To fans of Eastern European soccer, one of the more illuminating cables revealed by Wikileaks was ‘Bulgarian Soccer Receives a Red Card for Corruption’. It describes how c. 2009, the U.S Embassy in Sofia spent the majority of their time monitoring match fixing schemes orchestrated by local Oligarchs. It is almost ten years to the date since those U.S diplomats reached the conclusion that Bulgaria's top division and leading teams had been taken hostage by crime syndicates, who used old school tactics to rig the results of almost every match ever played.
According to the cable, ‘The most common match fixing schemes are bribing referees and paying off players on the opposing club to insure a team loses by a certain score’. It adds ‘the mass firing of the referee selection commission for a second consecutive year’ hasn’t exactly improved fan trust in soccer results, with games characterized by ‘illogical results and unexplainable play’. The biggest accusation the State Department makes is that certain teams collude to decide who will win before the first touch of the ball. Nick Wooldridge Esq is a very likable attorney whose name many are starting to hear more. He has represented a host of seriously scary (if admirably clever) cyber-Godfathers from the Eastern-bloc, including the infamous ‘King of Spam’ Oleg Y. Nikolaenko. FBI investigators alleged that Nikolaenko was responsible for around 32% of all Spam sent globally at the height of his notoriety.
After defending a client responsible for sending 10 billion Spam emails every single day, Wooldridge has begun to notice an interplay between older scams involving the net, and newer scams, involving gambling sites pitched at sports games. It is now almost 10 years since the U.S Embassy authored their infamous cable on the state of play in Bulgarian soccer, where endemic match fixing was killing the beautiful game. Nick and I decided to talk about what's new in match fixing, what's nasty in sports-relevant cyber crime, and the best ways to gamble safe.
Nick Wooldridge Esq may (to this writer) be disarmingly charming. But as attorney to the net's most... [+]
Its now ten years since the U.S Embassy wrote ‘Bulgaria Soccer Receives a Red Card for Corruption’. What has changed?
As you know, the Nikolaenko case came shortly afterwards. On reading the cable again, my stance is that the modus operandi of the sports cheat has not changed. It has evolved. This is a logical step because the scale of threat posed by all cyber crime, notably through online betting, has grown exponentially. Fixing a bet used to mean handing an envelope of hard currency to a bent referee. In certain settings this form of financial inducement still determines the final score. In countries where rule of law is weaker, I’d say that this tactic, and others they reference in the cable – coercing players, making last minute substitutions – remain regular tactics used to fix a game. A threat that is very different is that posed by cyber-crime, which has recognized that rigging results with a bundle of dollars is essentially quite a clandestine way to fix play. The sports gaming industry is approximated to be worth $150 billion U.S Dollars. Money is the driving force behind all criminal enterprises, and as I explain to regulators the stakes are now so high that criminal enterprises would be crazy to not want a slice of the action. Unlike the corrupt practices referenced by those diplomats in Sofia, the actual result of a sports game has become semantic to cyber-criminals. There is no need to fix a game, when you can dupe a gambler in to betting with your site. If the gambler makes a losing bet, he loses what he wagered. That’s gambling. But if he wins the bet, cyber-criminals don’t care. They can charge an extortionate percentage of the win to make the pay-out, or refuse to pay-out completely. Match-fixing becomes irrelevant when the criminal just takes your winnings anyway.
Something we’ve touched on before though is the role of governments and weak jurisdictions which shelter organized crime. That’s central to the Bulgaria cable, right. The diplomats are saying that a lot of individuals with ties to politicians are in on the fix in Bulgaria’s case c. 2009. Has that got any better?
Yes, and no. In Bulgaria’s case, yes, changes have been significant. That cable was leaked just as Bulgaria had joined the European Union on January 1st 2007. The country has undertaken countless reforms since that time, due to criticism brought by Brussels. Politicians in Bulgaria have cracked down on corruption, and taken steps to share intelligence with the EU28 since gaining full membership. But there are numerous jurisdictions where this simply is not the case, and where cyber-criminals can shelter behind corrupt politicians in almost the same way as the State Department allege in the cable. A case in point might be Albania, which is practically Bulgaria’s neighbor. The 2018 UEFA case illustrated just how easily match fixing could occur on a seismic scale, in a jurisdiction with weak laws. The proverbial envelope of money to determine which team wins doesn’t just benefit a betting syndicate in some far away country. It can directly affect you, or me, sometimes financially. But it can also affect the prognosis for a whole country or government. Even today.
