Big money or insider trading: Inside the world of betting on cricket

On paper, betting and gambling may be banned in India, but if you’re a company called the Board of Control for Cricket in India, the law is up for interpretation.

And going by BCCI’s decision over the past year or so, post-pandemic, anything and everything to do with betting – My11Circle and Mobile Premier League and Dream11 – are some of the popular brands currently associated with BCCI in one way or the other.

The BCCI is so liberal that it even allows its president Sourav Ganguly, skipper Virat Kohli, and former captain and now mentor Mahendra Singh Dhoni to endorse these brands that are the business of online betting (or gaming, as it’s popularly known). It’s a different matter that all the advertisements for these brands come with a disclaimer that says “this game involves an element of financial risk and may be addictive”.

On October 25, 2021, a team auction that was only expected to fetch somewhere between Rs 3,000 to Rs 3,500 crore per team suddenly got almost three times the amount, and the BCCI took a decisive step to allow an international betting and gambling company to run an Indian Premier League team in India.

At a walk-in bidding event in Dubai, BCCI president Sourav Ganguly, secretary Jay Shah, treasurer Arun Singh Dhumal, and IPL chairman Brijesh Patel evaluated the nine bids and finally approved two new teams. The Sanjiv Goenka-led RPSG group and private equity fund CVC Capitals Partners had successfully deposited the highest bids of Rs 7,090 crore and Rs 5,625 crore to win rights to own teams at Atal Bihari Vajpayee Stadium in Lucknow and Narendra Modi Stadium in Ahmedabad for the next 10 years.

There are many questions surrounding this announcement.

Why would the RPSG group pay Rs 7,090 crore for a team based in Lucknow, where there are hardly any big corporate houses to offer sizeable amounts for corporate boxes inside the stadium? The RPSG group has some experience of running an IPL team, having owned Rising Pune Supergiant for two seasons in 2016 and 2017. Until 2018, which was when most teams made profits for the first time, most franchise holders were cribbing to BCCI about making losses, but the pre-2018 experience was apparently good enough for Sanjiv Goenka to “invest a few crores for passion” this time round.

However, more important questions surround CVC, which is involved in betting and offshore gambling. (Let’s not forget that in 2014, CVC picked up an 80 percent stake in the betting and gaming company Sky Bet, founded and owned by the British media and telecommunications conglomerate Sky Group Limited.) How could such a company be chosen as a successful bidder, instead of being blacklisted during the evaluation process? Was the bidding event all about enabling CVC to enter India?

Unethical for Europe, ethical for India?

CVC is heavily invested in sports betting and gambling worldwide, which is unreservedly against the bid objectives laid down by BCCI relating to the development of the game of cricket. In 1999, CVC acquired William Hill, one of the largest British bookmakers. In 2003, it acquired IG Group, UK’s leading provider of speculative investment such as spread bets. In 2013, CVC tried to acquire Betfair, the world largest Internet betting exchange company, but the deal didn’t go through.

In 2015, CVC bought a 10 percent stake in the Spanish football league La Liga in a $117.3 million deal that gave CVC 11 percent of La Liga’s media revenue for 50 years. CVC would also provide $2.9 billion to league clubs as an interest-free loan. Real Madrid, Barcelona and Atletico Madrid were among the clubs that opposed this move. “CVC bought the stake after negotiating terms that contravene Spanish law and La Liga’s protection of its clubs,” said a BCCI insider. Eventually, the decision was reversed.

Earlier this year, 38 of 42 clubs in the Spanish football league La Liga voted in favour of major investment from CVC, which will inject 2.7 billion Euros into La Liga. Barcelona and Real Madrid are among the clubs that have rejected the deal. The Royal Spanish Football Federation, the governing body of football in Spain, has described the deal as “shameful”.

Given CVC’s history and the fact that sports betting is still prohibited in India, why did no one in the BCCI raise a red flag about CVC while evaluating the bid papers? You’d think that giving an entity involved in betting the rights to own and operate an IPL franchise would lead to serious concerns in the overall IPL ecosystem.

It has now been brought to BCCI’s notice that “CVC Capital Partners were heavily fined by the Dutch competition authority for breaking the competition rules for price-fixing” . An insider within the BCCI told Newslaundry, “Keeping all these factors in mind, CVC Capital Partners (group company of Irelia Company PTE LTD) have failed to comply with the terms and conditions laid down by BCCI under the ITT document”. ITT document refers to the invitation to tender for the right to own or operate a new team.

For the love of cricket?

In 2014, while hearing the IPL spot-fixing case, the Supreme Court came down heavily on Chennai Super Kings owner N Srinivasan’s son-in-law Gurunath Meiyappan, for placing bets on the team’s performances. The apex court compared it with the practice of insider trading on the stock market.

With CVC Capital Partners entering the IPL, what is the guarantee that these owners – who run betting and gambling businesses worldwide – would not use their resources and inside information to make money?

As of 2021, BCCI is set to earn Rs 1,200 crore a year for the next 10 years (including Rs 709 crore and Rs 560 crore paid by two new teams). Judging by past records, which show teams earned around Rs 200 crore per year from central revenue and about Rs 100 crore more from gate collections, sponsorship and merchandising, the two new team owners could be in the red in the near future, with the RPSG group losing in the range of Rs 350 crore and CVC Capital Partners losing approximately Rs 260 crore a year.

On the face of it, this seems like a questionable investment, but perhaps both owners were feeling charitable in the name of cricket?