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Understanding the impact of
Asian betting markets
David Forrest
University of Liverpool, UK
Match fixing
• as old as organised sport itself
• sometimes home-made
• sometimes betting syndicates
• historically a purely domestic
crime
A new world
• online changed the betting
market
• size of the global market has
increased
• stakes increased faster
• competitive environment
Asia
• market is globalised
• Asian domestic leagues discredited
• honest competitions in Europe and
Australia
• attracted more betting interest in
Asia than at home
• Asia provides liquidity that
supports potentially high profits
from fixing
Asia
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a very international crime
event on one continent, bets on another
regulation ineffective
international organised crime:
• organise
• synchronise
• manipulate
• Bochum:
• +300 soccer matches
• 12 European countries (+Canada)
• most bets placed in Asia
Asia
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won €19.5m and spent €12m
Asian markets - large stakes
Turkish fourth division - staked €36,000
up to €300,000 on Belgian second
division match
• player wages are very low
• situation is structurally “made for
corruption”
Asia
• fraudulent money outside
jurisdiction
• own bettors defrauded
• better understand the Asian
market
Asia
• sports betting illegal in nearly
all jurisdictions
• same in Britain prior to 1961
• today in USA except Nevada
• participation in betting is still
high in the presence of
prohibition
Asia
• street bookmakers with local focus
• not enforceable by law
• agents to recruit and maintain
clients
• Koleman Strumpf - five illegal
bookmakers in New Jersey
• American model similar to Asian
• American bookmakers seldom
hedged
• pass bets upwards to manage risk
Today...
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structure adapted to online
four online supra-national operators
aggregate bets from super-agents
local bookmakers - virtual franchisees
supra-nationals use e- and m-commerce
SBOBet & ibcbet largest bookmakers in world
gross gaming revenue more than double UK
bookmaker William Hill’s
• Cagayan - a special economic zone of the
Philippines
• lax in terms of regulation
SBObet
IBCbet
188bet
Other
Asian
Bookmakers
Super Agent
May sometimes act
as a sportsbook
Master Agent
May act as a
sportsbook
Agent
Agent
European &
R.O.W.
Sportsbooks
Super Agent
May sometimes act
as a sportsbook
Betting
Syndicates
Super Agent
May sometimes act
as a sportsbook
District
Agent
Hedge
Trading Flow
Master Agent
May act as a
sportsbook
Super Agent
May sometimes act
as a sportsbook
Hedge
Trading Flow
Master Agent
May act as a
sportsbook
Regional
Hedge
Trading Flow
Trading Flow
National
Hedge
Agent
Agent
CLIENTS
Agent
Larger
Staking
Clients
Legal betting in China
• Sports Lottery one of two
national lottery operators
licensed in China
• offers sports betting in the
largest market in the world
• but unappealing to serious
bettors
Legal betting in China
• no single match bets
• only parimutuel combination bets
• pay-back rate only 65%
• winnings subject to income tax
• does permit single match betting on NBA
• foreign websites often blocked
• unattractiveness of legal product
most sports betting business in China is captured
by local underground operators and international
websites
Legal betting in China
• Japan, South Korea, Hong Kong
and Singapore
• Singapore - serious money
diverts to international market
• Philippines - operators
‘hoover’ up money from all
over Asia
Differences between European and
Asian bookmakers
• business models:
• Ladbrokes (European)
• SBOBet (Asian)
• European - position takers
• Asian - book balancers
• contrasts in a number of
dimensions
Ladbrokes
high margin
SBOBet
low margin
low volume
high volume
exclude sophisticated
traders
low maximum stakes
sophisticated traders
major product is 1x2
major product is Asian
handicap (hang cheng)
changes odds infrequently
changes odds frequently
high maximum stakes
All these features hang together…
• position taker - exploits
superiority in evaluating
probabilities over naive client
base
• book balancer - maximises
turnover, no reason to exclude
informed traders
• Asian handicaps provide binary
outcomes - easier to balance the
book
Empirical support
• Grant and colleagues:
• recorded odds on 2,132 matches
in six major European soccer
