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Risky gambling-like trading and cryptocurrency products are filling the void left by gambling football sponsorships as they are outlawed by regulators, academics have warned.
Regulators must address these new sponsorships or risk existing gambling ad bans having little or no effect on reducing societal harms, Dr Philip Newall, postdoctoral researcher at CQUniversity, Australia, and Leon Y. Xiao, teaching associate in the School of Law at Queen Mary University of London, told VIXIO.
“Newer quasi-gambling activities are less regulated and less understood by researchers, and might be perceived by consumers and regulators as less risky. This reflects a general trend towards gamblification that regulators should pay attention to,” the researchers said.
In Spain, six of the 20 La Liga teams used to have gambling sponsors before the current ban on gambling sports sponsorships was introduced.
Now Atlético Madrid and Sevilla are sponsored by financial trading apps as their shirt sponsors, while Valencia is sponsored by its own “fan tokens”, a volatile digital asset allowing fans to vote on minor issues affecting the club.
In Italy, where gambling sponsorships are also banned, Atalanta is sponsored by a “contract for difference” provider, Inter Milan is sponsored by a cryptocurrency-based fan token and Roma is sponsored by a cryptocurrency firm.
The researchers say they are not pro- or anti-gambling sponsorships in sport, but instead hope lawmakers “make more informed decisions”.
“An outright ban of sports sponsorship by traditional gambling companies without also addressing quasi-gambling products will likely just shift the harm to different domains, rather than remove it, which might not be ideal, given that those other domains’ potential harms are more unknown,” the researchers said.
The paper argues that a “new generation” of mobile phone apps easily allows consumers to invest in complex financial securities such as “options” and “contracts for difference”.
Further blurring the lines between gaming and gambling, many of these apps are “gamified”, including features such as flashing colours or congratulatory measures.
These features, the researchers say, make the financial products more likely to attract people with problem gambling symptoms.
Disclosures from the European Securities and Markets Authority (ESMA) revealed 74–89 percent of contract for difference investors lose money.
These products carry an additional consumer risk, as consumers can risk losing more money than their initial deposit.
Additionally, when it comes to cryptocurrencies, the researchers argue their extreme volatility compared with traditional stocks make them akin to a gambling product, as seen in previous studies revealing a high propensity for cryptocurrency traders to exhibit signs of problem gambling.
