H2 Gambling Capital: Liberalisation of sports betting markets leads to improved channelisation
Research claims missed opportunities in terms of tax dollars and leakage to black market are as a result of truncated sports betting markets in nations such as Germany and Australia
A new study from H2 Gambling Capital has reported a “strong correlation” between the liberalisation of regulated sports betting markets and a growth in channelisation rate across three continents.
Titled ‘The Availability of Sports Betting Products: An Economic and Integrity Analysis’, the report was commissioned by by the International Betting Integrity Association (IBIA), and investigated the impact that a wider availability of sports betting products has on sports integrity, consumer protection and tax revenue globally.
The study was developed in conjunction with the Brazilian Institute of Responsible Gaming, Canadian Gaming Association, Dutch Online Gambling Association and Responsible Wagering Australia, and its conclusion is based on data harvested from sports betting operators, combined with alert data from IBIA and market data from H2 Gambling Capital.
H2 Gambling Capital analysed the impact of restricting sports betting markets as opposed to their liberal regulation, and what effect this has on consumer protection, regulatory supervision, taxable revenue, the markets and the integrity of sport as a whole.
H2 Gambling Capital noted a wider availability of sports betting products directly related to an increase in channelisation, and in turn, reduced the risk of the public’s exposure to unregulated, black-market operators.
The report highlighted that the more popular sports such as football and tennis and their respective betting markets have a disproportionate impact on the channelling rate.
The study also noted the availability of in-play betting, prop markets and side markets, such as corners and fouls, all had a “very significant impact on channelling”.
The IBIA said that the findings contrast with assumptions that these markets bring a heightened risk of match-fixing betting fraud.
The H2 Gambling Capital report also detailed out some key findings from across the markets in which it had partnered with the various aforementioned trade bodies.
In 2024, the global sports betting industry is predicted to be worth $94bn in gross win, and approximately $132bn by 2028, with over 70% ($93bn) of that generated online.
The report also predicts that around 47% of all online sports bets will be placed in-play this year, with that share climbing to 51% by 2028.
Looking at specific markets and the subsequent channelisation rate, the report noted the highly liberalised UK had a channelisation rate of 97%, streets ahead of other nations.
This contrasts with Portugal (79%) which restricts football and tennis betting markets, Australia (75%), which prohibits online in-play betting and Germany (60%) where football, tennis and in-play bets are limited.
H2 Gambling Capital said these “depressed onshore channelling rates” also have significant implications on tax revenue and market oversight.
For example, the study forecasts that Australia would stand to gain an additional $1bn in incremental tax revenues, and Germany an additional $400m, over the next five years if they were to permit online in-play betting markets alone.
In restricting access to the main football betting markets between 2024 and 2028, Germany and Portugal are predicted to miss out on a combined $750m in taxable revenue.
The Netherlands could experience a $118m increase in tax revenue over the next five years if it allowed access to football side markets such as cards and corners, while Portugal would benefit from an extra $122m in tax revenue over the same period if it permitted availability of ITF tennis betting products in alignment with Italy and Spain.
Elsewhere, in the case of Brazil, which is set to launch a regulated sports betting and igaming market later this year, the report noted that should “stringent product restrictions” be put in place, it could result in $18bn being wagered offshore.
Khalid Ali, IBIA CEO, said: “While politically attractive, the study clearly demonstrates that bet restrictions are a blunt and counterproductive instrument. They don’t prevent betting; they just drive it into the unregulated market where most of the problems with sports integrity arise.
“The conclusions are clear: if you want to protect consumers and sports from corrupters, while maximising tax revenues, then allowing a wide range of sports betting products is essential.”
David Henwood, director at H2 Gambling Capital, added: “We always turn to data. There is a lot of conjecture 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 results of the study reinforce this point of view. Limiting the choice of onshore betting types – including live – is basically counterproductive. Instead, the markets most successful in limiting offshore play – evidenced by a pipeline rate of over 90% – are those that have generally opened up their onshore offering to a wider choice of products. There is a lot that can be learned here in terms of best practice regulation.”