The Big Fix (11 page)

 

CHAPTER 17

RIFFA, BAHRAIN, 2010

T
hrough Football 4U, Perumal arranged a match between Bahrain and the tiny West African country of Togo. This was a classic arrangement of the Singapore syndicate, an impoverished soccer federation playing yet another meaningless international friendly on the edge of anyone's concern.

Perumal's favorite referee, Ibrahim Chaibou, was officiating. Access to the betting ser­vices was assured. There was no need to take chances. But from his earliest days, Perumal had been a gambler. His brazenness had been the key to his success as a match fixer, the ability to do what others found impossible or objectionable.

On the evening of September 7, 2010, the Togolese national team took the field at the national stadium in Riffa, Bahrain. But this was not the Togolese national team. It was a team of journeymen club players from Togo, selected by a former national coach whom Perumal knew. The real Team Togo had lost to Botswana in an African Cup of Nations qualifier only days before. Togo lost to Bahrain, 3–0.

After the match, Josef Hickersberger, the Bahraini head coach, shook his head, commenting that the Togolese players “were not fit enough to play ninety minutes.” This episode recalled Perumal's use of the questionable Zimbabwean national team the year before. The difference this time was the considerable media attention that the match generated. By now, the sporting press had caught on to the fixing story. Perumal had made Togo look bad. He had made FIFA look ridiculous, which, it turned out, required a special effort before an uninformed, forgiving public. The publicity put the syndicate at risk.

The only reaction Perumal had was to retire Football 4U, changing the company name to Footy Media. “The bubble burst after the Bahrain game,” Perumal says. “Before then, I was very quiet, below the radar. After the Bahrain game, I became very popular.” Otherwise, he didn't care. He believed so strongly in his invincibility that he had no qualms with living in the public sphere. He maintained a Facebook page. He posted photos of himself from various locales around the world, dated proof of his whereabouts, which any investigator would find useful. Perumal also had an account on Zorpia, a social network popular in China and India. His username was zidane3107, no doubt a reference to the French national team star. He listed his favorite book as
The Day of the Jackal,
Frederick Forsyth's 1971 cloak-­and-­dagger novel about an assassination attempt on the French president. His favorite movie was
The Shawshank Redemption
. Under “Interests,” Perumal noted just one: soccer.

Perumal didn't know when to stop, and what would have inspired him to do so? FIFA, the soccer federations, and law enforcement had never cared much about his behavior. The cops weren't closing in. But the syndicate was. Dan Tan had come to the conclusion that Perumal saw himself as the main character of a soccer thriller, whereas the other members of the syndicate were concerned only with running a business. The Singapore bosses recalled Prakesh and Anthony Raj Santia. At a meeting in Singapore, Dan Tan told them that he no longer trusted Perumal. He wasn't a sure bet anymore. His ego was out of control. The bosses wanted to continue the operation with ­people they could trust.

In a business based on betting, Perumal's gambling had impinged his credibility. And when he turned on the TV on October 8, 2010, he knew that his situation was about to change. Bolivia was playing Venezuela in an international friendly. The match featured two classic Perumal national team targets, but that wasn't what caught his attention. The thing that struck him was the identity of the man officiating the match. It was Ibrahim Chaibou. Chaibou had awarded three controversial hand-­ball penalty kicks in South Africa's 5–0 win over Guatemala in May 2010. As Perumal tells it, he had annulled goals on phantom offside calls, extended injury time long enough to pad the score, issued red cards at critical moments in games, and it appeared, when Anthony Raj Santia contacted him about refereeing the match at Venezuela's Estadio Polideportivo de Pueblo Nuevo–San Cristóbal, he went right along with the plan. There was no loyalty between fixer and the fixed. Pal Kurusamy had taught Perumal that long ago. But what about loyalty between fixers, between business partners? Santia and Prakesh had gone around Perumal, tapping into the network that he had spent years establishing. They bypassed their mentor and plugged into the Singapore syndicate directly. Perumal was an entrepreneur, sure. He could sell his fixes to whoever was buying. But he was also a shareholder in the joint Asian-­European fixing cooperative that appeared to be shutting him out. He wasn't the sort of person to allow that to happen.

 

CHAPTER 18

C
arsten Koerl grew up in Allgäu, a province of Bavaria, halfway between Munich and the Austrian border. His fascination with both sports and computer programming led him, in the mid-­1990s, to investigate the ways in which he might combine his interests.

In 1998, with a friend, he founded a company called BetandWin. It was one of the first bookmakers to offer betting through an online portal, a novel concept at the time. Koerl could not have been more prescient. Just four years after Koerl opened his company with five employees, several thousand ­people were working at BetandWin. In 2002, he took the company public. Its name shortened to Bwin, the company eventually became one of the dominant books in the market. Bwin went on to sponsor Real Madrid, AC Milan, and Bayern Munich, the company's logo emblazoned across the clubs' jerseys.

When Koerl removed himself from the daily operations of the company, shortly after the IPO, he cast about for a new project. He remembered two Norwegian programmers who had pitched him on a product during his last days at Bwin. He didn't have time for them then, but now the memory returned to him.

