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IN-DEPTH 12 January 2016
Fixers beware
David Cook visited Sportradar Security Services in London to discover more about its Fraud Detection System that's being used to combat match fixing
By David Cook

Over 2,000 sporting events to have taken place since 2009 have been noted as likely to have been manipulated. That’s according to Sportradar’s Fraud Detection System (FDS). With the provider aiming to position itself as a protector of integrity in the betting industry and with security being the main theme of this issue of Gambling Insider, it made perfect sense to travel to the firm's west London office to find out just how the system works and what it is doing to combat match fixing.

Almost perfectly situated between a pub and an ice cream parlour, the setting is far less demonstrative than you may expect for an office dedicated to security. The entrance is not protected by large gates or police with guns and dogs raging to be set off their leads (ok, so I may have let my imagination run away with itself a little). Rather there is a subtleness to the building. Passers by would have no clue that there are people inside attempting to combat a range of scandals that could be going on in the world of sport. It is one of three offices that make up Sportradar’s Security Services, with the other two being in Hong Kong and Sydney. After being allowed into reception, I meet with Alex Inglot, director of communications and public affairs, who leads me to a meeting room on the first floor, where the team that sells its virtual products and the managed trading services are based. This is where I'm informed about the FDS’ operations.

To provide some background, this is the security services arm of Sportradar, and is separate from Sportradar’s media services and right holder solutions. It monitors thousands of events across a range of sports and its clients include Uefa, FIBA and the Rugby Football Union. The system, which launched in 2005, changed its name to the Fraud Detection System in 2009. It comes to life when sizeable changes in betting patterns notify analysts with alerts, which can then be investigated accordingly. An alert is a movement that is beyond reasonable and depends on the percentage of the net win change in betting on a league-by-league basis. Reports of these betting patterns – which can also include video evidence – are produced by the analysts and can then be passed on to the relevant authority. The system is fed by data from over 450 bookmakers on a daily basis. Freelancers can also input news into the system to potentially explain the reasons behind odds movements.

Sportradar’s numbers explain a great deal. In European football alone, over 31,000 matches per year are tracked by the company. Since it's been in operation, approximately 1% of all sporting events it has monitored are likely to have been manipulated, with the most to have been reported in one year being 400 in 2013. It expects the figure at the end of this year will be 400-500. Inglot divulges the reasons this could be happening. “Football is susceptible because there’s a lot of money in the market,” he says. “Then there is the vulnerability of players. Are players earning enough? FIFPro published a study of European Leagues called the Black Book Eastern Europe in 2012 and found some awful statistics about how players are intimidated and threatened. These are the kind of conditions that make match fixing attractive.”

The size of the sports-betting industry that Sportradar is attempting to keep track of, particularly the football-betting industry, should not be underestimated. Sportradar claims that the global sports-betting industry is worth approximately €750bn in worldwide turnover per annum, with €450bn coming from football. An estimated €149m is bet on every English Premier League football match, which equates to approximately €56bn a season, exceeding any other league in the world in terms of betting activity. The closest league in comparison is the Spanish La Liga with €23bn generated per season.

I think it’s nice to have a few wins for the betting industry and for the wider public to know that while some may not like us, we are making a difference to sportAlex Inglot
So Sportradar can identify fixes in various markets, but what can this lead to? There are some recent success stories, such as the case of Sanel Kuljic, a former Austrian footballer who was sentenced to five years in prison last year for match fixing. Six other individuals were given custodial sentences. Sportradar assisted Austrian police with the investigation.

Despite the progress it can and has made in tackling match fixing via the FDS, Sportradar cannot act as a policing authority and can only assist with judicial investigations rather than conduct them. Sportradar’s evidence helped lead to 18 guilty verdicts in 2014 out of 97 arrests. Should the numbers have been higher? Inglot says: “From 2009-2012, we were offering our services purely to sporting federations. The problem for sporting federations is jurisdiction. The FA, for example, can only go after players and coaches. They can’t go after a gangster that could be threatening the players.”

