Was the Noise on CVC Capital Ownership of the Gujarat Titans Justified?

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Was the Noise on CVC Capital Ownership of the Gujarat Titans Justified?

The BCCI had to Tread Carefully after Former IPL Chairman Pointed Fingers

In October 2021, Luxembourg-based international private equity fund CVC Capital Partners which operates $165 billion, won one of the two new IPL franchises with a bid of ₹5,625 crore. However, the global investment company didn’t receive the Letter of Intent (LoI) from the Board of Control for Cricket in India (BCCI), even though the other winner in the auction – the Kolkata-based RP-Sanjiv Goenka Group which won the Lucknow IPL franchise – were handed their LoI immediately. A scandal had blown out following a tweet by former IPL chairman Lalit Modi.

“I guess betting companies can buy an IPL team. Must be a new rule. Apparently, one qualified bidder also owns a big betting company. What next? Does BCCI not do their homework? What can Anti-corruption do in such a case?” Lalit Modi pointed fingers at CVC Capital on the same day the IPL franchise auction results were reported.

The BCCI appointed an independent external panel led by former Supreme Court Justice K. S. Radhakrishnan to scrutinize the issue. After months of work, the panel established that it was the European fund of CVC Capital that had invested in Malta-based online gaming and sports betting operator Tipico, Italian cash prize gaming and payments operator Sisal, and UK-based Sky Betting and Gaming.

The CVC Capital Asian fund was found to be clear of any investments in gaming and sports betting businesses and to be a separate entity from the company’s European fund. As it was the Asian fund that had won the Indian Premier League franchise, CVC received the green light from BCCI to proceed with the Ahmedabad team and named it the Gujarat Titans.

Distance, and not Legality, Helped CVC Capital, while India Shies Away from Regulation on Betting

Gambling and betting in Malta, Italy and the UK are legal and well-regulated businesses, meaning that the investment portfolio of the European Fund of CVC Capital was perfectly legitimate and law-abiding. Nevertheless, it was the distance between CVC’s Asian and European funds that allowed the BCCI to grant clearance to the Ahmedabad team purchase, treating the company’s legal business in Europe as a leper. At the same time, IPL satta is reportedly huge in India, even though mostly done underground, with IPL betting conducted online the only not-illegal option desi bettors have.

Reports estimate the size of the existing Indian betting market anywhere between $130 billion and $150 billion across various illegal and legal forms. The number of regular bettors in the country is estimated at 140 million, with a total of 370 million people placing bets on big sports competitions. At the same time, calculations show that ₹3 lakh crore can be pushed out of black economy and enter legitimate money flows if sportsbooks in India get regulated.

The experience of countries like Sweden, Denmark and the UK shows that increased taxation revenues and siphoning of funds out of the hands of criminal circles are not the only benefits regulation on sports betting brings.

Sensible betting regulation laws allow countries to implement a thorough framework of customer protection and responsible gaming mechanisms to effectively shield users from an array of risks including problem and addictive behavior, unsustainable financial losses, privacy breaches, and operators that revert to malpractice and fraud.

Moreover, the greater traceability of betting activity in a regulated market can do a lot towards bringing down match-fixing and enhancing the integrity of sports. This is a particularly acute problem for India, as exemplified by a recent litigation dealing with alleged cricket match-fixing cases from the Karnataka Premier League T20 tournament at the state’s High Court.

The court ruled that match-fixing does not constitute a criminal offense as per the Indian Penal Code, even if it “may indicate dishonesty, indiscipline and mental corruption of a player.” The court bench also observed that betting on cricket and other sports is not illegal as per the definitions of gaming in the Karnataka Police Act.

This HC decision may pave the way for sensible regulation over the country’s huge sports betting market, instead of sports officials making big noise about legitimate betting businesses in successfully regulated countries.

Disclaimer – We don’t endorse online gaming and cricket betting. Readers may participate at their own risk.

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