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Dubious tipsters who earn commission on the business they send to online bookmakers are pulling in vast sums of money by deliberately recommending long shot bets that are unlikely to win, the Guardian has learned.
Current and former tipsters, pressure groups and charities have described how the operators have a vested interest in seeing their tips lose because they take up to a 30% cut of the losses their followers make to bookmakers.
The disclosures will increase pressure on the government to exert more control over the gambling industry. It is currently self-regulating but is facing severe scrutiny after the online betting firm 888 was penalised a record £7.8m because more than 7,000 people who had voluntarily banned themselves from gambling were still able to access their accounts.
On Thursday, the Guardian revealed that the industry was harvesting people’s data to target low-income gamblers and people who had stopped betting.
The new details of dubious practices on the fringes of the industry focus on “affiliates” – individuals or businesses who send customers to online bookmakers by posting links and taking a share of the income that the bookmakers make from those referrals. Affiliates have become one of the main ways for online casinos and bookmakers to gain new customers since the cost of conventional pay-per-click advertising rose sharply in recent years.
The spread of social media has led to a marked increase in the number of affiliates. While some conduct their business legitimately, others are alleged to deliberately mislead those who have come to trust them after they have built a rapport by showing evidence of occasional wins and by having an approachable tone. To access the operator’s tips, followers must sign up with the particular bookmaker or casino to which the vendor is affiliated.
They often advertise free bets to lure in new users. However, users often have to make up to 35 bets before any winnings can be withdrawn.
Critics say bookmakers must do more to challenge such practices.
“Online gambling companies need a constant stream of new players, as a huge proportion of their customers experience significant harm and lose more than they can afford,” said Matt Zarb-Cousin, of the Campaign for Fairer Gambling. “Affiliate sites disguise themselves as tipsters, but when they earn a percentage of customer losses they are clearly only pretending to be on the side of the gamblers.”
Income from “remote betting”, that is, via online casinos, poker and bingo, was £817m in 2009. It has now reached £4.5bn, making up more than a third of the industry’s £14bn income last year.
Earlier this year, the head of the Gambling Commission, Sarah Harrison, expressed her “grave concerns about terms which appear to bamboozle rather than help customers make informed choices”.
An industry expert, Peter Ling, said tipsters earn money through revenue share deals, where they earn around 30% of the losses incurred by any customers they refer to the mainstream betting websites.
“This incentivises such tipsters to only put up losers, yet no self-respecting punter would knowingly follow the advice of a losing tipster,” he said. “It has created a situation where losing tipsters are masquerading as being successful by using a variety of tactics, be it through social media where they create new accounts and delete posts to fit a narrative, or simpler things, such as quoting odds that don’t exist.”
Some affiliates, masquerading as tipsters via Facebook groups, build up a following on social media before posting a sign-up link connected to their affiliate ID. This ensures they earn from their followers’ losses once they purposely recommend that they gamble on bets that are likely to lose.
It has been alleged that one prominent tipster advised his followers to make 57 consecutive bets which lost.
Such tipsters, who work from home, frequently recommend accumulator bets that experts say represent bad value, and entice their followers by posting fake graphics of their wins.
Others will play high stakes slots all day on a livestream before cherry picking their wins and posting the videos on YouTube. These will be accompanied by affiliate links which do not disclose that the tipsters stand to win from any losses incurred by those who sign up.
The YouTube videos of the wins garner far more views than those of the livestreams, which often feature repeated losses. However, because of the success they have in encouraging people to sign up, they can afford to take the losses.
An ex-employee of a gambling company said: “I’ve watched the YouTube affiliates, they are definitely in the red [on their on-screen bets].”
Other, more reputable tipsters also enjoy win-win scenarios when recommending bets to punters.
“We have concerns about some of the ‘big players’ who generate a great deal of affiliate income,” said Brian Chapel, of Justice for Punters, a group calling for greater regulation.
Referring to larger businesses that simultaneously tip and take a cut from bookmakers, he said: “Of course these organisations provide some great information for punters, but surely there is a conflict of interest when they promote themselves as the best source of information for punters yet earns a commission based on punter losses.”
guardian.co.uk © Guardian News & Media Limited 2010
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