[AusRace] From MorningMail

[L.B.Loveday]

Have a punt now and then?

As one who never punts, wouldn’t even know how to place a bet, I thought
some punters, occasional or frequent, might be interested in how and where
huge sums of your money goes? The betting business is a large cheese with
many holes and even more mice nibbling away getting their share of the
available bounty. This article is long and very informative.

The barrage of blokey ads. The sponsorship signage. The steady drip of
endorsements by smiling sports stars. Online betting giants are pumping
millions into the battle for the minds and wallets of Australian punters,
with a singular aim: making you reach for your phone.

Sportsbet’s big punt

Source: 7.30 Paul Farrell, Inga Ting and Amy Donaldson

Now a 7.30 investigation can reveal details about the powerful machinery
behind one of the country’s leading sports betting operators - a company
that has spent nearly half a billion dollars over five years on endeavours
aimed at tightening its grip on this rapidly growing market.

“Companies spend this amount of money on marketing because it works,” said
Samantha Thomas, a leading researcher in gambling behaviour.

But the payments have also raised concerns about the integrity of some of
the deals, sparking calls for enhanced supervision of the activities of
betting operators.

A Sportsbet spokesman said the company had been a longstanding public
advocate for a reduction in wagering advertising.

A tangled web of influence

>From tech behemoths Google and Facebook to sports celebrities and television
personalities, professional sporting codes and even local sports clubs,
court documents obtained by 7.30 reveal a vast network of payments that have
helped transform Sportsbet into the most recognised gambling brand in the
country.

News/Broadcast

Affiliates

Tech

Sports clubs

Individuals

Other

$0.1M

$1.4M

$6.5M

$25M

Google Asia Pacific

$36.8M

Google Australia

$25M

Facebook

$18.7M

TCN-9 Sydney

$43.3M

Fox Footy Channel

$21.2M

Between January 2013 and June 2018 Sportsbet paid more than 1,500 entities a
combined sum of $490.5 million in marketing and promotional endeavours.

Each one is represented by a circle in the chart above. The bigger the
circle, the bigger the spend.

Among the entities is Quantium, a data analytics firm that National
Australia Bank supplies with de-identified customer transaction data from
all NAB account holders.

The company is part-owned by Woolworths and uses the NAB data to analyse
spending habits for all kinds of sectors, including online gambling.

A Sportsbet spokesman confirmed Sportsbet “uses data and analytics to
understand our market share and make informed business decisions.”

NAB’s privacy policy for its customers does not include any express
references to Quantium nor does it explain that transaction data could be
used by third parties like Sportsbet.

“I think most people would be pretty shocked to know that their bank is
sharing their transactional information,” said Lauren Levin, the director
of policy and campaigns at Financial Counselling Australia.

A spokesman from Quantium told 7.30 the company does not work betting
companies “following an update to our data ethics and usage policy
implemented eight months ago”.

He said the data provided to Sportsbet was a “high-level breakdown of the
sports betting market” and that it would be impossible to individually
target marketing.

An NAB spokesman said that it took customer privacy seriously and that the
transaction data provided is de-identified and encrypted.

He said that the information provided to Quantium was not considered to be
personal information subject to Australia’s privacy laws.

Murky legal territory

Sportsbet’s aggressive marketing strategy has potentially already breached
state gambling laws. 7.30 can reveal that in December 2018, Liquor and
Gaming NSW filed criminal charges against Sportsbet for four counts of
unlawful gambling advertisements on its website.

The regulator alleges the company has repeatedly offered unlawful
inducements like bonus bet offers - where new bettors are offered bets for
free - to new customers.

The company spokesman said the action relates to “legacy advertisements”
that were inadvertently left on a discreet section of the website following
changes to NSW law in July 2018.

The charges follow a period of rapid growth for the company. Between 2013
and 2016, Sportsbet’s promotional spending nearly trebled, rising from just
under $40 million to more than $110 million.

This fell slightly in 2017 to $101 million but in the first six months of
2018 had already exceeded $98 million, suggesting that last year may have
been its highest spend.

Sportsbet’s massive injection into marketing and promotion stands in stark
contrast to the resources available to regulate it.

Those resources mostly lie with Licensing NT, which manages the Territory’s
gaming industry. Sportsbet and other major gambling operators are registered
in the NT, which provides a generous cap on tax.

