The International Betting Integrity Association (IBIA) today launched the study “The Availability of Sports Betting Products: An Economic and Integrity Analysis”. The study was prepared by H2 Gambling Capital, the leading authority on market data and intelligence on the gambling industry.
The study analyzes the comparative impact of restrictive and liberal regulation of the sports betting market on consumer protection, regulatory oversight, taxable revenues, market and sport integrity.
The document is based on data from sports betting operators, alert data from IBIA and market data from H2 and was developed in collaboration with: Instituto Brasileiro de Jogo Responsável, Canadian Gaming Association, Netherlands Online Gambling Association and Responsible Wagering Australia.
The main finding of the study is that there is a strong correlation between the wide availability of sports betting products and the percentage of consumers placing bets with onshore regulated sports betting operators (known as the funnel rate), thus reducing the risk of exposure to fraud related to sports betting on unauthorized markets.
The study also highlights specific betting markets that, due to size and popularity, have a disproportionate impact on the onshore market and channeling rate. These include football, which dominates sports betting globally, and tennis, which is particularly strong in Europe. Products such as “in-play”, “side markets” (e.g. cards and corners) and “prop” bets also have a very significant impact on the funnel.
The new data challenges the assumption that these markets pose a greater risk of match-fixing fraud, while demonstrating that limiting their availability through regulated onshore operators significantly increases the number of consumers using unlicensed offshore operators, more risky.
Khaled Ali (pictured), IBIA CEO, said: “Although politically attractive, this study confirms that betting restrictions are a blunt and counterproductive tool. They do not prevent betting, but push it towards the unregulated market, where most sporting integrity problems arise. The conclusions are clear: if we want to protect consumers and sport from corruptors, while maximizing tax revenues, it is essential to allow a wide range of sports betting products.”
David Henwood, director of H2, added: “We always rely on data. It is speculated that one of the main reasons why customers use offshore betting sites is because they offer a wider range of products than those available onshore. The study results reinforce this point of view. Limiting the choice of onshore betting types – including live in-play betting – is essentially counterproductive. In contrast, the markets that have been most successful in limiting offshore plays – evidenced by a channelization rate above 90% – are those that have generally opened up their onshore offering to a broad choice of products. A lot can be learned here in terms of regulating best practices.”
The study illustrates the growing global popularity of sports betting. In 2024, global sports betting is expected to be worth $94 billion in gross winnings, and will reach approximately $132 billion by 2028, with more than 70% ($93 billion) online. Just under half (47%) of all online sports bets are expected to be placed in-play (or live) in 2024, rising to 51% by 2028.
The study also compares the success of different regulatory approaches in managing this growing demand. Study finds that jurisdictions that allow a wide range of betting products, such as Great Britain (97%), have a much higher onshore consumer funnel rate than countries that restrict access to major betting markets , such as Portugal (79%; restricts football and tennis), Australia (75%; prohibits online in-play) and Germany (60%; limits football, tennis and in-play ).
In addition to protecting consumers from match-fixing fraud, these depressed rates of onshore channeling have significant implications for tax revenue and market surveillance. For example, the study predicts that:
- Australia would earn $400 billion more in tax revenue and Germany $XNUMX million more over the next five years if they allowed online in-play betting markets.
- Germany and Portugal are projected to suffer a combined loss of around $750 million in taxable revenue due to restricted access to major soccer betting markets between 2024-28.
- The Netherlands would suffer a loss of $118 million in tax revenue. The Netherlands would see an increase in tax revenue of $118 million over the next five years if it liberalized access to football's ancillary markets (e.g. cards and corners).
- Portugal would benefit from additional tax revenue of $122 million over the next five years if it allowed the availability of ITF tennis betting products to match Italy and Spain.
The study's findings are important for policymakers, who must take into account that new jurisdictions, particularly in North and South America, are considering how best to regulate their online sports betting markets. In Brazil, for example, a regulatory framework with high product availability projects revenue of $34 billion for onshore sports betting, with a GGR of $2,8 billion, by 2028.
Ontario's experience is also instructive. Having abandoned the Canadian monopoly model and introduced a licensing system in 2022, Ontario's onshore sports betting pipeline is expected to reach 92% in 2024. For the rest of Canada, however, a rate of around l '11% and the loss of $2 billion in taxable revenue between 2024-28.