When asked if another company could create a similar system that rivals FDS, the response from Darren Small, managing director trading services, is bullish to say the least. He says: “Good luck. There are smart people out there, but the system Sportradar is built on is so difficult to replicate. We’re processing five billion data sets a day. The system is just enormous and the hard part is for anyone to try and replicate the core databases. It would cost millions to get that up and running.”

So that's what the system can achieve, but how about seeing it in practice? This is where Tom Mace, director, security services, comes in. From Mace’s office on the second floor, where the analysts are based, he explains what happens when the system detects an alert. It is from Mace’s computer that we can see every alert that is being put into the system. He says: “When the system spots something strange, it will ping up an alert to the analyst. The analyst then has to work out what that alert is saying. Is there a reason for it? Probably 99% of all alerts are explainable by regular things such as team news, motivation etc. If they do think it’s a suspicious match, then the first thing they will do is inform a partner and then we’ll put together a very detailed report. A typical match report would be 40-50 pages long. Our data could end up in court so it’s important we provide a reference.”

What is made clear is that while alerts in betting patterns will regularly pop up on the system, there is a clear difference between what constitutes an alert and what classes as suspicious. Breaking down the different levels of alerts makes this easier to understand. “All matches will start off completely blank,” says Mace. “The number appearing alongside the alert on the system shows the number of bookmakers that have produced an alert. There are three thresholds of alerts: levels zero, one and two. All the alerts run off a net win change figure. The net win change is a mathematical representation of the odds change. It depends on the ratio between stake and potential profit. There is a tipping point between the levels. All level one and level two alerts require our analysts to write a comment explaining why the market’s behaving as it is. The system is clever but it doesn't interpret and analyse odds changes without the analysts.”

As I am shown out of the premises, there is one comment from Inglot that stays with me. He says: “I know it’s crass and I know we’re in the betting market, but I think it’s nice to have a few wins for the betting industry and for the wider public to know that while some may not like us, we are making a difference to sport.”

Inglot indicates that the FDS could well be image-defining for the industry and it will be very interesting to see if this is the case moving forward. Match fixers, don’t say we didn’t warn you.
IN-DEPTH 16 August 2019
Roundtable: David vs Goliath – Can startups really disrupt the industry?

(AL) Alexander Levchenko – CEO, Evoplay Entertainment

Alexander Levchenko is CEO of innovative game development studio Evoplay Entertainment. He has overseen the rapid expansion of the company since it was founded in early 2017 with the vision of revolutionising the player experience.

(RL) Ruben Loeches – CMO, R Franco

Rubén Loeches is CMO at R. Franco Group, Spain’s most established multinational gaming supplier and solutions provider. With over 10 years working in the gambling, betting and online gaming industries, he is skilled in operations management and marketing strategy.

(JB) Julian Buhagiar – Co-Founder, RB Capital:

Julian Buhagiar is an investor, CEO & board director to multiple ventures in gaming, fintech & media markets. He has lead investments, M & As and exits to date in excess of $370m.

(DM) Dominic Mansour – CEO, Bragg Gaming Group:

Dominic Mansour has an extensive background of nearly 20 years in the gaming and lottery industry. He has a deep understanding of the lottery secto,r having been CEO at the UK-based Health Lottery, as well as building from scratch, which he sold to NetPlay TV plc.

What does it take for a startup to make waves in gaming?

DM: On the one hand, it’s a bit like brand marketing; you build an identity, a reputation and a strategy. When you know what you stand for, you then do your best to get heard. That doesn’t necessarily require a TV commercial but ensuring whatever you do stands out from the crowd. Then you have to get out there and talk to people about it. 

AL: Being better than the competition is no longer enough; if you’re small, new and want to make a difference – you have to turn the industry on its head. Those looking to make waves need to come up with a new concept or a ground-breaking solution. Take Elon Musk, he didn’t found Tesla to improve the existing electric cars on the market, he founded it to create the industry’s first mass-market electric sports car. It’s the same for online gaming; if you want to make waves as a startup, you have to bring something revolutionary to the table.

JB: Unique IP is key, particularly in emerging (non-EU) markets. As does the ability to release products on time, with minimal downtime and/or turnaround time when issues inevitably occur. A good salesforce capable of rapidly striking partnerships with the right players is vital, as is not getting bogged down too early on in legal, operational and admin red tape.