In the five-and-a-half years to June 2018, Sportsbet spent 2.5 times more
than Licensing NT’s budget for the six years to July 2018.

This budget is used to regulate all gaming, racing liquor, consumer and
trading activities in the Territory.

Sportsbet’s dramatic marketing spend also raises questions over whether the
company may have breached a new code of conduct, which it signed as a member
of Responsible Wagering Australia. The code states that all members “will
immediately advocate for further industry wide commitments to reduce the
volume of wagering advertising”.

The industry body can impose sanctions and penalties on members and can even
revoke membership in some circumstances.

A spokesman for Responsible Wagering Australia said Sportsbet was wholly
compliant with the code of conduct.

He said: “RWA and its members have also led the way on other significant
reforms aimed at addressing community concerns about wagering”.

Sporting stars in the spotlight

The documents reveal nearly $18 million in payments to about 400 community
associations, sports clubs and individuals, including sportspeople and media
personalities.

A number of payments - some of which may have breached sports integrity
rules - were made to high-profile players and others associated with
professional sporting codes, including a former NRL player and two AFL
teams.

“These sorts of payments need to be made transparent, they need to be made
public and they need to be explained to ensure that we’re upholding and
protecting the integrity of the sport and the athletes,” said Richard Ings,
a tennis integrity expert who is also the former vice-president of the
Association of Tennis Professionals.

7.30 previously reported that Christos Kyrgios, tennis star Nick Kyrgios’
brother, received $40,000 to engage in promotional activities for Sportsbet
in 2018, in what may amount to a breach of tennis integrity rules.

Among the transactions raising concerns is a $40,000 payment made in 2013 to
Romboh Pty Ltd, a company owned by former NRL player Trent Barrett.

During 2013 Barrett was assistant coach for NSW in the State of Origin,
prompting questions over whether he may have breached the NRL’s integrity
rules.

The NRL’s rule around gambling operators states: “No person bound by this
Code shall be sponsored, employed, contracted, engaged or otherwise
commercially involved in any way, whether directly or indirectly, with a
Gambling Operator”.

An NRL spokesman declined to release a copy of the full NRL integrity rules
to 7.30 and did not respond to questions.

Trent Barrett did not respond to questions sent via his manager.

Two Australian Football League clubs that received payments from Sportsbet
may also breach the AFL’s gambling policy.

Richmond Football Club received $91,480 from Sportsbet in 2015 and
Collingwood Football Club received $12,567 from Sportsbet in 2013.

Collingwood was listed as a sponsor on the club’s website, giving
Collingwood supporters a free $100 bet when they signed up. Court documents
filed by Sportsbet state that the club “has also been the official betting
partner of the Collingwood Football Club since at least 2012.”

A Collingwood spokesman said the club “has not been involved with Sportsbet
in any way since 2013”. The Collingwood webpage describing Sportsbet as a
sponsor and betting partner was deleted following 7.30′s queries.

The AFL’s gambling policy prohibits clubs, players and officials from
engaging in betting advertisements or promotions without the permission of
the AFL. The Collingwood spokesman declined to respond to questions about
the policy.

An AFL spokesman said: “Under AFL commercial operations guidelines, clubs
are entitled to enter into sponsorship arrangements with a wagering partner
if they choose”.

He added that no club in the AFL had a current sponsorship arrangement with
Sportsbet.

Tech giants’ share doubles in five years

The payments made to individuals pale in comparison to those made to tech
multinationals such as Google, Facebook, Twitter and Bing.

Google Asia Pacific

$36.8M

Adobe

$3.0M

Twitter

$2.9M

Google Australia

$25M

Facebook

$18.7M

The share of Sportsbet’s advertising and promotional budget going to tech
companies doubled between 2013 and 2017, rising from 13 per cent to 26 per
cent, or more than $25 million.

Google alone took $18 million in 2017 - nine times the spend in 2013 - while
in 2017, $5.6 million went to Facebook, compared with $820,000 in 2013. In
the five-and-a-half-years to June 2018, Sportsbet paid Google and Facebook
$61.8 million and $18.7 million, respectively.

Sportsbet’s strategy for promotion relies heavily on satirical videos
posted online, with the documents showing it paid $2.8 million to Twitter
and $2.2 million to YouTube in the five-and-a-half-years to June 2018.

