Introduction
The UK government is due to publish a review of gambling laws in 2022. It is widely expected to recommend that betting operators should face restrictions on sports advertising.
Concerns about problem gambling – and children being introduced to betting via gambling ads when they watch sport on television – are important reasons for the review. Laws have not been updated since the 2005 Gambling Act and are not considered fit-for-purpose in the digital age.
There are a range of options open to the government. Most stringent would be a blanket ban of all advertising in sport – from television adverts, hoardings, teamwear and collaborations.
This seems unlikely because of the chaos that would ensue in the horseracing industry, which is dependent on money from bookmakers.
Most likely is targeted laws for football, specifically shirt sponsorships and title (leagues or cups) sponsorships.
This article seeks to understand what the consequences would be for the sport – and gambling firms in part – if the latter option comes to pass.
It discusses the precedent set in Italy and Spain, the football industry’s belief that it would represent financial hardship for many clubs, how it is preparing for a ban and what other sort of sponsorship gambling will be replaced by. And what the consequences might be.
What is the situation?
The 2005 Gambling Act deregulated gambling. Television and radio advertising for gambling had previously been prohibited. Between 2007 and 2013 gambling spend on advertising increased by 600%.
Gambling became a 24-7 hobby. No longer did people have to go into a high street betting shop to place a bet. They could do it anywhere, anytime on their phone or online. Online betting has increased in the period from 2010 to 2018 while betting at a physical location has declined.
Logos from betting firms have been found to appear 700 times during the course of football matches. The industry has implemented a self-imposed whistle-to-whistle ban for afternoon matches.
Campaigners believe such visibility could lead to a rise in problem gambling. However, Gambling Commission studies in June 2021 and September 2021 found no evidence of a rise in risk or problem gambling.
Not surprisingly, gambling advertising is a major revenue stream for the football industry. Annual contributions to clubs via sponsorship deals are estimated to be worth £100m while £200m is spent with broadcasters. The English Football League has a bookmaker (Skybet) as its title sponsor, estimated to be worth £40m over five years.
Betting shirt sponsorships/ white label partnerships in Premier League 2021-22
Club |
Shirt sponsor |
White label |
Brentford |
Hollywoodbets |
|
Burnley |
Spreadex |
|
Crystal Palace |
W88 |
Midnight Gaming |
Leeds |
SBOTOP |
TGP |
Newcastle |
Fun88 |
TGP |
Southampton |
Sportsbet.io |
TGP |
Watford |
Stake.com |
|
West Ham |
Betway |
|
Wolves |
ManBetX |
Vivaro |
Betting shirt sponsorships in Championship 2021-22
Club |
Sponsor |
Birmingham |
Boylesports |
Bristol City |
MansionBet |
Coventry City |
Boylesports |
Derby County |
32Red |
Middlesbrough |
32Red |
Stoke City |
Bet365 |
*There are no gambling shirt sponsorships in Leagues One and Two
What is a betting partnership?
Before the 2002-03 season Premier League football fans would not have seen a betting logo on a team’s shirt or website. Fulham were the first club to be sponsored by a gambling company (Betfair).
In the 2021-22 season at least 14 Premier League clubs had a betting partnership with a gambling operator and there were 15 in the Championship. Some Premier League clubs have associations with more than one.
A gambling operator pays for the right to be associated with the brand, hoping for increased exposure, engagement and, of course, revenue. A club receives a fee for that association, and, in some examples, a share of revenue generated. (Manchester United’s previous global betting partnership with Yabo Sports was worth a reported £3million).
The problem with betting partnerships is that they are dominated by offshore operators or ‘white-label’ firms. These are companies which are not UK-based and use a go-between registered with the Gambling Commission to gain a licence. TGP Europe, in the Isle of Man, have specialised in white-label packages. Most Premier League clubs had one in the 2021-22 season.
Premier League betting partnerships 2021-22
Club |
Betting partner (white label) |
Arsenal |
Sportsbet.io (TGP) |
Aston Villa |
Oubao (TGP)/Parimatch (BetVictor) |
Brighton |
Betway |
Burnley |
BetVictor |
Chelsea |
Parimatch (BetVictor) |
Everton |
i8Bet (TGP)/Parimatch (BetVictor)/Rushbet.co (no UK licence) |
Leeds United |
Bet365 |
Leicester City |
HTH (TGP), Lovebet (Vivaro), Parimatch (BetVictor), W88 (MidnightGaming) |
Man City |
Marathonbet |
Man Utd |
HTH (TGP) |
Newcastle |
Bet365, Boylesports |
Southampton |
Parimatch |
Tottenham Hotspur |
William Hill Fun88 (TGP), Betway |
Wolves |
Bet365, Boylesports |
Other Premier League clubs unknown |
|
Precedent in other European countries
The English game is following Italy and Spain. Italy introduced a ban on gambling sponsorship in sport in July 2018. All existing advertising deals had to end by July 2019. In Spain, the ban was introduced in November 2020. In both countries betting partnerships with overseas operators are still allowed. In May 2022 Belgium became the latest country to announce a gambling advertising ban, effective by the end of the year.
