Nasdaq Among Companies Vying To Help U.S. States Fight Match-Fixing

As U.S. states debate sports betting, companies including stock exchange operator Nasdaq are jostling to supply integrity monitoring services that will clamp down on cheats and handle high volumes of wagers.

With sports betting only legal outside Nevada since May, states such as New Jersey, Pennsylvania and West Virginia are grappling with how to ensure that betting is fair, markets are not manipulated and sports matches are not fixed or prone to insider trading. 

In Europe, sports integrity monitoring is a hot topic. Organisations including ESSA, a not-for-profit group representing leading betting operators, review trades and share information, while companies including Sportradar and Genius Sports are contracted by sports associations to monitor wagering trends.

By contrast, U.S. regulators who oversee land-based casinos and racetracks are approaching sports wagering with a blank canvass.

Although there are many methods to track and report suspicious bets, regulators at the very least need to ensure bookmakers have the ability to detect dubious transactions and report them to regulators and sports leagues, a Sportradar executive said. 

“This sounds obvious to many extents but there have been draft sports-betting bills and even regulations published around the U.S. that didn’t consider this originally,” said Andy Cunningham, Sportradar’s director of global strategy for integrity services.

Although European bookmakers and their regulators may have much more experience monitoring sporting integrity, their systems are older, and betting transactions are growing exponentially, one Nasdaq executive said.

“In the U.S., we have the opportunity to set up an entirely new system,” said Scott Shechtman, head of new markets at the company.

Nasdaq thinks the systems it uses to oversee financial markets can be adapted to take on sports wagers.

The company claims its SMARTS market surveillance system can handle 8bn messages per day, and has been testing up to 60bn a day, a spokesman said.

By contrast, London-based bookmaker Paddy Power Betfair processed 2.6bn transactions all of last year.

Sportradar and Nasdaq contend that the best system for detecting skulduggery is a centralized hub collating real-time, anonymized individual betting data from all licensed bookmakers at state, federal or league level.

Cunningham envisions a scenario where an individual operator is not suspicious about a match, but data aggregated across multiple operators reveals enough amiss to trigger an investigation.

In Europe, Italy has a real-time monitoring system for all betting transactions that reports to the country’s gambling regulator, ADM. That system facilitates integrity monitoring but is “quite burdensome” to operators, according to one executive.

The regime could be the toughest in Europe — “others are a bliss by comparison,” said Moreno Marasco, chairman of Logico, Italy’s trade group for online operators.

But it does allow for enormous collection of big data, which is key for integrity monitoring, he said.

“The regulator is able to intervene almost in real time by receiving alerts and notifications about anomalies,” Marasco said. 

“In the future as we continue to expand, absolutely, we want a more robust system where there’s a demand on the industry to instantaneously report to all the operators in New Jersey [when] there’s suspicious activity on an event that they see,” said David Rebuck, director of the New Jersey Division of Gaming Enforcement.

In the U.S., there are signs that New Jersey may be taking the lead with a different approach to most European markets.

Newly-adopted regulations require operators to work with a licensed “integrity monitoring provider” that would receive reports of unusual betting, compare trends and provide notification to other sportsbook operators, regulators and affected leagues if suspicions arise.

Pennsylvania is considering similar requirements that would mandate the hiring of a licensed third-party integrity monitoring service to identify suspicious or illegal activity, although operators there would have the option to keep monitoring in-house if they can demonstrate to regulators they are capable of handling it.

In July, New Jersey asked its sportsbook operators — at the time only four — if they had seen any suspicious betting patterns at a Wimbledon tennis doubles match where one international operator reported concerns.

“The good news is in New Jersey, we’re so new to sports wagering, we didn’t have that [tennis event] on the books to take a wager on,” said David Rebuck, director of the Division of Gaming Enforcement.

But in the future the state wants “a more robust system where there’s a demand on the industry to instantaneously report to all the operators in New Jersey and anybody we agree with outside of New Jersey,” he said.

The regulators want operators to supply notice “electronically, not by phone call, not by seeing the guy when I go out to dinner with him that night; instantaneously,” Rebuck told GamblingCompliance. “Boom! 'Do you see this?'.”

Although New Jersey sports betting is now up and running, operators have up to nine months to shift into full compliance with all the state’s regulatory requirements.

The CEO of London-based Genius Sports said it was a welcome move “that New Jersey is looking at ways of increasing the protection for all stakeholders within the ecosystem of sports and gaming.”

“The legalization of sports betting creates a unique opportunity for all parties, government, sports leagues, operators and members of law enforcement to work together to find solutions that best protect consumers, safeguard sports and encourage operators to cooperate closely with the sports and the regulators,” said Mark Locke, whose company provides integrity services to golf’s PGA Tour and Major League Baseball.

Meanwhile, Australia is looking to set up new sports integrity rules with teeth.

Last week an integrity review called for establishing a national integrity commission, a sports tribunal, a national sports-wagering program and toughening anti-doping regulations.

The review would give the commission power to start criminal proceedings targeting betting fraud and match-fixing, and make passing on insider information for betting a criminal offense.

It also recommended the creation of a national “suspicious activity alert system” to allow authorities to order the suspension of wagering markets where a significant risk of fixing is identified.

Additional reporting by Tony Batt and James Kilsby.