more power to prevent consumers from accessing unlicensed gambling from abroad. Among other measures this could involve blocking orders, advertising bans and new policies to interrupt payment processing.

The second option – as implemented by a number of Finland’s neighbours – would be to establish a licensing model of gambling regulation. According to the study, the introduction of this system would “significantly improve” the channelisation of users to legal offerings.

State-owned Veikkaus praised the study, with CEO Olli Sarekoski emphasising the size of the offshore sector and his openness to the introduction of a licensed system to improve Finland’s channelisation rates.

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Waterhouse VC: Are you feeling lucky?

Business partners David Walsh and Zeljko Ranogajec are professional bettors, whose syndicate bets about $10bn per annum across horse racing, sports betting and lotteries. Walsh spent $75m to re-open Hobart’s Museum of Old and New Art (MONA) in 2011.

In our December newsletter, we discussed the niche but highly lucrative field of professional betting. Betting successfully is incredibly challenging, with other market participants always trying to take your edge. This dynamic means that betting strategies must be adjusted all the time.

The Pharos wing at Australia’s MONA museum

Rebating their competition away

The large betting syndicates receive generous rebates from pari-mutuel or tote betting for providing liquidity. This gives them a significant edge, which varies depending on pool or jurisdiction, over other participants.

To receive this rebate, bettors need to turnover vast sums of money. For example, US totes typically only offer rebates to bettors who wager over US$5m per year, according to Sports Trading Network. The largest pari-mutuel markets are in the US, Australia, Singapore, Japan, Hong Kong and France. 

It is incredibly difficult for new entrants to compete with the handful that currently dominate because they are already behind. The compounding of their rebate advantage has generated the largest syndicates incredibly lucrative profits.

Alan Woods and Bill Benter are other examples of successful professional bettors focused on racing. Bill Benter grew up in Pittsburgh and studied physics at university before taking on Las Vegas casinos at blackjack.

Data is competitive and costly

Alan Woods grew up in Murwillumbah, a small Australian town. Woods was an actuary, who became a gambler with particular horse racing expertise.

After being banned from casinos, Woods and Benter partnered in 1984 to bet on horse racing in Hong Kong. Their system developed an edge by betting on overlays but it was several years before they were generating significant profits. In the first two years, they lost most of their $150,000 starting bankroll.

After a split from Woods, Benter started his own model using only 16 factors. Over several years, the number of factors used in the model grew to over 100 and complex data began to play an increasingly important role.

Today, syndicates have large teams of statisticians and data analysts assessing hundreds of unique factors. For example, analysts of horse racing assess factors related to each horse, the racecourse, turf conditions, the trainer, the jockey and track configuration. 

Whilst the largest syndicates would win without the rebates from the totes, the rebates effectively provide further funding for their investments into data analysis capabilities, strengthening their competitive advantage. This rebate-data investment flywheel makes it extremely difficult for newcomers to break into professional betting.

Furthermore, in our discussions with professional betting syndicates, they told us that you usually need up to 5,000 individual events to work out whether you have a real betting advantage that meets expectations, with lower advantages requiring more individual events.

Model of a dice roll with a 5% advantage (yellow lines are 2 standard deviations)

For example, sports betting models require more events, given their typically lower advantages than horse racing models. As Benter and Woods experienced early in their racing betting, unfortunate luck in these first few thousand individual events easily bankrupts hopeful syndicates.

As shown by the deviations of the red line – cumulative result of actual dice rolls – above and below the blue line, it takes many events to determine the actual advantage. In this example, there are 6,000 events and it is still unclear if there is an advantage.

Artificial intelligence in betting 

There has never been more data and technology applied to professional betting as there is today. The increasing power and prevalence of artificial intelligence (AI) is the latest wave of technological disruption, which presents opportunities and threats to existing and emerging betting syndicates.

As discussed above, incumbent syndicates are best funded to further strengthen their dominance through investing in AI capabilities.

AI could improve the speed and efficiency of a syndicate’s automated betting processes, ultimately bringing down the cost of placing bets. Consequently, the speed of bet placement is likely to become even more competitive.

From the bookmaker’s perspective, AI can identify new patterns and insights from betting data to ultimately make better predictions, adjust odds and minimise their losses to professional bettors. For casual bettors, AI allows bookmakers to personalise each user’s experience according to their betting data.

In November last year, David Walsh said that he was focusing his time on finding methods to protect his syndicate’s income from artificial intelligence, with the belief that having data sets with unique observations could favourably impact his syndicate’s betting results.

Some of the world’s largest global investment firms are applying their expertise to professional betting. For example, Susquehanna International Group (SIG) was founded in 1987 and has grown to around 2000 staff and US$1 billion of annual revenue primarily through trading in financial markets. SIG established Dublin-based Nellie Analytics in 2017 to focus on sports betting.

In 2022, SIG took a 12.8% equity stake in Pointsbet, which gave Nellie Analytics the opportunity to explore a partnership to provide sports analytics and quantitative modelling services to PointsBet.

