Gambling Under a Different Name: The Issue With Cryptocurrency Deals in World Soccer

  • Soccer teams have formed crypto deals to replace cash with gambling sponsorship bans inbound
  • This season, 17 of the EPL’s 20 clubs have crypto deals, with many also creating new fan tokens
  • Due to the renowned volatility of crypto trading, any investment essentially constitutes a gamble
  • Top teams, including Manchester City, are not completing checks on cryptocurrency partners
  • With the soccer world forced towards crypto, the future of the deals will depend on regulators
Bitcoin with soccer balls
Cryptocurrency partnerships are now commonplace in world soccer, but do they present a better alternative to ousted gambling sponsorships? [Image:]

A new kid on the block

In mature markets, the betting sector currently has a turbulent relationship with professional soccer. The Spanish government banned gambling companies from partnering La Liga soccer teams in 2020. Meanwhile, Germany and the UK seem set for similar measures, with lawmakers, fans, and anti-gambling groups united in their calls for change.

a new type of company has begun to appear on soccer shirts

While these groups focus their attention on kicking betting out of their favorite sport, a new type of company has begun to appear on soccer shirts. Clubs across the globe are now forming more and more partnerships with cryptocurrency firms as they look to maintain much-needed sponsorship income.

On the surface, this sounds like a fair compromise. Soccer franchises need to replace deep-pocketed gambling partners with bans on the way, and the wealthy crypto world can certainly provide. However, it could be argued that these companies currently pose a greater risk to fans than gambling operators ever could.

A gradual encroachment

Cryptocurrencies are not a new phenomenon. In fact, they have been around for about as long as the iPhone. You could, however, be forgiven for not paying much attention to them until recently. Virtual currencies have grown substantially in popularity, peaking in 2021 when Bitcoin doubled in value before losing almost all of those gains by January this year.

With these digital currencies clearly the flavor of the month, soccer teams have jumped into dealmaking headfirst. This season, 17 of the English Premier League’s (EPL) 20 clubs have cryptocurrency agreements. Meanwhile, Barcelona, Real Madrid, Paris Saint-German, and Bayern Munich are but a few of the world-renowned teams outside of the UK with crypto partners.

It’s essentially buying credibility from football.”

Speaking in a podcast for The Guardian last week, the UK newspaper’s technology editor Alex Hern commented on this recent flurry of deals. “The crypto sector is now incredibly flush with money and as with any suddenly rich sector that needs to attract users endlessly, it’s spending that on advertising,” he explained. “It’s essentially buying credibility from football.”

Notably, a large portion of these soccer deals do not involve a simple logo on a shirt or pitchside branding. Many teams are working with their cryptocurrency partners to create fan tokens. With these virtual currencies, supporters can buy a portion of control in how their team is run while earning rewards and prizes along the way.

Under a different name

The main issue with these cryptocurrency deals lies in the hypocrisy of regulation. Most likely, gambling companies will soon be left out in the cold in all mature markets, banned from sponsoring soccer teams across Europe. Meanwhile, crypto companies are free to benefit from this situation even though they ultimately offer a very similar product.

giving it a new technological sheen and letting them invest in it.”

The notoriously volatile nature of crypto trading means that any investment is essentially a gamble. Added to this, The Guardian’s Hern believes that through fan tokens, teams are trying to motivate supporters to put cash on the line. “It’s essentially taking the betting you would get outside of the crypto space, giving it a new technological sheen and letting them invest in it,” he explained.

The journalist went on to liken crypto trading to the kind of wagering seen in collapsed betting company Football Index. The site allowed customers to buy shares in football players which would increase in value if they performed well. Users lost millions as Football Index slashed dividend payouts before its collapse in March 2021.

Strikingly, other higher powers have also begun to associate crypto with gambling. Only last week, India’s government announced that it taxes crypto earnings in the same way it would tax horse racing or sports betting. Government officials described digital currencies as a “grey area” as they continue to debate their stance on the sector.

Where is the due diligence?

Outside of this regulatory hypocrisy, the second problem with crypto partnerships in soccer lies in substandard due diligence efforts. As they scramble to secure themselves a slice of this new craze, soccer teams are failing to check the legitimacy of the crypto firms they are partnering.

In November 2021, English Premier League team Manchester City announced crypto start-up 3Key Technologies as their “official regional partner in decentralized finance trading analysis.” However, just two months later, the club mysteriously announced that it had terminated the partnership with little to no explanation. As it turns out, that company didn’t even exist.

Doubts were cast on the partnership when it emerged 3Key’s website contained no contact details, registered office, or company number. Its staff also appeared to have no digital footprint. Despite all of these seemingly obvious red flags, Man City alleged that it completed its due diligence before agreeing to the deal.

In a similar story, a crypto company called IQONIQ partnered with a long list of major soccer organizations, including Crystal Palace in England, AS Roma in Italy, and even the Spanish league itself. Its cryptocurrency went live in April 2021, but by December IQONIQ had entered liquidation leaving fan tokens without any value.

This left thousands of supporters out of pocket – something a thorough check of the company could have prevented. According to France Football journalist Phillipe Auclair, authorities previously named the IQONIQ CEO in a US fraud case with links to a company that had recently gone bust, taking €10m ($11.4m) from investors.

Revealing these failings in last week’s Guardian podcast, Auclair likened them to the lack of due diligence seen in UK soccer partnerships with gambling companies, particularly those from Asian countries. In a desperate bid to secure sponsorship funds “no questions are asked,” he claimed. “Boxes are ticked.”

Between a rock and a hard place

Supporter groups for Arsenal, Manchester City, Aston Villa, and Leeds United, who have all partnered with crypto company Socios to create fan tokens, have shared their disapproval of the deals with English Premier League officials. In response, the league’s chief executive Richard Masters has tasked the EPL’s chief commercial officer with looking into the matter.

will cost the league’s 72 clubs more than £40m ($53.5m)

Despite that promise, with a ban on front-of-shirt gambling sponsorship with UK soccer teams potentially inbound, league officials may have no choice but to turn to crypto. This is particularly true for the lower leagues in English football. According to Rick Parry, chairman of the English Football League (EFL), the measure will cost the EFL’s 72 clubs more than £40m ($53.5m) of annual revenue.

The Premier League is also supposedly eyeing up the non-fungible token space through a deal with Ethereum-powered platform Sorare. According to reports, the company has raised around $680m through a lucrative funding round, and already has deals with the Bundesliga in Germany and La Liga in Spain.

Evidently, whether fans like it or not, it seems the sector has found a home in the world of soccer for the foreseeable future. Now, only time will tell if governments decide to accept the agreements, or whether they will see the clear similarities between crypto deals and the gambling sponsorships they have so often opposed.

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