New Law

Cracking Down on Sports Fraud

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Obviously bungled free kicks may be investigated in future.
  • Why it matters

    Why it matters

    Proposed legislation would define fraud and manipulation in sports as crimes punishable with prison terms.

  • Facts

    Facts

    • Under the proposed legislation, athletes, coaches, referees and judges who manipulate the outcome of a competition in return for a reward can be sentenced to up to three years in prison.
    • The law would create two new criminal offences: sports betting fraud and manipulation of professional sports competitions.
    • The draft bill calls for undercover sports investigations and authorization for telephone surveillance.
  • Audio

    Audio

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It doesn’t always have to be a big FIFA scandal. An oddly botched penalty kick, a coach doesn’t use his best players, or a referee blows the whistle on a seemingly unjustified penalty. These are situations with a whiff of fraud. Have shady characters used suitcases of cash or other incentives to exert influence and manipulate competitive sports to suit their needs?

In the future, anyone involved in such activities could face criminal prosecution, according to a current draft bill from the German Justice Ministry, obtained by Handelsblatt.

The goal of the draft legislation is to protect the social role of sports. However, for lawmakers the bill is a reaction to the economic importance of athletic competition. “Major sporting events like world championships and the Olympic Games, as well as national and international leagues, generate substantial revenues and profits,” reads the rationale for the draft bill.

“This is an important initiative for everyone involved in professional sports.”

Juliane Hilf, Freshfields Bruckhaus Deringer law firm

Fraud in sports betting and the manipulation of sports competitions “harm the assets of others in a fraudulent manner,” the draft continues. According to the proposal, this includes honest athletes and clubs, organizers and sponsors, as well as the providers of sports betting services.

In the future, athletes, coaches, referees and judges who manipulate the outcome of a competition in return for a reward can be sentenced to up to three years in prison.

Those who hire others to commit acts of manipulation will also be subject to possible imprisonment, with especially severe cases punishable with up to five years in prison.

Two new criminal offences are being created: “sports betting fraud” and “manipulation of professional sports competitions.” There has been a gap in the law in this area until now. For instance, the crime of fraud did not apply to the manipulation of sporting events with no connection to sports betting.

“This is an important initiative for everyone involved in professional spots,” said Juliane Hilf, an expert on public business law with the law firm of Freshfields Bruckhaus Deringer. “Clean sports is the condition that makes reasonable economic behavior possible in this sector,” she added.

The draft bill also addresses the risk that sports could lose its appeal to sponsors as a result of fraudulent acts, and “thereby suffer as an economic factor in the long term.” Ms. Hilf agrees: “Naturally, a sponsor only wants to support a club that’s also clean. Manipulation in sports could damage its reputation.”

To gain access to the masterminds of fraud in sports, the Justice Ministry’s plans also call for undercover sports investigations and telephone surveillance authorization. “The criminal act in especially serious cases is assigned such a high degree of wrongdoing that it becomes comparable with corruption crimes like bribery. Similar surveillance measures are also planned in that area,” said Klaus Umbach, an expert on betting law with the Freshfields law firm.

The next stage is for the draft bill to be sent to the federal states and key associations, which can then submit their responses. After that, the federal cabinet will discuss the matter before a government draft bill is sent to the German parliament, the Bundestag.

 

Heike Anger reports for Handelsblatt from the Düsseldorf bureau. To contact: anger@handelsblatt.com

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