## The Ascent of Digital Finances and its Effect on Sports Wagering Honesty
Digital monetary systems have seen a dramatic increase in acceptance in recent times, affecting sports wagering and other sectors. Jack Byrne, representing the International Wagering Integrity Association (IBIA), examines the potential risk to sports honesty and potential solutions to address match-fixing.
Since the introduction of Bitcoin in 2009, digital currencies have made significant progress. They have moved beyond their initial stages and are now a standard method for buying and selling a wide range of goods and services, from everyday items to luxury purchases, even financing recreational activities such as sports wagering.
While digital currencies were initially primarily used by technology enthusiasts and students, they are experiencing rapid expansion. Tech-savvy individuals born between the early 1980s and the late 1990s, and those born between the mid-1990s and the early 2010s, are driving the number of global digital currency users to over 100 million.
This surge in demand, coupled with the anticipation of future growth, has propelled Bitcoin’s value to over $60,000 in April 2021. The total value of Bitcoin in circulation surpassed $1 trillion at the same time, representing a 200% increase from early 2020.
Sports wagering is becoming more innovative… and so are methods of sports manipulation.
Emerging enterprises have recognized this pattern, with the desire for consumers to finance their accounts using digital currency in the sports wagering sector, leading to the development of a parallel industry. More than 120 operators are operating outside of regulated markets in Europe or the United States, providing Bitcoin payment solutions, with over 25 operators offering “end-to-end” services exclusively in cryptocurrency. This expansion of the crypto sports betting market has the potential to influence the extent of sports and betting-related fraud.
This established industry has undergone a complete metamorphosis through technological innovation over the past two decades. As the variety of what can be wagered on, how bets are placed, what is being wagered on, and how financial transactions are conducted have changed, so too have the methods in which sporting events can be manipulated.
In recent years, advancements in data gathering and real-time data transmission technology have resulted in continuous enhancements in customer service, a wider array of markets and events available to bet on. While this enhanced service has improved the customer experience, it has also created new opportunities for a small number of individuals who are determined to manipulate sporting events for financial gain.
Although sports manipulation might be the responsibility of athletes, officials, or any group of individuals, the modern approach to manipulation assumes a networked organization consisting of individuals with diverse roles. These roles include manipulators, gamblers, money launderers, agents, and club officials and leaders.
This method must benefit a wide range of parties. It benefits from the ability to place large sums of money on predetermined outcomes across various betting companies, both in regulated and unregulated markets. Additionally, new technologies facilitate swift and inexpensive communication and financial transfers.
A hierarchical network is essential, with the goal of shielding different parties from detection. Most importantly, for an organization, it must ensure that gamblers and players are not connected and that players do not wager on their own games. This is easily detected, particularly by betting companies in regulated sports betting industries, which have robust KYC and risk management procedures, as well as processes for reporting suspicious activity to relevant regulators and sporting organizations.
On cryptocurrency sports betting websites, the anonymity of the gambler has altered the method of match manipulation. This is because there is no requirement for identification to create an account, nor is there a direct link to the owner of the cryptocurrency wallet used to fund it.
The increased anonymity has simplified manipulation.
Although extensive match-fixing rings might persist in a comparable structure to the framework, a different strategy is likely to have emerged and will continue to exist concurrently, operating on a smaller scale, due to athletes or officials effortlessly and directly wagering on their own contests using newly discovered opportunities without concern about their identity being connected to the wagers placed.
While the anonymity provided to bettors could be viewed as similar to the agent systems associated with the uncontrolled Asian sports gambling market, the cryptocurrency sports betting market can serve as a more readily available alternative to this market, providing not only anonymity but also the convenience of direct, immediate betting, wagering with online operators rather than using agents or online brokers, who often have to utilize information services to place bets and provide personal details.
Moreover, while sports betting firms in the unregulated Asian market frequently accept higher stakes than elsewhere, the capacity to place substantial bets could also increase as the adoption of the cryptocurrency sports betting market expands and casual betting grows, as cryptocurrency sports betting companies raise their betting limits to accommodate genuine high rollers and offer more appealing products than their rivals.
Its true, although crypto sports betting and the unregulated Asian market are viewed as separate entities, the acceptance of digital currency as a payment method by online brokers before regulated markets, due to the increased privacy, could further enhance the probability of fraud associated with wagering.
Can information be the solution?
Thus, the increase in digital currency usage and the growing demand for crypto-only sports betting presents a challenge for the regulated sports betting industry, where incorporating digital currency payment solutions may be viewed as essential to retain and attract crypto-enthusiast customers. In fact, some regulators are developing a structure that permits operators to integrate digital currency payments into their products. Early indications suggest that customers will need to register their identity and link it to their crypto wallets, which would be understandable and inevitable, although possibly through third-party providers or crypto token mechanisms.
While this is a responsible step, for understanding customer due diligence and anti-money laundering purposes, it highlights the predicament faced by the regulated industry. If the popularity of digital currencies and the demand for them, as well as their use in sports betting, is connected to the relative privacy of the system, will there be a negative effect on the demand for using digital currencies in sports betting markets where KYC requirements are in place?
Indeed, if cryptocurrency gambling participants stay outside of controlled marketplaces, the potential for a fresh, player-driven way of match manipulation raises numerous inquiries for infrastructure designed to identify and address sports honesty problems. Although these inquiries may be challenging to resolve, the answer may reside in the regulation of the data supply for cryptocurrency sports wagering businesses.
Perhaps there should be a limitation on who can provide this data, so that methods of detecting match manipulation remain effective, as data providers allow cryptocurrency betting companies to offer betting markets similar to regulated operators within an uncontrolled and unclear environment.
Jack Byrne has over a decade of experience in the sports wagering sector and joined the International Betting Integrity Association in early 2021. As an Integrity Analyst at IBIA, Byrne is responsible for examining suspicious betting activity reported to the association by its members, which include sports betting operators in regulated betting markets, as well as recognizing trends and evaluating the future risk of betting-related fraud to sports.
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