Players, their faces masked, being led away for questioning. The police pulling an all-nighter to question suspects. Scores of indignant voices on social media demanding CBI investigations and arrests.
For any issue to provoke this level of moral outrage in India, it seems it must revolve around cricket. Can you remember a single financial sector scam, whether it was the Rajat Gupta insider trading case, the exposé of Sahara group’s illegal Rs 17,000 crore mop-up or the Saradha scam, attracting similar public ire?
Who are the victims?
Yet, if you look into the facts of the case, financial crimes have far more serious consequences than the IPL betting/fixing racket. In market manipulation or ponzi schemes, small savers have lost their limited nest-egg, which they never chose to risk, to schemes floated by unscrupulous promoters. These episodes have left some destitute, destroyed many livelihoods and weakened faith in the Indian financial system.
In contrast, who are the victims of the IPL scandal? Possibly cricket-viewers, who after rooting for one team or another, feel a little cheated now. The players who didn’t succumb to bribery, and instead delivered their best to this format, may also have reason for complaint. But neither can claim that betting or match-fixing has destroyed their lives or left them poorer. And beyond these two categories of ‘victims’, it is hard to find any legitimate ones.
Sponsors and event partners, who pour crores of advertising rupees into a sporting event do so only for general visibility. Advertising in IPL hardly comes with a guarantee that it will sell a certain number of bottles of soft drinks. As to the team sponsors, if at all they have any reason to complain, it is only about getting slightly less mileage for their brands than they hoped for.
Yes, if you are idealistic, you can say that such scandals taint the game of cricket. But then, to purists, IPL was not the gentleman’s game anyway. With its abbreviated format, dancing and revelry and bombastic rather than stylistic batting, IPL was always about entertainment first and sport later.
Financial parallels
But the amount of public debate generated by IPL makes one wish that Indians could get equally worked up about financial scams as well. After all, the parallels between the IPL scandal and financial crimes such as insider trading and price rigging are hard to miss.
The IPL controversy is about affluent people, not content with merely watching a match, betting their shirt on the outcome, not unlike speculators taking derivative bets. The bookies are the ‘intermediaries’ to this booming ‘market’. There is nothing very reprehensible about all this, as many other forms of betting do exist today – horse racing, playing cards, lotteries, even day-trading and playing the derivatives.
Where the whole business gets murkier is when the punters, not content with guesswork to back their trades, begin to take active steps to change the outcomes. In IPL, this is done by bribing players to cede runs or throw a match. In the markets, one ‘persuades’ company insiders to leak material financial information, before it is made public.
Regulating the bets
With these similarities, it should be possible to those looking to regulate sports, to take some immediate cues from securities market regulations.
For instance, there may be no need to completely ban betting. After all, what sports betting does is to pit one set of affluent people who like to play guessing games, against another equally rich set. As everyone puts up the money knowing fully well that these claims are not enforceable under law, why try and protect them?
Instead, it would be best to treat this just like any other form of speculation in the securities market. First, get all the bookies to register with a central regulator and record all their trades, thus killing off the grey market.
After such regulation, one can tweak the betting rules to prevent sharp practice. Why not embargo last-minute bets and limit bet sizes? If regulators are keen, they can even insist on PAN cards for placing bets. After that, if betting remains popular, the exchequer can line its coffers by imposing capital gains or ‘betting transaction’ tax.
To make sure there is an efficient ‘market’ in place, though, match-fixing needs to be completely banned. This can be best done by two regulations. One, expressly bar team owners, players and their relatives from participating in any form of betting, thus doing away with any conflict of interests, à la promoters trading on inside information.
Two, create Chinese Walls, between the viewers and bookies on one hand and players on the other, as trading firms do with their dealing rooms. Ensure outsiders don’t enjoy access to the players or ‘inside information’ on strategies during the match.
But then, securities market regulators have much to learn from the IPL scandal too. Despite being armed with elaborate laws that cover every aspect of securities fraud, they seem to be quite slow in acting on them, to prosecute the guilty.
It is now almost a year since the Supreme Court ruled on the Sahara case; the Saradha investigations are making slow progress and there are several insider trading cases that have dragged on for several years.
It would be good to see SEBI and other financial regulators making some midnight arrests, like the Mumbai police, of the perpetrators of financial fraud.