Monday, July 22, 2024

The risks of betting on Iran

Online Betting Companies need to get out of the Iranian market before November 4 or face the consequences of penalties for sanction busting. With the opening up of the US sports betting market, international players need to look hard at where they and their partners operate because US players in this field will not be slow to report them.

Until May 2018 the only state in the US in which you could legally bet on sports was Nevada. Then the US Supreme Court overturned that ban, in one of a number of recent decisions that strengthen the rights of states over the federal government. Congress could still legislative to prevent states from allowing the gambling but with a powerful lobby of gaming companies supporting the move, it is unlikely to do so, and this frees up the US market for domestic competition. But what is even more interesting, from an international trade perspective, is that it allows international players into the hugely lucrative sports betting market. Estimates of the current value of illegal sports betting are between $150billion and $400billion.

Because this market has been closed for decades, many of the key international players in the sports betting world have had to find alternative markets to develop. These markets are good, but they are nothing compared to the potential of the sports mad USA.

At the moment the physical gaming market in the US is worth about $70billion and the total value of gaming to the US economy is around $240billion. Ten states are set to allow internet gambling over the next year or so, growing the value nationally and away from the small number of states that have historically allowed it to take place. It will not take long for the legal market to become as lucrative as the illegal one.

So what if the gaming companies have to make a choice between markets they have been forced to grow and the market that has the most potential?

Here is an example of the kinds of tough choices players in this space are now having to make.

GAN is a UK listed gaming company that is becoming a leading player in the US market. They recently announced a strategic partnership with SB Tech.  Who promise on their website that: We ensure that you get the best solution for your needs, while meeting all regulatory requirements in any market. SB Tech in turn supplies one of the major players in the online gaming market in Iran. As their website proudly boasts:

Betcart is  part of the Bcourt Group NV, which is based in Curacao. This is also where the upcoming bookie is licensed and they were established in 2010. Since then, Betcart has made an impact in the betting industry and especially in Italy and Iran, where they hold exclusive domains, and Their sports betting platform is provided by Sbtech, one of the greatest software providers globally.

Gambling, except between the participants of archery contests, camel races and horse races, is illegal in Iran, so most people who gamble either go to Turkmenistan or bet online. Iran is one of the most active online markets in the region. Betcart is doing very well in this market. Its review on the Bookmakers review site calls it the “Top choice for Iranian players”.

So, the question for these companies is what to do when the newly re-imposed sanctions on Iran covering online financial activity and specifically the financial transactions necessary to bet, begin to be enforced after a winding up period comes to an end. Specifically, the Treasury Department guidance states that the following is prohibited:

Sanctions on significant transactions related to the purchase or sale of Iranian rials, or the maintenance of significant funds or accounts outside the territory of Iran denominated in the Iranian rial;

Apple long ago decided that its app store was covered by the sanctions:

“Under the U.S. sanctions regulations, the App Store cannot host, distribute or do business with apps or developers connected to certain U.S. embargoed countries.”

GAN might not be given a choice if it wants to continue to grow its US market because, the Treasury department guidance also states that:

Persons engaging in the activity listed above undertaken pursuant to the U.S. sanctions relief provided for in the JCPOA should take the steps necessary to wind down those activities by November 4, 2018, to avoid exposure to sanctions or an enforcement action under U.S. law.

Other international players are in the same boat. With trade wars waging with China and Turkey, these markets might also soon come under scrutiny, potential tariffs and even sanctions. In fact, they almost certainly will. I would bet on it.

Elliot is the Editor at ABCMoney. He manages a team that writes and contributes to many leading publications across a number of industries.

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