Ivar Arnesen and Petter Fornaess were in their mid-­twenties, graduates of the Norwegian University of Science and Technology, located in the city of Trondheim, three hundred miles north of Oslo. The university in Trondheim held mythic status among computer programmers. Engineers there had been instrumental in building the operational core of Google.

Like Koerl, Arnesen and Fornaess were interested in sports and computer programming. And gambling. They knew enough about the sports betting market to recognize its inconsistencies. Bookmakers were good at analyzing a match and offering the kinds of odds that would generate action and produce profit for the company. Setting the right odds was the bookie's special talent. What bookies weren't good at was paying attention to small details. And these small details could make a big difference.

Arnesen and Fornaess realized that bookies, since they were dealing with so many games, often listed the incorrect starting time of a match. Sometimes match administrators moved a contest from one site to another, a change that could affect the outcome, yet a bookie might fail to report this fact. A bookie could receive the wrong information from a spotter and list the incorrect final score of a game. Also, without noticing it, a bookmaker might list odds that were, say, 15 percent higher or lower than the market average. If a bettor possessed more accurate information about a match than did the bookie with whom he was wagering, then he had the upper hand.

Bookies were taking action on league matches, international friendlies, World Cup qualifiers, youth games—­from all over the world and at a constant pace. With so much volume, bookies simply couldn't keep track of every detail of every match that they listed. Arnesen and Fornaess developed a method by which they could. They created an algorithm that could handle mass data extraction, specific to the online betting market. Using the data supplied by the online books themselves, their program was able to pinpoint inconsistencies in the market. Arnesen and Fornaess could identify the weak link (or links), the outlier in the network of international bookmakers, and then exploit it. When they detected which book was listing the wrong odds on a particular match, they would place a bet on that game with that book. They had figured out a way to game the system, using one book against many others to make a profit.

As exhilarating and profitable as this was, Arnesen and Fornaess understood that as the market became more developed, which was an inevitability, bookmakers would gradually address and eliminate these inefficiencies. Eventually, Arnesen and Fornaess would use their algorithm to squeeze out smaller and smaller profits, until their tool became virtually worthless. They believed that there was a better, more sustainable way to utilize their program. They decided to develop an instrument to aid bookmakers in correcting their offerings.

They pitched the idea to Bwin. But they weren't businessmen. They were programmers. Their product and pitch were raw. All the same, Koerl recognized an opportunity, for he was the entrepreneur. And after Bwin's perfectly timed IPO, he had the abundant capital to finance a start-­up.

In 2004, Koerl, Arnesen, and Fornaess established a new company, calling it Sportradar. The company's product, which was called Betradar, expanded upon the technology that Arnesen and Fornaess had been using to beat the bookies, but with Koerl's new market-­specific modifications. “From my time at Bwin, I knew what a bookmaker needed, because I was a bookmaker,” Koerl says. “I understood risk management, because I learned about it in a painful way, from clients cheating on me. I had precise knowledge of what I needed. That was our advantage. This was something that the bookmaker needed.” For a monthly fee, which a bookie could build into the back end of his business, like insurance, Betradar would handle the tedious tasks of verification and data collection for which bookies traditionally displayed little talent or patience. Koerl was back in the bookmaking game, yet in a decidedly different role. It wasn't long before that role would change once more.

I
n January 2005, German soccer officials announced the suspension of referee Robert Hoyzer. During an August 2004 German Cup match between Paderborn and Hamburger SV, Hoyzer had awarded underdog Paderborn two questionable penalty kicks. He had also dispatched a Hamburger player by red card. Paderborn won by two goals. An investigation determined that Hoyzer had bet on the match.

As the German soccer federation combed through Hoyzer's match record, the German prosecutor's office initiated its own investigation. It turned out that Croatian organized crime had been controlling Hoyzer, who had fixed a number of matches. And he wasn't the only one. Revelations implicated dozens of players and referees, even hinting that someone from inside UEFA was leaking the identities of those who would referee Champions League matches, allowing the Croatians to compromise them. Hoyzer was sentenced to two years and five months in prison. The leader of the betting ring, Ante Sapina, received two years and eleven months. The case was closed, but Koerl knew that this was not an isolated incident.

From years working in the betting business, Koerl knew that fixing was happening with regularity. Every bookie knew. They could usually tell when something untoward was happening with a match. It was one of the challenges of the business. Not only was a bookmaker concerned with establishing the proper odds to offer his clients, but he also had to worry about fraud in the marketplace upending all of his calculations and ultimately cleaning him out. Everyone in the business had general knowledge of fixing. What made Koerl different was his specific knowledge. He just didn't know that he had it.

Shortly after the Hoyzer case broke, Koerl received a phone call from a journalist. The reporter informed him that several bookies had revealed that they had recognized these fixed German matches through the Betradar interface. One component of the software was called “removed lines.” This displayed bookmakers that had offered betting on a match, but then subsequently removed it. This had always been a curious practice, for if a bookie removed a match after first listing it, he must know that the match was tainted. Combining this element with other factors of the Sportradar software, Koerl approached the German Football Association.