It is too early to assess the financial impact on football clubs in Spain but some conclusions can be drawn from Italy.
When the ban was announced the Italian football authorities said that it could be ruinous for clubs, claiming commercial revenue, notably shirt sponsorship monies, would be severely reduced. The Italian Football Federation (FIGC) also argued that the television deal would be impacted because broadcasters’ ad revenues would be down due to the gambling ban.
The pandemic and its financial consequences – costing an estimated €500m - led to the FIGC asking for the ban to be suspended until 2023. This was rejected by the Italian government.
There is evidence that the FIGC overreacted slightly. Shirt sponsorship revenues have actually increased post ban by more than €20m, although the market is skewed somewhat by Juventus’s €45m agreement over three years with Jeep. Only two clubs, Roma and Lazio, lost sponsorship deals with betting firms. Lazio remain without a sponsor.
Serie A did suffer a slight dip in TV revenues when the broadcast deal came up for renewal. The league will receive around €927.5 million (US$1.13 billion) down from €973 million (US$1.18 billion) per year. Overall club revenue has decreased. Both these factors have been blamed on the pandemic, however, not gambling sponsorships.
The argument that the loss of gambling revenue is a significant financial blow doesn’t quite ring true. Italian football’s main issue – like most leagues – is clubs spending beyond their means. In 2019-20, five from 20 Serie A clubs (Sassulo, Napoli, Udinese, Genoa, Atalanta) returned post-tax profits.
In Spain, eight La Liga clubs and three Segunda (second division) clubs had to find new main shirt sponsors because of agreements with bookmakers. Only one (Alaves) did not have main shirt sponsor for 2020-21.
How La Liga clubs moved on from gambling
Levante Betway to Gedesco (finance)
Real Betis Betway to Finetwork (mobile network)
RCD Mallorca Betfred to aGEL (technology)
Sevilla Marathon Bet to NAGA (social trading)
Valencia Bwin to socios.com (cryptocurrency).
Segunda Division
Espanyol Betway to Riviera Maya (tourism)
Leganes Betway to Urbas (real estate)
Girona Marathoin to Gosbi (animal respect campaign)
How will the gambling industry react to increased restrictions in England?
The industry is resigned to a ban on shirt sponsorships in English football. And there would not be huge surprise if there was a blanket ban on television advertising and hoardings at stadiums.
What will the operators do to remain visible or to ward off the latter?
There is an archaic precedent in how tobacco firms reacted to the sports sponsorship ban in the 1980s. Tobacco giant Philip Morris‘s Marlboro brand was the main sponsor of Ferrari in Formula One. It maintained its relationship and influence by setting up a corporate and social responsibility project called Mission Winnow. It replaced Marlboro logos with Mission Winnow branding.
The same has happened in football with gambling sponsors. In a pre-emptive action the Entain group (which includes Ladbrokes and Coral) “pulled out of sponsorship of football in the UK”. Instead it set up ‘Pitching In’, a corporate social responsibility (CSR) model to sponsor the Isthmian, Northern Premier and Southern Leagues.
William Hill’s foundation supports Scottish football’s ‘Support Within Sport’ initiative, helping to increase mental health awareness and education.
It is possible that to retain some advertising rights, gambling operators may offer a levy to pay into a community fund to assist with grassroots projects and other CSR initiatives. In France, both lottery games and sports betting revenues directly contribute to the budget of the National Sports Agency, which in turn subsidises sports clubs at a local level.
This would tie in with the theme of clubs being strengthened as community assets by the recent Fan-Led Review of Football. Monies could be distributed by any of the several leagues, funding and regulatory bodies in football. Again, there is precedent for this sort of arrangement when Sport England and UK Sport distributed Covid contingency funds.
How will football react?
Just as the gambling industry saw what was coming, so did football. In 2017 the Football Association ended a £4m deal with Ladbrokes barely a year into its agreement. There has already been a significant drop in gambling-related sponsorship in the sport.
