NFL suspends five over betting violations
NFL charges, Brit jailed for betting fraud, Junket jail time, Tennessee opts for turnover tax, EU lawmakers approve crypto licensing regime +More
Good morning. On today’s agenda:
The NFL suspends five players in the latest betting eruption.
British crime boss that abused Bet365’s bonus system jailed for five years.
Macau junket boss found guilty of illegal gambling
Tennessee opts to introduce a sports-betting turnover tax.
EU lawmakers have approved a new crypto licensing scheme.
All the Federales say they could have had him any day.
NFL suspensions
The NFL insists no insider information was involved in the latest player gambling violations.
Five go rogue: Five football players were suspended late last week with three of them banned for the next season after each was found to have broken NFL rules on gambling.
Panic in Detroit: Three of the five – Quintez Cephus and CJ Moore from the Detroit Lions and Shaka Toney from the Washington Commanders – are suspended indefinitely, while Jameson Williams and Stanley Berryhill from the Lions received six-game bans.
NFL rules ban all gambling by players at any club, league facility or venue.
The NFL statement said a review “uncovered no evidence indicating any inside information was used or that any game was compromised in any way”.
Williams’ agent told the Times he had been penalized for making a bet not related to football that would have been allowed if it hadn’t been made at a team facility.
“Jameson would never intentionally jeopardize the integrity of the game he loves so much,” the agent added.
Lions GM Brad Holmes said in a statement the players “exhibited decision-making that is not consistent with our organizational values and violates league rules”.
Ridley me this: The last betting scandal came in 2022 when Calvin Ripley received a season-long ban after he was found to have bet on games when he was taking time away from the team to deal with mental health issues.
Commissioner Roger Goodell again insisted at the time the NFL had “uncovered no evidence indicating any inside information was used or that any game was compromised in any way”.
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Bet365 fraudster jailed
A British man who ran a crime syndicate that abused Bet365’s bonus system has been jailed for five years.
Locked up: Jon Howard was found guilty of conspiracy to commit fraud by false representation after a four-week trial concluded earlier in April.
Police said Howard was a “central figure” in a group that created online accounts to bet without the limitations placed on individuals.
People willingly gave their details over to Howard, who then impersonated them to access Bet365 services, dodging the company’s checks and gaining access to the bonuses.
Basildon Crown Court heard the criminal enterprise dated back to 2008 and involved more than 1,000 compromised accounts which allowed Howard to bilk around £236,000.
It’s a raid: A warrant executed at Howard’s address in February 2019 turned up 177 sim cards along with paperwork in different names, receipts for luxury items, and bank books.
“When we were notified in 2018, we embarked upon a lengthy and complex investigation that took some time to unravel,” said Detective Sergeant Mike Monkton, of Kent and Essex Serious Crime Directorate. “Substantial sums of money were involved.”
“Betting online in someone else’s name is against the terms of use.
“The whole enterprise was dishonest and designed to deceive the gambling company.”Howard was also convicted of conspiracy to commit fraud against the bank Santander, and found not guilty of money laundering.
Co-defendant Daniel Gorman, also cleared of money laundering, was jailed for 16 months with 12 months suspended for conspiracy to commit fraud.
Bonus track: As competition between operators heats up, the problem of promo abuse is growing and is estimated to cost the online sector up to 15% of its annual revenue.
“Bonus abuse is one of the most pervasive fraud problems igaming operators must reckon with,” said Simon Marchand, vice president of product, risk at GeoComply.
“In a highly competitive market where attractive offers are often made to customers to augment market share, it’s unsurprising that the appetite for risk is higher and leads to criminals abusing those offers and exploiting gaps in anti-fraud controls,” he told C+M.
Junket jail time
Tak Chun is the latest junket operator boss to be sentenced on illegal gambling charges.
Macau junkets: A Macau court has jailed former Tak Chun junket supremo Levo Chan for 14 years over illegal gambling, fraud, money laundering and organized crime activity. He was found guilty of 34 counts of illegal conduct.
The judge in the case ruled that Chan’s activities generated HK$1.5bn ($191m) in illegal side betting and telephone betting revenue between 2014 and 2020 and denied the government some HK$575m in gambling taxes.
The jailing of Chun comes just three months after Alvin Chau, the CEO of fellow junket operator Suncity, was also found guilty of illegal gambling.
Further reading: Martin Purbrick on Macau, the junkets and organized crime and the FT on an overdue reckoning for Macau’s casinos.
Tennessee turnover tax
The Tennessee legislature has passed legislation shifting the state’s sports betting taxation scheme from revenue to handle.
One bad policy for another: Instead of a 20% tax on revenue, the state will tax its sports betting operators’ handle at 1.85%. The impetus for the unique change to a handle tax is a preexisting unique policy in Tennessee that required sportsbooks to maintain a minimum hold percentage of 10%.
Per Tennessee regulations: “If licensees fail to generate the required AGI, they are required to pay either a “true-up” payment at the end the year, to bring their annual privilege tax payments to be 20 percent of 10 percent, or 2 percent, of a licensee’s gross wagers, or a $25,000 fine.”
That’s a fine: Few operators have complied with the 10% hold policy, with the state handing out fines to nine of the state’s 11 sports betting operators. And unsurprisingly, everyone chose the fine. The $25,000 fines do not come close to offsetting the $26m tax shortfall (see below) due to operators missing the 10% hold requirement.