Other social media platforms like Snapchat received more than $210,000 for
advertising.

The company has even advertised on dating platforms, paying $41,000 to
Tinder and $10,000 to Grindr.

Gambling researcher Samantha Thomas told 7.30 that children risked being
“swept up” in the saturated promotion of gambling on social media.

“One of our concerns in particular with social media advertising is that
it’s not visible to parents,” she said.

“They’re on tablets, they’re on mobile phones and parents may not be
aware of the extent to which children are being exposed to these promotions
on platforms.”

A spokeswoman for Google said: “We have robust advertising policies in
relation to gambling ads. If we discover ads that break this policy, we take
swift action.”

There is some evidence to suggest that Sportsbet’s advertising strategies
may have encouraged children to sign up with them. A recent decision by the
NT gambling regulator found that Sportsbet failed to verify the identities
of 1,500 new customers in 2015, which led to a minor being able to sign up
for a Sportsbet account. The Racing Commission described it as a “very
serious breach” and fined Sportsbet $13,000.

A Sportsbet spokesman said the company “directs its advertising to adults
and employs a range of sophisticated measures to ensure wagering advertising
does not target minors, including using age-gating technology across social
media platforms.”

Associate professor Thomas said research showed that gambling advertising
warranted a similar approach to the restrictions placed on tobacco
advertising.

“What we had with tobacco - that was clearly incredibly influential in
preventing the next generation of smokers - was a comprehensive framework
that regulated all types of advertising,” she said.

“At the moment social media is a little bit like the wild west.”

Such a framework might bring social media advertising more in line with
advertising on traditional media platforms like television and radio, which
is subject to strict rules on when ads can be aired and what they can say.

TCN-9 Sydney

$43.3M

Fox Footy Channel

$21.2M

QTQ-9Brisbane

$17.6M

GTV-9 Melbourne

$14.7M

HSV-7 Melbourne

$13.1M

And despite the surge in payments to tech companies, traditional media
companies continued to take the lion’s share of Sportsbet’s advertising
budget.

These companies reaped roughly 50 per cent of spend in 2017, up from 44 per
cent in 2013. In the five-and-a-half years to June 2018, broadcast networks
including Channel Nine together earned more than $270 million.

Your loss, their payday

Part of Sportsbet’s advertising strategy is an extensive network of more
than 600 “affiliate” websites. These third-party websites offer punters a
whole range of services such as tips on races or reviews of the major
gambling companies in Australia. Because they attract bettors, gambling
companies see them as a rich ground for potential customers.

Multi Channel - Online

$13.2M

Racenet.com.au

$9.2M

PuntersParadise

$6.4M

What isn’t always clear to bettors is that these affiliate websites receive
commissions - sometimes for years - when bettors visit affiliate websites
then sign up to gamble with Sportsbet. The more money gambled (and lost),
the greater the commission.

Affiliated sites and media marketing companies pocketed more than $111
million of Sportsbet’s promotional spend in the five-and-half-years to June
2018, despite their share falling from 36 per cent to 21 per cent over that
period.

Previously, according to Sportsbet’s standard affiliate terms and
conditions, affiliates would potentially continue to earn a commission from
a referred customer for as long as that customer continued to gamble with
Sportsbet.

One former Sportsbet affiliate, Daniel Kirk, who has been running the
betting site Sportspunter since 2001, spoke to 7.30 about his dealings with
the company. He confirmed many of the details around affiliate agreements
but said that there was great mistrust of the company among smaller players.

Since 2013, Sportsbet had introduced changes to the terms of its affiliate
deals that had effectively left the operators of many small websites,
including his own, without incomes, Kirk said.

“Sportsbet do prey upon taking advantage of people losing and avoiding
people that might beat them,” he said.

“At the end of the day they were just thinking about how they were going to
save their business money.”

Affiliate arrangements have also faced criticism from consumer groups
because they incentivise affiliate operators to encourage people to gamble.

Levin told 7.30 that there was a much greater need to regulate affiliates.

“The affiliates, if they’re acting rationally, would be encouraging a
person to keep losing because they only get paid when the person loses.”

A Sportsbet spokesman said the company had made significant changes to its
affiliate program in 2016, which led to a 90 per cent reduction in
affiliates.



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