A 2021 study found that gambling sponsorship of football teams had more than halved as a proportion of sponsorship revenue from 32.7% to 15.2% two years ago.
In addition, the construction & engineering, automotive and financial services sectors have all overtaken gambling as the most prevalent category sponsor across the 221 sports teams analysed in the 13 different leagues/competitions.
Individual football clubs have not only started to plan without gambling funds, but reject them. Crystal Palace replaced W88 (who reportedly paid £6.5m a season) as shirt sponsors with car sales company Cinch for the 2022-23 season. Newcastle United have ended their shirt sponsorhip with Fun88 two years early, although it is understood the change was primarily due to being able to attract more money. Everton, however, were criticised for a 'record deal', with Stake.com.
Bolton Wanderers and Tranmere Rovers, of League One and League Two respectively – exactly the sort of clubs that could be considered at most risk when denied access to a type of sponsor – have imposed bans of their own. This includes shirt sponsorships and betting kiosks inside the ground.
At that level, a front of shirt sponsorship deal is understood to be worth up to £200,000, back of shirt sponsorship is £20,000 and betting kiosks up to £20,000 as year.
Although these sums are large for clubs of this size, there is little evidence or indeed a belief within the industry, that replacement sponsorship cannot be found.
Tranmere have a shirt deal estimated to be worth up to £150,000. With an extra £50,000 on offer from a gambling firm, the most significant consequence of the smaller deal might be signing one less player to their squad. Or one-and-a-half players if back of shirts and betting kiosks are included.
Football clubs’ marketing teams will react by being more flexible to find alternative sponsors. They may be inclined to work more closely with local business, strengthening community ties. This was a theme of the fan-led review into English football with the government expected to issue a white paper in the summer of 2022. I Trust Sport spoke with football executives, and this was a strong theme. Likewise the idea that the sport had become ‘lazy’ when taking the ‘easy’ option of money from a bookmaker.
In addition, football marketing teams have had plenty of warning about what is to come and plan accordingly. The argument is the same for the English Football League, who are worried that their £40m title sponsorship arrangement with Skybet may not be replicated. The clubs share that concern.
But how real is it? Currently around £450m of central revenue is shared between the 72 league clubs. Around half of this is parachute payments for relegated Premier League clubs. The rest is largely made up of broadcast money and is distributed on a weighted basis. Championship clubs receive around £7m, League One clubs £1.6m and League Two clubs £1m. There would have to be a significant drop in value of title sponsorship for clubs to suffer hardships beyond not signing an extra player to their roster.
That goes to heart of the Fan-Led Review, which was set up to help clubs, seen as community assets, survive by not spending beyond their means. Recommendations include checks on financial plans and restrictions on wages as a proportion of turnover.
Cryptocurrency
A ban on gambling sponsorship/advertising could be a case of ‘better the devil you know’. Into the void left by betting operators have stepped cryptocurrency companies. Unlike the gambling industry, crypto is unregulated.
Inter Milan, the Serie A club, changed their shirt sponsor from Pirelli for the first time in 26 years to cryptocurrency firm socios.com. The Pirelli deal was reported to be worth more than €10m but Inter were said to have been seeking €30m for their new arrangement.
Socios.com also sponsors the shirt of Spanish team Valencia, replacing the bookmaker Bwin. Bwin were understood to have paid €4.8m for three years. It is not clear what the new deal is worth but playbook.com have reported it being for half the sum over one year.
Both Inter and Valencia advertise their own team’s tokens on their shirts. These tokens can be purchased by fans in return for ‘decision-making power’, such as what colour scarf the manager might wear at a match. Up to several million tokens are sold at a time, usually for a few pounds each. The clubs get half the money, and Socios take half.
Fourteen of the Premier League's 20 clubs have one or more commercial deals with companies operating in the cryptocurrency sector, despite supporters’ groups concerns about the exploitation of fans and the absence of regulation. Socios.com has agreements with six clubs.
There is an argument that clubs are encouraging people to ‘bet’ by a different name without any form of checks and balances.
The lack of regulation has already caused problems. Manchester City suspended their relationship with cryptocurrency start-up 3-Key when the club were unable to clarify who owned the company. But City have partnerships with three other firms. Barcelona also ended a similar deal with Ownix.
Concerned by the situation, the Financial Conduct Authority has sought to remind fans that there is no regulation. Charles Randall, the FCA's chairman, has compared cryptocurrency to 'get-rich quick' schemes. He made it clear that buyers should be wary. ‘These tokens are not regulated by the FCA … If you buy them, be prepared to lose all your money.'
