By Prof Dr Steve Cornelius, Sports Law Centre, Pretoria University, South Africa
The ‘Cape Cobras’ cricket franchise, which is based in Cape Town, South Africa, has recently announced that online sportsbook company, World Sports Betting, has entered into a three-year deal to be the title sponsor of the ‘Cape Cobras’ (http://www.capecobras.co.za/cape-cobras-confirm-world-sports-betting-new-team-sponsor/).
This news was reported in the South African media in much the same way that any other sports sponsorship deal has been reported in the past. Strangely, in a sport that has a tragic history of match-fixing and corruption related to gambling, this sponsorship should have triggered alarm bells for gambling authorities; Cricket South Africa; journalists; and cricket fans. But, it did not!
So why should anybody be concerned if World Sports Betting is the title sponsor of the ‘Cape Cobras’?
The problem is that World Sports Betting declares itself to be “the top cricket sportsbook in South Africa, offering hundreds of pre-match and live in-play markets on all major matches”. A sportsbook takes bets on the outcomes and other eventualities of various matches played in a particular league. As such, there can only be faith in the integrity of the betting process if the sports book is completely independent, so that it cannot in any way have any potential influence on the outcome of any of the matches concerned; nor should any of the participants in the league have any influence on the odds that are offered. Furthermore, to ensure a level playing field between the sports book and the punters placing bets, it is also vital that, neither the sports book, nor any punters, should have access to information which is not reasonably at the disposal of all concerned.
It is important to remember that sports sponsorship is not an altruistic gesture. Sponsorship is a marketing strategy, which is generally employed after a careful cost/benefit analysis. It is not merely a donation of funds to a sports franchise. Sponsorship is a reciprocal contract in which one party, the sponsor, agrees to pay a sum of money and/or deliver certain goods or services to another party, the beneficiary, in return for certain commercial marketing rights which the beneficiary awards to the sponsor. These rights include naming rights; advertising on team kit; and stadium advertising. But it also often includes hospitality rights and access to players for marketing purposes. And certainly, it involves a relationship in which the sponsor and beneficiary needs to interact on a regular basis for the duration of the sponsorship contract. The sponsor has a clear interest in the success of the beneficiary. This means that a sponsor is not merely an independent observer. A sponsor becomes a participant in the sport and leagues in which the beneficiary competes.
This interest, in itself, poses an insurmountable conflict of interest when a sports book becomes involved as sponsor of a team in a league on which it takes bets. On the one hand, a sports book taking bets on matches in a league should be independent to ensure objective analysis and determination of odds. On the other hand, a team sponsor has a clear interest in the success of that team and cannot claim in any way to be independent. This alone should preclude sports books from becoming involved as team sponsors.
This conflict of interest can be explained in more practical terms: normally, the relationship between a sponsor and a sports franchise is aimed at maximising results for both the sponsor and the franchise. The rationale is that if the team performs best, it will attract more fans and spectators, giving more exposure to the sponsor, which, in turn, is aimed at increasing sales and profit for the sponsor. In short, it is a win-win outcome for everybody.
Conversely, if the team performs poorly, spectators will dwindle, disgruntled fans will stay away and the sponsor gets less exposure, reducing the return on its investment. However, where a sports book is the sponsor of a sports franchise, this formula is turned on its head. For a sports book to maximise its profit, it must encourage punters to bet on unsuccessful teams. If too many punters bet on the winner and too few bet on the loser, it could have a substantial impact on the profit of the sports book. Sports books and other bookmakers offer different odds on favourites and underdogs to encourage betting on losing teams, thereby maximising profits. In other words, for a sports book, the most unattractive scenario is a successful team with massive numbers of fans who place bets on that team. The most attractive scenarios for a sports book are a losing team with lots of fans still betting on that team to win, or a winning team with fewer fans betting on that team to win. Therefore, where the sportsbook is also a sponsor, it cannot both promote the success of the team and the fans and spectator following of the team. It must either discourage success or discourage fans and spectator support. This is a win-lose outcome.
Of course, sportsbooks do not only take bets on the outcomes of matches, but also on other eventualities during a match, such as with spread betting. But it cannot be denied that betting on outcomes is a major part of their business and, in any event, the same principles will also apply on in-match betting. Normally, a sponsor and sports franchise will work together to promote the most stable and consistent performances to achieve success and build fans and spectator support. However, the most attractive scenarios for a sportsbook are either stable and consistent performances with fans and spectators expecting and betting on the unexpected, or inconsistent performances with fans betting on consistency. Again, a win-lose scenario. Simply put, the sports franchise will aim for consistent performances, greater success and increased fans and spectator support. A sportsbook, on the other hand, strives for one, but not the other.
Secondly, if a sports book stands in an intimate relationship with one team in a league, there can be no confidence that the odds it offers to punters are determined fairly and objectively. A team sponsor regularly has, at the very least, potential and more likely actual access to information relating to the franchise, which will not be readily available to the general public. As such, there is at least the potential that odds can consciously or unconsciously be fixed based on this information.
Furthermore, when a sports book becomes involved as a sponsor of a team or a league, this immediately places the results in that league in question. Professional sports franchises rely quite heavily on sponsorship and it is not at all conceivable that an unscrupulous operator can abuse the relationship to manipulate the outcome of or the run of play in a match.
None of this is by any means intended to imply that World Sports Betting is engaged in any unscrupulous activities. But the conflict of interest is undeniable; the potential for harm is clear; and the integrity of the betting process is inevitably compromised as a result. It does not matter if they adhere to the highest ethical standards, the potential for harm and the perception of possible manipulation, even at the most insignificant level, is certainly there. In fact, a company which adheres to the highest ethical standards would have realised the conflict of interest and would, arguably, have avoided it altogether. This alone reflects poorly on corporate governance within both World Sports Betting and the ‘Cape Cobras’ and is a major cause for alarm and concerns.
The only transparent and ethical way in which these various concerns can be addressed, is if World Sports Betting does not offer any markets on leagues, in which the ‘Cape Cobras’ participate, or if World Sports Betting and the ‘Cape Cobras’ agree to terminate their relationship!
Prof Dr Steve Cornelius may be contacted by e-mail at ‘email@example.com’