Asia-focused gambling operators sponsor top tier European football
The 2009/2010 European football season has seen an explosion in the number of predominantly Asia-facing gambling operators signing sponsorship deals with European football clubs. In England’s Premier League alone, operators with a significant Asian presence now sponsor the shirts of no less than four of the 20 teams, with 188Bet sponsoring both Wigan Athletic and Bolton Wanderers, SBOBET sponsoring West Ham United, and Mansion having sponsored Tottenham Hotspur since 2006. In addition, 118bet has also secured standalone “official gambling partner” deals with Aston Villa, Chelsea and Liverpool. This article considers the commercial opportunities behind this trend, and the legal and regulatory challenges facing Asian operators entering the European sponsorship market.
Why European football?
This question is perhaps more manageable when broken down into its two constituent elements—why football, and why Europe? Addressing the first question, it is no coincidence that gambling operators around the world choose to spend much of their marketing budgets on sport due to the symbiotic relationship between the betting and sports industries. Although betting markets are growing ever more diverse, the sportsbook remains the lifeblood of most betting operators. The people most likely to bet on sports events are sports fans, so sponsorship of a sports team or competition is an obvious way to reach the betting operator’s target demographic. Football betting in particular is a growing market for gambling operators, being a major reason for the fact that, in Britain, horseracing now accounts for just 28% of bookmakers’ gross win, compared with 45% only five years ago.
Football clubs in particular are also adept at offering more to gambling sponsors than the right demographic. Typically, clubs offer ‘official gambling partner’ status either as part of a shirt sponsorship deal or as a standalone offering, whereby the gambling operator provides branded gambling services at the stadium and via the club’s website. This provides a direct route for the sponsor to generate revenues from the club’s fans—a straightforward way to recruit new customers and demonstrate immediate return on investment. At the time of writing, 19 of England’s 20 Premier League clubs have gambling partners. The odd one out is Manchester City, owned by Sheikh Mansour bin Zayed Al Nahyan, Abu Dhabi’s Deputy Prime Minister and Minister for Presidential Affairs.
Whilst Asian operators may view football shirt sponsorship as a good way to enter the European market or expand existing European operations, the key driver is not necessarily the European market at all—it is the global reach of European football. Most pertinently, prior to the 2009/2010 season Asia accounted for more than 40% of the Premier League’s global television audience and some of its most passionate fans. This proportion is likely to increase if the league is able to secure coverage of at least some matches on a nationwide free-to-air (as opposed to only on pay television) basis in China, as it appears keen to do. An attempt to organise a deal between WinTV (the incumbent Chinese rights-holder for top tier English matches) and Guangdong TV (the national satellite broadcaster) to show a game a week free-to-air collapsed recently.
Leading domestic leagues in Europe such as the German Bundesliga, Spanish La Liga and Italian Serie A are also widely available on Asian television screens, as are the UEFA Europa League and Europe’s premier club competition, the UEFA Champions League. As a result, sponsoring a European football club allows Asiangambling operators to showcase their brand before millions of sports fans around the world, including in their home markets.
In some European jurisdictions, the explosion in gambling sponsorship has been facilitated by a change in the legal framework. The best example is Britain, where offshore bookmakers were not permitted to advertise (by way of sponsorship or otherwise) prior to September 2007, and online gaming operators were heavily restricted in the way in which they could advertise. However, the British regulatory regime was transformed on 1st September 2007, when the Gambling Act 2005 came into force. This new Act permits the advertisement of gambling services in Britain by any operator licensed in Britain, the European Economic Area (EEA), including Gibraltar, and any territory on the Government’s “White List”, which currently includes Alderney, the Isle of Man, Tasmania and Antigua. In a number of these jurisdictions it is possible for Asian online gambling operators to obtain a gambling licence, subject to meeting the relevant licence requirements which typically relate to being fit and proper persons to provide gambling services and ensuring that customers are protected in terms of fairness and financial stability. For example, 118Bet and SBOBET are licensed in the Isle of Man, whilst Mansion is licensed in Gibraltar.
A further key driver behind the growth in gambling sponsorship deals has been the state of the wider economy, and the impact of the recession on the cost of football sponsorship. Total shirt sponsorship revenue for England’s Premier League clubs has fallen by £10 million (US$16.4 million) in two years, and the result has been cut-price shirt sponsorship deals for Premier League clubs unlikely to qualify for European club competitions. For example, 118Bet’s deals with Wigan and Bolton are reportedly worth £650,000 and £750,000 per annum respectively.
By contrast, the gambling industry has proved relatively resilient to the effects of the downturn, and so has been able to take advantage of these relatively cheap sponsorship opportunities as they have arisen.
Challenges
If the opportunities highlighted above did not outweigh the challenges, we would not have seen the proliferation of gambling sponsorship in football that has taken place. Nevertheless, there remain significant obstacles to Asian gambling operators wishing to enter the European football sponsorship market.
Britain is generally considered by the gambling industry to be the most developed regulatory regime in Europe, and (the tax treatment of gambling aside) a good model for other countries to follow. However, as part of the regulatory regime, there are a number of restrictions on gambling operators’ sponsorship activities.