How do cryptocurrency deals work?
- A company like Socios charges fans for ‘influence’, although the votes they offer on club policy are minor
- The more fan tokens you buy in a club, the more votes you are allowed
- The cost of tokens depends on supply and demand so they go up and down. This is why it is similar to gambling in its purest form because people trade on that volatility
- The cryptocurrency companies own the vast majority of the currency. By partnering with football ‘brands’ they are fuelling that currency
Premier League cryptocurrency partnerships 2021-22
Club |
Cryptocurrency |
Arsenal |
Socios.com/Etoro |
Aston Villa |
Socios.com/Etoro |
Brentford |
Coinjar |
Crystal Palace |
Socios.com |
Everton |
Socios.com |
Leeds United |
Socios.com |
Leicester City |
FBS |
Man City |
Axi.com, OKX.com, Socios.com, |
Man Utd |
Tezos |
Newcastle |
Etoro |
Southampton |
Learncrypto.com |
Tottenham Hotspur |
Libertex |
Watford |
Bitci |
West Ham |
PeakDefi |
Will the black market benefit?
During a March 2020 debate on gambling advertising, Nigel Huddleston, Minister at the Department for Digital, Culture, Media and Sport (DCMS), said if licensed gambling operators’ ability to advertise was removed, ‘we would undermine our ability to ensure that gambling is conducted in a fair and open way, that it remains crime-free, and that children and vulnerable people are protected.’
What he meant was that instead of people betting on a regulated market, they would move to an unregulated one. The grey and black markets. A gambling ban might result in loss of control over where people bet.
The Betting and Gaming Council (BGC) subsequently warned that British players using black market websites to place bets had doubled, according to a study they commissioned that was conducted by PwC.
From data collected during November and December 2020, PwC found that money wagered with unlicensed operators went up from £1.4bn to £2.8bn, compared to a similar study in 2019.
The report also found a rise in customers using offshore websites, despite these platforms being less visible on search engines and with little evidence of growing public awareness of ‘black-market brands’.
Could it be that the rise in black-market wagering had something to do with Premier League clubs signing up to betting companies via white-label agreements?
An argument that a ban would fuel black market gambling is an emotive and useful one for the regulated industry, particularly as, through the same report, they can point to a similar rise in Italy. The BGC has been more vocal about the dangers in the Spring of 2022 yet not all inside the industry believe there is a credible threat.
In real terms there is unlikely to be a spike in numbers ‘migrating’ to offshore accounts. A ban hurts the ‘visibility model’ of the ‘white label’ operators in the grey markets more than the established, high-street and online names. Most recognise that the latter are deeply entrenched in the psyche of the UK gambler.
Italy is not considered a comparative market. It has been heavily regulated, has a high-tax regime and is not competitive for gambling. A handful of old-fashioned ‘retailers’ and online firms have dominated which has been an open invitation to more agile foreign operators.
What may happen is an increase in the ratio of grey and black-market gamblers to regulated users, insofar as the latter see a dip post-ban. This is likely to be the case, however, with one significant assumption: a ban on betting partnerships.
Do unlicensed operators pose an integrity threat?
There is no suggestion of any wrongdoing in a current partnership between a club and an unlicensed betting partner or sponsor. But such arrangements have the potential to be considered a risk to football’s integrity.
This is because unlicensed operators, those who have white-label agreements to validate commercial deals with the UK’s Gambling Commission, operate in the grey or sometimes the black market. The white, grey and black markets can be categorised by the United Nations Office of Drugs and Crime (UNODC) as the following:
White market: operators legally able to operate in all jurisdictions in which they take bets
Grey market: betting operators licenced in at least one jurisdiction but take bets in areas where the betting product is illegal
Black market: unlicenced betting operators that operate in multiple jurisdictions and can be understood as a form of transnational organised crime
In its 2021 Global Report on Corruption in Sport report the UNODC calls the licencing framework for the grey market ‘opaque’ and argues that because such operators take bets from all over the world, it is hard to determine which are legal and which are not. They have only an online presence and it is difficult to know where the company is based or who runs it.
An investigation by The Times raised concerns about Manchester United’s betting partnership with Hua Ti Hui, a white label operation via the Isle of Man based TGP.
Everton’s ‘Asian betting partner’ agreement with i8.BET also came under scrutiny. Who owns the company, where it is based and evidence of operating in countries where betting is illegal were discussed in an investigation.