leagues during 2012-2013
• odds were recorded at eight fixed
points in the betting process
• from one day to one second
before kick-off
Margins
• even in 1x2 betting, overround was
lower at SBOBet (mean at 1 second:
6.4% versus 7.7%)
• understates relative tightness of Asian
odds
• SBOBet volume dominated by Asian
handicap betting where overround is
close to 2%
• Ladbrokes offered similar overround on
Asian handicaps as on 1x2
Frequency of odds changes
• mean number of price changes per match
was 0.795 at Ladbrokes and 5.360 at
SBOBet
• price changes at SBOBet were a strong
predictor of price changes at Ladbrokes at
the next data point (but not vice versa)
• the results of the model confirm that Asia is
the leader and Europe the follower
• but Ladbrokes responds to movements in
SBOBet prices only above a threshold
Efficiency of the odds
• odds predict match outcomes more
accurately as kick-off approaches
• kick-off odds at SBOBet predict match
outcomes significantly more accurately
than kick-off odds at Ladbrokes
• if SBOBet is book balancing, this implies
that smart money in Asia drives the
market towards efficiency
Asia
• why do Asian operations provide a
threat to European sport?
• two features of Asian markets:
• high liquidity
• weakness of regulatory framework
Liquidity
• volume of betting on European sports
in Asia dwarfs that in Europe itself
• Liquidity defined by ability to make a
series of transactions without driving
price against the investor
• liquidity is the friend of the fixer permits large stakes at favourable odds
• in-play and pre-match markets
facilitates larger stakes
• fixers will exploit both markets
Liquidity
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high liquidity
unregulated betting market
honour their liabilities
no ‘know your customer’ requirements
accept large aggregations of bets
most customers are betting illegally
agents have incentive to accept bets from fixers
promotes corruption
Asian betting markets are at the core of the crisis
of integrity and credibility faced by European
sport
Monitoring betting markets
• ‘petty’ criminals within sport
• likely to use domestic betting
markets
• fixing is relatively straightforward
to detect
• French handball case:
• volume of betting
• concentrated in the home town of
one of the teams
But….
• organised crime will always bet on Asian
markets
• monitoring agencies cannot observe quantity,
only price (odds)
• movements of odds must be interpreted in
terms of how much money is flowing
• on high profile events several hundreds of
thousands of euros might not shift odds
perceptibly
• monitoring of Asian markets is essential
• quantities wagered on European markets there may be echoes of what is happening in
Asia
In defence of Cagayan (!)
• biggest villains...?
• relatively transparent legal tip to traditional
pyramid structure
• supra-national operators display odds and
maximum that may be placed at these odds
• raw material which enables agencies such
as SportRadar to pick up just what is going
on in Asia
• offers some scope for protecting soccer
where the majority of volume originates in
East Asia
America
• not just soccer - cricket and tennis
• America does not appear to have
experienced the same upsurge in
corruption seen in the rest of the world
• domestic fixes in college sport have not
gone away
• fixing in mainstream sports does not
appear to have surged
America
• protected by the unpopularity of its sports
• lack of betting interest in Asia
• heavy domestic betting on American sports in
an illegal market
• structure deters fixing because bookmakers
and bettors know each other almost
personally
• American sports are actively seeking to
promote themselves in Asia
• Asian bettors may move on to American
sport in search of ‘honest’ wagering?
The long run
• large-scale fixing depends on high liquidity in
betting markets which are unregulated and nontransparent
• the more jurisdictions which provide legal, wellregulated markets offering odds which attract the
bettor, the less liquidity will be available in illegal
and ‘grey’ markets
• starving illegal markets of liquidity is one of the
few policy approaches capable of mitigating
threats to the integrity of sport and betting
• other policies can secure short-term results
• new criminals will eventually replace the old
thank-you for listening…
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