Bookies' World Cup bonanza is wake-up call for regulation
The Boys in Green may not be there, but Irish football fans can't wait for the World Cup to kick off in Brazil on June 12. It's a fantastic spectacle that anyone with a passing interest in the game can enjoy.
And this time round, it looks set to be a record bonanza for bookmakers as billions of euro is gambled around the world. Thanks to innovative new online gaming products and smartphones, punters can place sizeable bets, not just on the outcome of a match, but on the number of corners, who will score – and they can change their mind during the match.
The technology and gaming habits have moved on so much since the last World Cup that bookmakers in Ireland and the UK are expecting it to be the most lucrative sporting event ever.
William Hill is expecting to turn over £200m (€250m) on the World Cup, double last time round. Paddy Power is also expecting to double turnover to €160m. Mobile technology makes it easier for customers to place bets, and then gamble even more by availing of multiple bet options.
TV advertisements showing guys betting on a mobile device while in the back of a taxi are already on our screens.
Despite the explosion in online gambling, the Irish Government has yet to set up an adequate regulatory framework. The contrast between applying for a gaming licence in Ireland versus the UK could not be greater. In Ireland, the relevant legislation dates from 1931 and 1956. If you want to apply for a licence here you apply to the Department of Justice saying you are a fit and proper person to hold one. You also register for tax and get a tax clearance certificate.
In the UK, the Gaming Commission has a rigorous vetting process which is aimed at protecting customers and being utterly vigilant about money laundering or criminality. There the commission wants evidence of detailed facts, which allow it to carry out an assessment against identity and ownership, finances, integrity, competence and criminality.
Dublin-based business consultant Michael Flynn has international experience in gaming regulation. He said the UK approach is very rigorous and they seek "a detailed business plan with projected accounts and cash flows; they need to know about software, hardware, security systems and training; full details of the last five years of group business relationships and a lot more."
"There is a need for every licence applicant to have performed a risk evaluation of their business to determine its exposure to money laundering and terrorist financing," he said.
In Ireland you are looking at a statement of fitness from a garda superintendent and a tax certificate.
The good news is that the big Irish players, like Paddy Power, are very often regulated from places like Malta or Gibraltar, where there are already good regulatory environments in place. In fact, Paddy Power in particular has been a strong advocate of better regulation in Ireland as a way of developing the industry.
However, the completely outdated regulatory structure here does little to enhance Ireland's international reputation and fails to legislatively safeguard consumers' interests where they may have developed gambling problems.
The delays in putting a new regulatory structure in place are inexplicable, not least because bets placed online could also be taxed, bringing in revenue for the State.
An Oireachtas report published in 2008 (two years before the last World Cup) described our 1956 legislation as a "relic of social history" that is "utterly unsuited to effectively regulate gaming in a modern wealthy European state. When it was enacted, foreign travel was rare, the first Planning Act had yet to be passed, bingo was called pongo and much of the Oireachtas debates concerned protecting the livelihoods of persons providing gaming at carnivals."
A July 2008 Department of Justice report said a new code was needed with the objectives of protecting young people and the vulnerable, ensuring that gambling is fairly and openly conducted, and keeping gambling free of crime.
Last year, Alan Shatter managed to bring a general bill to the Oireachtas but there is still no adequate regulatory structure for the sector. Regulation is decades behind the fact that somebody can bet and lose a large sum on a football match in another part of the world, while going home in a taxi.
Time differences with Brazil will mean lots of matches late in the evening, with lots of chances to bet. Bookmaker earnings from the likes of the World Cup will be so big because betting on football is a combination of randomness (how many corners, etc) or punters placing bets on their favourite players scoring goals. It's a combination of a flip of a coin and blind optimism.
The technology now exists for gaming companies to target market specific bets to specific punters based on what players they like. Accumulator bets are now massive and tend to favour the bookie a lot more. Profit margins are better for gaming companies, because football gambling is more top-of-the-head stuff.
Having said that, it doesn't mean you cannot win. Of course some people will win, some of the time. Bookies are presenting the bets as an entertainment-enhancing activity. And it is – some of the time.
It has been six years since the complete failure of light-touch regulation in banking. It has also been six years since the first government report on the need for regulation in betting.
Yet we don't even have light-touch regulation in the sector. We don't have real regulation at all.