In 2020 Everton ended their agreement with another betting partner, SportPesa based in Kenya. An investigation by The Guardian newspaper found that SportPesa had not paid tax on profits, had been suspended by the Kenyan government and its founder had been linked to organised crime.
Why such corporate entities are attractive to football clubs may be purely a question of money. These types of betting companies are attracted to football because it gives their business visibility and association with a glamorous product.
The UNODC says that regulation and transparency is a huge problem in the grey market. In its 2021 Global Report on Corruption in Sport it directly links the industry to money laundering and organised crime:
‘Illegal betting operators are subject to none of the anti money-laundering oversight measures present in the legal betting or financial industries (notably some of these measures are used by transnational organized criminal groups to make proceeds of crime appear to be profits from licenced betting operations)’.
The report goes further directly linking sponsorship of sports team to organised crime. Sometimes that sponsorship is ‘fake’. ‘They facilitate money-laundering through sports, such as using proceeds of crime to buy a sports club, to invest in transfers and to provide sponsorship, and through sports-related betting’
This is not new. In 2009 the Financial Action Task Force issued a report entitled “Money Laundering through the Football Sector”. It identified money-laundering methods as ‘investment in and ownership of football clubs, the control of player transfers and player image rights, betting activities, sponsorship and advertising.’
It goes further, explaining how a grey market offers the opportunity for betting-specific corruption. ‘Products and prices are seldom controlled and in many jurisdictions operators may not be obliged to conduct due diligence regarding the profile of bettors and the origin of money, or to ensure that moneylaundering, manipulation or betting addiction risks are assessed and managed. In this context, it can be easy to place a high number of fraudulent bets on a specific match, use cryptocurrencies as a means of payment and avoid detection by selecting favourable operators and jurisdictions and disseminating the bets across them.’
Conclusions
Shirt sponsorship ban
The argument for a betting sponsorship and advertising ban in football centres on problem gambling. Few can argue that it is not an issue worth tackling.
As a result sports governance consultancy I Trust Sport – just like the majority of the football and gambling industries – believes it is inevitable that shirt sponsorships are outlawed. This is the minimum restriction likely from the Gambling Review.
Football clubs will probably be given a period to adjust and plan. This could be as short as 12-18 months or timed to coincide with the end of the EFL’s title sponsorship with Skybet which runs until summer 2024.
Football finance
There is little evidence that football will suffer a financial crisis because of a betting ban. This is largely because gambling sponsorship is declining anyway and clubs have had time to adapt. There is an acceptance that they will need to be more agile in marketing.
The recent Football Fan-Led Review recommends an independent regulator and raft of financial safeguards, including a fairer distribution of wealth. For this reason it is unlikely the argument of financial hardship brought by sanctions will prevail.
In addition, if the gambling industry continues its recent shift to CSR projects to maintain its visibility in football, there is potential for a new source of revenue for the sport below the top tier.
Cryptocurrency regulation needed
Cryptocurrency companies are increasingly using football to advertise their product. Swapping gambling for crypto could be a case of jumping from the frying pan into the fire.
If the Gambling Review bans gambling companies on shirts for example, then it will do so to protect consumers from harm despite a regulated market and the safeguarding checks (which are likely to be fortified) that customers are afforded.
Cryptocurrency is completely unregulated and offers no safety net for consumers. In short, shirt sponsorships will not be available to a relatively ‘safe’ industry but will be open to one which the Financial Conduct Authority has issued grave warnings about.
The UNODC also has a warning: ‘The use of cryptocurrencies and cryptocurrency mixing services in the context of illegal betting are also an emerging issue. They offer a reliable and almost untraceable international money transfer mechanism that can be used for betting purposes, as many betting sites now accept cryptocurrencies as a form of payment.’
It should not be ignored that cryptocurrency trading is gambling. And it has the potential to be as addictive and harmful as sports betting.
The collapse of Football Index in 2021, a stocks and shares-style football trading model, which saw customers lose huge sums of money, was not a traditional sports betting model and could be seen as a warning to the future if cryptocurrency comes to the fore.
The lucrative cricket competition, the Indian Premier League, has banned cryptocurrency sponsorships.
With gambling sponsorships considered ‘unethical’, and now increasing focus on cryptocurrency, football (and sport in general), may require a collective discussion about what sort of sponsorship is acceptable.
Ban white-label betting partnerships
Partnerships between football clubs and gambling operators operating in the grey market are an integrity risk. The UNODC is quite clear about the nexus with money laundering and criminal organisations.
The Gambling Review should seek to outlaw such agreements, either with a total ban on all betting partnerships or disqualifying white-label licence holders.