Betting on tennis betting

In our December newsletter, we discussed Tom Dry’s professional betting syndicate, which is focussed on tennis. Tom Dry has been professionally betting on tennis since January 2020.

He has prior experience working for Tony Bloom, owner of Brighton Football Club, both as a data scientist and as a football analyst.

Through his experience working for Bloom, who is widely viewed as the world’s best football bettor, Tom developed both the analytical and operational skills required to build a professional betting business.

Tom’s operational metrics are very impressive and we believe that Tom has the ability to further scale the team, increase liquidity in tennis and also expand into other sports.

Despite the challenges of breaking into professional betting, Tom has built specialism in a unique sport, which is much easier to leverage than multiple sports.

We believe that Tom’s edge in tennis betting would be difficult to replicate due to the quantity of proprietary historical data he possesses and the proprietary factors that he applies to his model. On 1 July, Waterhouse VC will make an investment in the syndicate.

For bettors who are driven to put in the work and apply the latest innovations in technology, there are significant potential rewards.

DISCLAIMER AND IMPORTANT NOTES

Please note the above information in relation to David Walsh, Zeljko Ranogajec, Alan Woods, Bill Benter, Pointsbet Holdings Ltd, Susquehanna International Group, Nellie Analytics, Tony Bloom and Thomas Dry, is based on publicly available information in relation to the company and should not be considered nor construed as financial product advice. Waterhouse VC has an option deal and has signed an agreement with Thomas Dry’s betting syndicate. The information provided in this document is general information only and does not constitute investment or other advice. Readers should consult and rely on professional investment advice specific to their individual circumstances.

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This material is for general information only and is not an offer for the purchase or sale of any financial product or service. The material has been prepared for investors who qualify as wholesale clients under sections 761G of the Corporations Act or to any other person who is not required to be given a regulated disclosure document under the Corporations Act. The material is not intended to provide you with financial or tax advice and does not take into account your objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by Sandford Capital, Waterhouse VC or any other person. To the maximum extent possible, Sandford Capital, Waterhouse VC or any other person do not accept any liability for any statement in this material.

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Past performance of Waterhouse VC is not a reliable indicator of future performance. Waterhouse VC Pty Ltd does not guarantee the performance of any strategy or the return of an investor’s capital or any specific rate of return. No allowance has been made for taxation, where applicable. We encourage you to think of investing as a long-term pursuit.

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Svenska Spel: Sweden should sign anti-match fixing convention

The seminar, which took place at Sweden’s parliament earlier this month, was organised by the parliament’s Culture Committee. It was attended by 30 people, including Dan Korhonen, head of sports betting integrity at Svenska Spel and Niklas Wykman, Minister of Financial Markets.

In its summary of the event, Svenska Spel made three recommendations: that Sweden signs the convention against match-fixing, the Gambling Inspectorate is allowed to investigate information on suspected match-fixing, and that police are informed on the prevalence of match-fixing.

Svenska Spel said that Spelinspektionen has received more funding to continue match-fixing investigations, adding that the Swedish government is considering giving the regulator joint responsibility on the issue.

Korhonen noted which patterns should be studied when match-fixing is suspected, and how gambling operators should remain vigilant against instances of suspicious betting.

Wykman highlighted how match-fixing can act as a cornerstone for criminal activity, such as money laundering, and pointed out the connection between match-fixing and problem gambling behaviours.

The event was also attended by Anders Wikström, a former Swedish footballer, who said that collaboration between associations and a strengthened regulatory framework is a key tool in the fight against match-fixing.

KRAIL agrees new RG memorandum on cooperation

‘Social Responsibility in the Field of Gambling’ was attended by KRAIL chairman Ivan Rudy, as well as KRAIL members Olena Vodolazhko and Khrystyna Dutka, and representatives of the Ministry of Health of Ukraine, the Ministry of Education and Science, the Ministry of Social Policy, and the State Regulatory Service of Ukraine.

Other attendees included representatives from the Centre of Responsible Gaming, the public union All-Ukrainian Gambling Council and the KRAIL Advisory and Expert Council.

Participants took part in a discussion on the development of a comprehensive system of measures aimed at preventing gambling addiction in Ukraine, after which all attendees agreed to sign a memorandum on cooperation to work together to strengthen responsible gambling efforts.

“When we join forces and direct in the same direction, only then will there be a great result,” Rudy said. “I really want us to move synchronously and connect our developments together and get an effective comprehensive system of measures aimed at preventing gaming addiction.”

The session came after KRAIL this week also suspended two of the country’s state lotteries – Catch the Moment and Penalty. Reasons for the decision were not disclosed, with the two suspensions officially coming into effect from 3 April.

Catch the Moment was an instant cash lottery, while Penalty was a monetary numerical draw lottery that had been operating in Ukraine from 15 September 2018. Both lotteries stopped accepting bets at 11:59pm on 24 March.

KRAIL last week also voiced support for Ukraine’s entry into the European Union, specifying measures that it would implement to ensure its success.

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