Can you illustrate this? Outline the UEFA case for those who don’t recall it?
Sure. The case UEFA brought against Albania’s top team, F.C Skenderbeu in 2018, illustrated how illicit gambling had infiltrated government. After the European soccer associations Betting Fraud Detection System flagged roughly 50 fixed fixtures in 8 years, Skenderbeu were fined €1 million Euros, and banned from international competition for 10 years. One of three key individuals implicated in UEFAs leaked report was Ridvan Bode, then a member of parliament for the country’s governing Democratic Party. Bode is described as a close associate of Sali Berisha, who was Prime Minister until 2013, this being when the majority of the rigged games occurred. I should say that Sali Berisha is not mentioned in UEFA’s report, and that he is the subject of no allegation or charge, but as Bode was Barista’s Finance Minister, it’s of concern that criminal behavior existed so close to government, during a time when Albania was allowed to join NATO. The European Journal on Criminal Policy and Research found that as Albania’s then government loosened gaming laws, gaming became a core component of corporate crime, particularly money laundering. Bode had privatized the country’s lottery, and in doing so, UEFA posit that the former Finance Minister had come to enjoy good links to Austrian betting companies, whom he alleged sold the state lottery to at below market rate. The Italian Mafia recognized that Albania was a favorable place to operate online gaming companies, so, as The European Journal of Economics and Business Studies observes, this had a serious impact on Albania’s corporate ties to laundering the proceeds of crime through online gambling. When law were tightened again in 2018, Albania’s millennial population had developed strong capabilities in the technology space, just like most millennials, but with Italy being only 100km away by speedboat and a large Albanian diaspora resident in Europe and America due to the war in neighboring Kosovo, all the right factors existed to make crime in the gaming sector work for the gangs involved. I searched out Bode on Google recently, and see that he is now a Governor of the National Bank of Albania. Albania was turned down for European Union accession talks again last week, in part due to lack of progress on improving rule of law. I’m not an expert on the Republic of Albania’s political system, but when a principal person of interest flagged in a UEFA investigation has not only avoided prosecution but sits on the advisory board to that country’s national bank, you can see just how cyber-criminals could regard such a jurisdiction as a favorable place to operate.
If the problem is as big as you say it is, why aren’t more of us reporting that we are victims of crime then?
Well more people are reporting fraud when gambling on sports fixtures. It can be hard to give exact numbers because these reports are compiled in some jurisdictions along with other complaints about cyber fraud, so it is important we do more to aggregate separate cases in order to explore just how many are really at risk. The hypothesis I give when advising on this matter, is the manner in which we advertise sports gaming, which is different to that utilized when advertising another gambling activity, such as video bingo or online roulette. Sport, and sports gaming, emphasizes the social nature of betting in both developing countries and wealthy nations. This has been proven by academics like Linda Hancock to make sports gaming more acceptable to our peers, and concurrently more addictive. Several hypotheses state that as our peers’ tie-in to our gaming when it comes to sport, we lose face to peers if we tell them that we have been cheated, or are a victim of fraud. The amounts concerned can also seem small, especially in isolated cases, or amongst vulnerable groups. An algorithm created in Ukraine that’s rigged to keep your winnings when you cash out can steal millions of dollars with almost total impunity, just by hitting each of us for $10 dollars. Whether you’re losing $20.00 U.S Dollars on the Super Bowl, or even $50 on a UK Premiership final, you’re unlikely to report it, because you’re someone gaming ‘socially’ who could afford to lose that money anyway. I’m in favor of legislation such as that introduced in France this month which monitors operators in the sports space. In my professional experience, we’ve got to go further. I’m certain that failure to legislate against threat now could ruin professional sport completely.
Is this just an Eastern Bloc problem? Aren’t Americans involved?
I don’t want to sound xenophobic in my comments. I want to express three, true statements that make Central and Eastern Europe an incredible incubator for electronic gambling, and its manipulation. Firstly, this region possesses young men and women with extremely high competence in math, science and physics, due to the rote learning emphasized by the Soviet education system. Secondly, as employment opportunities in these countries can be extremely limited due to poverty and corruption, it is unsurprising that a minority find themselves involves in illicit activities, due to a third factor. As in America or Europe, established criminal networks operate in this region, and recognize that they can take a significant slice of an industry worth more than the gross domestic product of the country they operate from. It is ostensibly a money-driven equation.