How easy it for startups to bring their ideas to life? How do they attract capital?

AL: It depends on the people and ideas behind the startup. Of course – the wave of ‘unicorns’ is not what it used to be. Some time ago the hype was a lot greater in terms of investing in startups, but that’s changed now. Investors now want more detail – and even more importantly, to evaluate whether the startup has the capacity (as well as the vision) to solve the problem it set out to address. That’s not to say investors are no longer interested in startups – they certainly are – but now more than ever, it’s important for startups to understand their audience as well as dreaming big.

JB: To get to market quickly, you need a great but small, team. If slots or sportsbook, the mathematical engine and UX/UI are crucial. Having a lean, agile dev team that can rapidly turn wire framing and mathematical logic into product is essential. Paying more for the right team is sometimes necessary, especially when good resources are scarce (here’s looking at you, Malta and Gibraltar).

Building capital is a different beast altogether. You won’t be able to secure any funding until you have a working proof of concept and, even then, capital is likely to be drip fed. Be prepared to get a family and friends round early on to deliver a ‘kick-ass’ demo, then start looking at early-stage VCs that specialise in growth-stage assets.

How do you react when you see startups coming in with their plan for disruption?

RL: We welcome the innovation and fresh thinking startups bring. This is particularly the case in Latin America, with a market still in its infancy. One area we’d especially like to see startups making waves is in the slot development sector. Latin America is a young market that needs local innovation suited to its unique conditions – especially in regard to mobile gaming.

Operators eyeing the market have Europe‐focused core products, which creates a struggle to work to the requirements of players and regulators. To succeed there, it has become more important than ever to work with those with a knowhow of the local area to adapt products and games to besuitable from the off; we welcome the chance for local talent to develop and grow.

Do you think it’s easier for established companies to innovate and establish new ideas? 

AL: From a financial perspective, yes. It is without a doubt easier for incumbent companies to establish a pipeline of innovation via their R & D departments, as well as having the tools to hand for data gathering and analysis.

But it stops there. Startups hold court in every other way. Not only are they flexible, they can easily switch from one idea to another, change strategy instantly as the market demands and easily move team members around. Established companies know this – and this is why we’re seeing an emerging trend for established companies to acquire small, innovative online gaming start-ups. They have the right resources and unique ideas, as well as the ability to bring a fresh approach to businesses’ thinking.

RL: For me, it’s always going to be established companies. Only with the resources, industry experience and know‐how can a company apply technology and services that truly make a difference. Of course there are exceptions. But when it comes to providing a platform that can be approved by regulators across multiple markets – as well as suiting an operators’ multiple jurisdictions – it is simply impossible for a couple of young bright minds with a few million behind them to get this done.

DM: I actually think it’s harder for established companies. It’s key to differentiate between having a good idea and executing one. That’s where the big corporates struggle most. They’re full of amazing people with all sorts of great ideas but getting them through systems and processes is nearly impossible.

Is it essential to patent-protect innovative products?

AL: It’s a very interesting subject. If we take IT for example – patents can actually become a block to the evolutionary process within the industry. Of course, getting a patent future proofs yourself from the competition copying your concept but, having said that, if you’re looking to protect yourself from someone more creative, smarter and agile, you’ve probably lost the battle already!

In our industry everything is moving faster and research takes less time than the development itself. No matter how good you are at copy pasting, you can’t copy Google or Netflix. The most important thing is not the tech itself but rather its ‘use-case’ – or in other words, does it solve what it’s meant to solve? Competition is healthy and the key to innovation. If you spend your whole time looking behind you, you’ll never be able move forwards.

JB: Tricky question, and one that depends on what and where you launch this IP. It can be difficult to patent mathematical engines and logic, mostly because they’re re-treading prior art. Branding, artwork and UX is more important and can easily be copied, but the territories you launch will determine how protectable your IP will be once patented. US/EU/Japan is easy but expensive to protect in. But China/South East Asia is a nightmare to cover adequately. Specialised patent lawyers with experience in software, and ideally gaming, can help you better.