For Asian-based gambling operators, the key advertising related offence under the Gambling Act is advertising foreign gambling. This offence makes it unlawful to advertise any gambling operator in Britain which is not based either within the EEA or in a jurisdiction on the White List. In practical terms, this means that it would be unlawful for a British football club to display the logo of any gambling operator not licensed in any such jurisdiction. It also means that any overseas football club with a shirt sponsor without a qualifying licence will have to remove the logo from its shirts when playing in Britain. Indeed, the Gambling Commission has already shown its willingness actively to enforce this law by blocking a shirt sponsorship deal between Cardiff City football club, a member of the second-tier league The Championship, and the Philippines-based online gambling operator 777ball. As a result, Cardiff City quickly signed a replacement deal with SBOBET, and 777ball lost its opportunity. In addition, the Spanish club Sevilla recently played its UEFA Champions League away fixture against Scotland’s Glasgow Rangers without the logo of its shirt sponsor, 12bet, which is also not licensed within the EEA or a White List jurisdiction.
Outside Britain, European laws relating to the advertising of gambling are extremely inconsistent, and operators wishing to advertise and/or provide gambling services across the EU face a patchwork of conflicting national laws. Some European states share the British view that the public interest is best served by allowing the private sector to provide consumer choice (subject to regulation to prevent consumer exploitation and fraud), and that the state’s interest is best served by collecting significant tax revenues and licence fees from operators. States taking this approach (or that are at least moving towards liberalisation and regulation) include Malta, Italy, Austria, Spain and France.
However, a number of European states have fought to preserve highly lucrative state monopolies over the gambling market, arguing that a single state-run operator is a better way to protect the public than regulating a liberalised market. These states often prevent overseas gambling operators from advertising, including by means of sponsorship. Famously, in 2006, the two Austrian chief executives of online gambling operator Bwin International Ltd, Manfred Bodner and Norbert Teufelberger, were arrested by the French authorities as they travelled to France to unveil a new sponsorship deal for their brand bwin.com with Monaco football club. Whilst the French regulatory position is due to be relaxed in 2010, visiting teams are likely to continue to have to remove the logos of gambling operators from their shirts when visiting EU Member States such as Portugal and certain German states. Norway is a non-EU country that nonetheless adopts or tracks much EU legislation through its membership of the EEA. When Spanish side Valencia played there recently it did so without its Unibet shirt logo. To further add to the confusion, Switzerland (which is neither a member of the EU nor of the EEA) also outlaws shirt sponsorship by gambling companies, with Real Madrid being forced to remove the bwin logo for their recent game against FC Zurich.
European law, through European Court of Justice (ECJ) rulings in cases such as Gambelli and Placanica, has until recently largely (but equivocally) favoured the gambling operators. Whilst the ECJ has generally accepted that restrictions on gambling operators by Member States are capable of being justified (in particular, in order to prevent the exploitation of gambling for criminal or fraudulent purposes), such justifications have always been subject to the principles of proportionality and non-discrimination between Member States. This would mean, for example, that if a Member State prevented overseas operators from advertising in that jurisdiction, based on an argument that it wanted to limit participation in gambling, then it would find it extremely hard to justify allowing that state’s monopoly operator to advertise. The European Commission has also pursued infringement proceedings against states which ban commercial online gambling but license state monopolies to undertake similar activities.
The gambling industry has generally believed (and largely still does) that the European market will eventually be liberalised and regulated. However, the recent ECJ ruling in the case of Bwin v Santa Casa da Misericordia de Lisboa has shaken that confidence somewhat. The ruling dealt with questions referred to the ECJ by a Portuguese court. It concerned an action brought by the state monopoly gambling operator Santa Casa against Bwin and the Portuguese Liga (football league) regarding Bwin’s sponsorship of the latter. The partners had argued in their response that Santa Casa’s monopoly was incompatible with EU law. However, the ECJ concluded that Member States may be justified in confining the operation of gambling within “controlled channels” (i.e. granting a monopoly operator the exclusive right to operate and advertise internet gambling services) if this is necessary to meet wider public interest objectives such as protecting consumers against fraud on the part of operators.
It remains to be seen what impact the Bwin case will have on the European gambling landscape, but the likelihood is that it will stall the liberalisation of the market and preserve the existing polarisation between national approaches. As a result, sponsorship by gambling operators in certain countries is likely to remain unlawful for the medium term, and teams with gambling shirt sponsors will continue having to remove the logos when playing away fixtures in those countries.
Conclusion
It is clear that the recent rapid increase in the number of Asian gambling operators sponsoring European football clubs is no accident. It is the result of a combination of favourable factors including the economic and regulatory environment and the ability to use sport in particular to create global exposure amongst the gambling companies’ target demographic. It seems likely that gambling operators will continue to spend large proportions of their marketing budget on football sponsorship, at the very least until the value of, and competition for, those sponsorship rights increases with a wider economic recovery. Until then, and quite probably further into the future, the Asian gambling industry will remain one of the most attractive places for football clubs to seek sponsorship revenues. Nevertheless, the inconsistency of the European regulatory environment, and even the restrictions contained in the relatively permissive British regime, mean that gambling sponsorship deals are full of potential pitfalls, as 777ball in particular has found to its detriment. Parties on both sides of these deals would be well advised to seek specialist advice on how to navigate them.
By Andrew Danson, Associate, Olswang
Olswang is a full service European law firm specialising in the gambling, media and technology sectors. The firm advised Tottenham Hotspur FC on its shirt sponsorship deal with gambling and entertainment group Mansion, bookmaker Boylesports on its shirt sponsorship deal with Sunderland FC and its broadcast sponsorship deal with Sky Sports, and Fulham FC on its sponsorship deal with gambling operator Bodog. Andrew provides commercial and regulatory advice in relation to gambling, sport, broadcasting and advertising / sponsorship matters. andrew.danson@olswang.com
RelatedPosts