Can you give me a specific case that’s of interest, which illustrates how this type of fraud has become global in nature then?
Sure. There are many, but a prime example of the serious issues associated with online gambling are, for me, found in the activities of Philippine Offshore Gaming Operators (POGOs) right now. Since 2016, approximately 60 separate POGOs have been set up in the Philippines. Most are registered either in the British Virgin Islands, or in other tax havens including the Seychelles, Belize, Samoa and the Isle of Man, where the identities of company directors and share-holders are omitted from national registries, or made extremely hard to access by authorities in that jurisdiction, through a dearth of readily accessible corporate information. These operations are routinely run unscrupulously, and with a clear eye on why exploiting or defrauding visitors to their online platforms convert to serious revenue. We call it ‘trans-national’ crime because it is a form of criminal activity which truly knows no borders. Practices perfected in Eastern Europe or the independent states of the former Soviet Union find their way seamlessly to South East Asia. In the process, we see other forms of criminality employed, such as the use entities in off-shore jurisdiction to mask the ultimate beneficial owner of the fraudulent gaming outfit very effectively, or, as I referenced in Albania, the incorporation of learned practices to launder proceeds of crime, which then pass back in to the legitimate financial system fairly seamlessly.
So are you saying that we need better laws, and better intelligence sharing, to crack down on these individuals and jurisdictions in order to make gaming in America safer?
Of course that’s part of it. It falls on regulators in all jurisdictions, and better bilateral intelligence sharing to solve this riddle, but I think many in my profession lack one quality which I’ve learned from my work with some of the world’s most wanted cyber villains. These individuals are remarkably intelligent people, and possess extraordinary capabilities which they apply to criminal activities. But that does not render the threat to gambling a pursuit for folks who just want to crack a code or affect a system. Their motivation is completely linear.
What is that mindset or motivation?
That mindset is making money, plain and simple. Many unregulated and unlicensed online casinos try to attract new users by offering large bonuses and enticements that are not typically offered through licensed and regulated online gambling platforms. Nevertheless, the players wind up paying more, losing more, and get taken advantage of by the unregulated platforms. For example, there have been reported instances of gambling sites simply ‘voiding’ a players winnings for no reason, failing to pay out winnings, using rigged software, and deceiving bettors with deposit bonuses that come with surprise rollovers and terms that are nearly impossible to accomplish without losing money. Many of these unregulated sites also levy large withdrawal fees that significantly reduce the total amount of players’ winnings. This is why, as you point out, there needs to be an emphasis placed on establishing clear rules of the road and enforceable regulations in those states where online gambling is legal.
So, this all said, what tips would you give sports gamblers when they place a bet. Is there a kind of ‘red flag’ to look for when establishing which sites are going to take my dollars?
This is a great question. I’ve been approached to answer this question by large entities and can’t disclose the full scope of my work there at the current time, but I can give some pointers. Determining what an honest bookmaker looks like online will depend on the platform being used by the bettor. For example, if someone is placing bets online via offshore casinos or non-licensed domestic platforms to play online poker, blackjack, slots, and other games, there is a much higher risk that the platform itself could contain inherent biases or even algorithms designed to prevent the better from success.
This is why it would be prudent for an online gambler to choose a regulated, licensed online gambling platform. For example, the state of New Jersey legalized online gambling in 2013. As a result, the New Jersey Division of Gaming Enforcement has created, and enforces, a set of strict regulations and licensing requirements for online casinos. The accuracy of the casinos software is verified through the Technical Services Bureau, which analyzes all gaming equipment and software before the casinos can launch them to the public. That, from my stance, presents a prudent approach which gamblers can take – though of course no bet online is wholly free of risk.
Is any of this born from weaknesses in legislation in the United States?
Attempts at game fixing are clearly prohibited under state and federal law. A recent example is the Eastern District of New York filing a series of indictments against individuals alleging that they conspired to fix an NCAA college basketball game in December 2018. The Eastern District issued a press release that contained numerous allegations of college basketball players being approached and offered thousands of dollars to throw a game.