He explained that his technology could alert the federation to the likelihood of a fixed match. And it could do it in advance of a game, so that the federation could take action to protect its organizational integrity. When the German Football Association, mired in scandal, enthusiastically signed a contract, Koerl and his team set about modifying the technology. The new product had to be designed not for bookies, but for soccer administrators.

Koerl's new system analyzed the numerous characteristics of a given match—­its location, the relative strengths of the opponents, player injuries, the weather, and many more data points—­in order to produce the most logical betting line. This was the work of a bookie, establishing a baseline. Then Koerl's system compared this ideal, baseline bet to the actual offers of the sportsbooks. When the market offers deviated wildly from the established baseline, this was a signal that a match was questionable. Koerl knew that there were only two reasons why a bookie would move his numbers drastically from what they should be. Either the bookie had inside information, or he had taken big action that he didn't want—­that is, bets on a fixed match. For example, if a team's chance of winning is initially 45 percent, and then a bookie pegs the chances at 70 percent, the game is undoubtedly fixed.

The program served a function similar to the analysis of insider trading on a stock market. If the price of a share suddenly collapses for no apparent reason—­the CEO hasn't been fired, the quarterly earnings report contains no surprises—­there is likely some nefarious explanation for the drop in value. Koerl's system was able to review the share price of a soccer game, then investigate why it had collapsed. He recognized that he could see the marketplace deteriorate ahead of time.

Koerl named his new product the Early Warning System (EWS). Beginning in 2005, with its first client, the German Football Association, EWS monitored five levels of German soccer, from the Bundesliga on down, roughly five thousand matches a year. Koerl then forged deals with the football federations of the Czech Republic, Estonia, and France. When UEFA signed on as a client shortly thereafter, Koerl's new venture attained unquestioned credibility. EWS was now overlooking every professional soccer match in Europe, from fifty-­four member states. This arrangement enabled EWS to analyze not just the activity in one country, but the ways in which fixing in one country influenced fixing in another, and how betting was being placed in Asia. By the time FIFA signed on, in 2007, EWS was the recognized authority in its field, with Koerl supporting governments and police across Europe. It had taken a few years, but soccer administrators had come to realize that the EWS was filling a necessary gap in their security.

“Manipulation is damaging to the commercial possibilities of sport,” Koerl says. “Federations are very aware of the connection. It's a massive commercial industry.” Altruism aside, protecting the integrity of the games with EWS supported Sportradar's core product, Betradar. “Do you think sports betting would exist if ­people knew the outcomes of the game before it starts?” Koerl asks. “I think not.” There was just one complication. Koerl's clients didn't know it, but by 2007, his EWS was obsolete.

O
nly insiders understood that by 2007, technological innovation had fundamentally transformed the betting market. Criminal syndicates were now able to manipulate bookmakers with impunity, hitting this corner candy store over and over. And there was no way to detect their crime. Koerl understood that he would have to adapt his technology to the new reality. When FIFA developed its own in-­house monitoring algorithm and called it the Early Warning System, Koerl let them have the name. In sports betting, there was no such thing as an early warning anymore. “The name was not really appropriate for the kind of manipulation that had developed based on how popular live betting became,” Koerl says.

Live betting, or in-­game betting, existed before 2005. But 2005 was the year that it began to affect the marketplace in a significant way. Traditionally, a bettor placed a wager on a game before it started. And he was stuck with the bet. If the game's events began to affect his chances adversely, there was nothing he could do. He couldn't relinquish his bet. He couldn't make a new one, since the game was already under way. He might yell at the TV screen, but that was the extent of his ability to express himself.

By 2005, technology was beginning to enable the bettor to monetize the thoughts he was having about the flow of play in a live match. Broadband Internet had penetrated deeply into homes in Europe and Asia. Smartphones were taking over outside the home. Instead of having to walk down to the bookmaker's shop to place a bet, a bettor could bet on his computer at home, or on his phone while at the bar watching a game. Online portals like the one that Koerl had pioneered at Bwin began taking abundant action.

And the kind of action they were offering changed in accordance with the new form of betting. Bookmakers realized that online betting allowed them to provide a new array of offers, stimulating the betting market and driving liquidity.

The types of bets didn't change. You could still bet the Asian handicap, the over-­under, and other wagers familiar to the traditional client. What in-­game betting changed was how frequently the dynamic of these bets changed, as a match progressed. Any event in a match—­a goal, a red card, or simply expiring time—­affected the game itself, and thus altered the probability of the bets related to its outcome. As a match played out, a bookmaker would now change the odds he offered on a bet depending on the shifting factors of the game action. If a bettor realized that his chances of winning a wager that he had already placed were decreasing, he could now bet against himself, or he could place another bet entirely. He was no longer stuck with the bet he had made before a game. And he could place bets throughout a match. Suddenly, sports betting changed from a static, passive experience—­a fan's experience of watching the game—­into a frenetic opportunity for arbitrage, stimulating the adrenaline that one might feel by playing the game. Bettors converted to the new way in droves, fundamentally altering the betting landscape. In 2003, 10 percent of Bwin's online sportsbook business was in-­game betting. By 2010, in-­game betting represented 70 percent of Bwin's business.