Lessons From Spain On What Happens Without Sportsbook Limits – Legal Sports Report

Limits are a fact of life for sports bettors in every market across the world.

Well, nearly every market.

In Spain, operators cannot legally limit accounts simply because they are winning. That precedent was established in a court ruling against bet365 and Betfair in July 2021 andhas since been reaffirmed by other courts.

Spanish bookmakers must therefore offer house limits to everyone, regardless of their perceived sharpness. The effect has been dramatic and instantaneous.

In Q3 2021, Spanish books held 2.8%, per data from the regulator. In Q4, that fell even farther to 1.4% before bouncing back slightly to2.7% in Q1 2022.

Revenues, in turn, are getting crushed. Spanish sports betting revenues were down 58% year-on-year in Q4, then down 41% in Q1 this year.

There are other things going on in the market, including major advertising restrictions. But handle is still growing, suggestion the inability to limit is the major issue.

I have never seen anything like it in my life, said one exec from a Spain-facing sportsbook. We knew the problems we were having but those Q3 numbers showed it was everyone in the market. Everyone can have a bad World Cup, but this is something different.

The exec noted growing problems from linked accounts and beards. He said betting syndicates were controlling multiple accounts via Spanish students, then hitting niche markets simultaneously.

These guys are very clever, the exec said. They come in and place loads of football bets for 10 a pop, then you suddenly get 5,000 accounts hitting a Spanish second division game for the limit.

It is industrial-scale bots and arbitrageurs, mostly operated from outside the country. You can see it is fraudulent activity because an account will log in from Madrid, then place bets from Barcelona.

A Spanish sportsbook account is worth three to fives times more than a UK equivalent on the black market, an industry source said.

Operators are working on improving their geolocation and other security measures but the Spain-facing exec said it was a cat and mouse game where one loophole was closed and another exploited.

It is a full-on battle with criminal groups, the source said.

Operators can close accounts if they can prove fraudulent activity, but Spanish courts have generally favored Spanish citizens in these cases over foreign corporate bookmakers.

New data from the Spanish regulator (DGOJ) appears to back up the notion of fraudulent activity.

The DGOJ this month released player data from 2021, showing stakes from female gamblers were up a whopping 126% year-on-year. That is despite the number of female gamblers remaining almost the same.

Whats more, female gamblers as an entire cohort were profitable. Around 20% of all Spanish accounts posted a profit in 2021.

So what are the implications for US sports betting and other markets? For starters, the Spanish experience shows why operators limit in the first place; they need to make money.

Spain might also be the start of a consumer-friendly trend in markets around the world. Ireland is reportedly considering similar rules on betting limits, per Gambling Compliance.

In Canada, Covers senior strategist Adam Chernoff has been calling for consumer-friendly regulations in the nascent Ontario sports betting market. That includes:

Chernoff said earlier this year he was optimistic about consumer-friendly regs in the market.

This is the third country where Ive worked through betting regulation, and this was the first time someone at the regulator level was interested in player advocacy, Chernoff said.

Books might not like having to lay $100 on the hundreds of the derivatives they offer, but it should be less of an issue on core sports and markets. One compromise could see books having to lay bets to win $500 on main sports sides and totals from 10 am on the day of the game.

I dont see that being a bad thing at all, said one North-America facing sportsbook exec. Good books have to book those bets.

Indeed, an MBL might encourage books to invest in risk and trading if they no longer have the easy option of limiting. That may pay off in the long run, especially if US books want to beat out their offshore competitors.

Spain has shown that no limits at all make for an unsustainable market. But there is perhaps a middle ground where books can make money if they can kick out fraudulent players, while also offering a fair bet to genuine customers.

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Lessons From Spain On What Happens Without Sportsbook Limits - Legal Sports Report