Rather than enforce the 10% hold mandate with heftier penalties, the state decided to revamp the entire tax scheme.
Much ado about nothing: The change will not significantly impact the amount of tax revenue the state collects. Per LegalSportsReport.com, the three options Tennessee could choose from would generate the following tax revenue:
20% with operators missing minimum hold = $126.4 million
1.85% handle tax = $141.2 million
20%, minimum 10% hold from each operator = $152.6 million
Deductions: One noteworthy component of the new tax scheme is it allows sportsbooks to deduct the 0.25% federal excise tax on sports betting wagers from their tax obligation – about $18 million from the state’s $7.3 billion in handle it has tallied since launch.
What the change accomplishes is ridding the state of the much-loathed 10% hold requirement, a policy that has caused nothing but headaches and bad press since it was adopted.
US notebook
New Jersey Attorney General Matthew Platkin and the Division of Gaming Enforcement have announced several new initiatives to bolster the office’s existing responsible gaming efforts.
They include the establishing of a new position dedicated to responsible gaming, setting new advertising standards for operators and simplifying access to self-exclusion for players struggling with a gambling disorder.
“As New Jersey’s gaming and sports-wagering industries continue to grow and mature, so do our obligations to assist patrons who are at risk for problem gambling,” said Platkin.
Crypto licensing
EU lawmakers have approved a new crypto licensing scheme: the Markets in Crypto-Assets (MiCA) regulation.
Block party: Plans to make crypto-wallet providers and exchanges obtain a license to operate across the EU’s states were broadly supported in the final vote last Thursday, April 20, and forms the first such comprehensive law in any major jurisdiction. It will take effect in 2024.
Exchanges, trading platforms, order executors, asset transfer services, crypto portfolio advice and other such services will be required to gain authorisation to serve the bloc.
The European Parliament also voted in favor of a separate law known as the Transfer of Funds regulation, which requires crypto operators to identify their customers as part of stricter anti-money laundering controls.
Issuers of stablecoins (such as Tether, USD Coin and Binance USD) tied to the value of other assets must also maintain adequate reserves, under the new rules.
The European Commission's Mairead McGuinness hailed a “world first” for crypto regulation.
“We’re protecting consumers and safeguarding financial stability and market integrity," McGuinness said. “The rules will start applying from next year.”
Token heads: MEP Stefan Berger, who oversaw the legal negotiations, said the rules put the EU “at the forefront of the token economy”. “The European crypto-asset industry has regulatory clarity that does not exist in countries like the US,” he said. “The sector that was damaged by the FTX collapse can regain trust.”
The European Securities and Markets Authority said it will “announce in due time” a timetable for drafting secondary legislation under MiCA.
“ESMA still warns consumers that investing in crypto-assets is a risky endeavor with limited safeguards at this stage,” the EU securities regulator added.
Battle lines being drawn: Experts said the EU had stolen a march on some rival hubs where an aggressive approach to regulation threatens to drive away business.
“This development comes at a time when crypto firms are still experiencing confusion and frustration around regulations in the US and the UK,” said Dion Seymour, crypto & digital assets technical director at specialist tax advisory firm, Andersen LLP.
“HM Treasury has been developing the regulatory approach in the UK. However, the UK appears to be losing the race to the EU.”
G7 digital currency chat
The G7 are discussing cryptocurrency regulation and ways to help developing nations introduce central bank digital currencies (CBDCs).
The lights are turning red: Japan’s senior financial diplomat Masato Kanda told a recent seminar in Washington DC that the crypto and CBDC discussions will be part of upcoming G7 efforts to tackle global challenges from fast-moving digital technology.
He said the collapse of crypto exchange FTX last year “was a serious wake-up call” for policymakers to create regulation across borders.
The G7 consists of the US, UK, Canada, France, Germany, Italy, and Japan, which currently holds the presidency, while the European Union also attends meetings.
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European notebook
Denmark: After the Danish gambling authority Spillemyndigheden found almost half-a-million Danes have some degree of gambling problem, the Danish government has announced a plan to allocate €4m through 2025 for problem gambling research and treatment.
UK: A new survey of attitudes towards gambling in the UK undertaken on behalf of the anti-gambling lobby group Gambling With Lives found that 52% of all respondents would like to see a ban on all gambling advertising.
The Survation poll of 1,009 adults also found that 68% of respondents thought under-18s should not be exposed to gambling advertising and 64% supported affordability checks for those wanting to bet more than £100 a month.
Meanwhile, Gamstop has reported a record number of self-exclusions in March, up 24% YoY at 8,504. It said the Cheltenham Festival was the likely cause of the jump.
Latin America notebook
Brazil: A provisional measure for the regulation of sports betting will be introduced by the end of this month, according to Games Magazine Brasil. Under the proposal, operators would pay $6m for a license and a 15% tax on profits.
Australian notebook
The Australia Communications and Media Authority has issued a “formal warning” Curaçao-based online casino operator Alistair Solutions, the operator behind ShazamCasino.com, for providing prohibited gambling operations.
Africa notebook
Kenya: A new bill to regulate betting and gaming has been introduced to replace the old Betting, Lotteries and Gaming Act, supported by President William Ruto.
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