Sports Betting's Unintended Consequences

00;00;00;00 - 00;00;49;20
Mark Conrad
Hello and welcome to the Sports Business Podcast with Prof. C, the podcast that explores the world of professional, collegiate, amateur, and Olympic sports. I'm Mark Conrad, or Prof. C from Fordham University's Gabelli School of Business, where I serve as Professor of Law and Ethics and the Director of the Sports Business Initiative. The chickens have come home to roost. That is my first reaction to the recent spate of news regarding arrests of athletes and coaches on charges related to improper sports betting.

00;00;49;22 - 00;01;27;07
Mark Conrad
My second reaction: is anyone really surprised? The recent indictments of Major League Baseball players, an NBA player, a former player, and a coach, along with investigations of college athletes have produced a lot of righteous anger by prosecutors, sports officials, politicians and commentators. But buyer's remorse should be another reaction. After all, over 30 states have legalized sports betting since the Supreme Court threw out a federal law banning it back in 2018.

00;01;27;10 - 00;01;54;25
Mark Conrad
So why the buyer's remorse? Well states raced to legalize the activity with little thought of the results of the systems they produced. We got mobile betting, prop betting, and parlays, which basically gives interested stakeholders the goodies they want, easy ways to bet and many types of bets allowed. The leagues and the teams found new revenue streams to fatten their coffers,

00;01;54;28 - 00;02;25;07
Mark Conrad
And states found new ways to increase revenues, advertisers found new accounts, and the broadcasters found a new source of revenue as well. 
But back to the gambling charges. Cleveland Guardian players Emmanuel Clase and Luis Ortiz were indicted on wire fraud and conspiracy for allegedly rigging individual pitches to benefit bettors. If true, it is stunningly stupid on their part 

00;02;25;10 - 00;03;05;15
Mark Conrad
They alleged receiving bribes of $5,000 for rigging the pitches, a pittance of the $20 million over the five years of Clase's contract. Ortiz reportedly earned $782,000 from the Guardians this year. For their nominal bribes, the betters allegedly won $450,000. NBA players and former players were charged conspiracy, wire fraud, and money laundering centered on what prosecutors call an insider sports betting conspiracy that exploited confidential information.

00;03;05;17 - 00;03;45;29
Mark Conrad
It allegedly involved player bets based on the performances of players on four NBA teams: the Hornets, Trail Blazers, Lakers, and Raptors. Non-public information was reportedly relayed by players and others for games played by those four teams. This comes about one year after the NBA banned Jontay Porter for violating the league's gambling rules after an investigation revealed that he had disclosed confidential information to bettors, limiting his participation for games for betting purposes, and even betting on NBA games himself.

00;03;46;01 - 00;04;20;28
Mark Conrad
But the tentacles may have spread to the college ranks. New Jersey authorities announced charges against 14 people for their roles in a multimillion-dollar sports betting ring operated by organized crime members. The NCAA banned a number of players for their involvement in game manipulation and sharing information. Clearly, a problem exists. After these reports, sports leagues, sensing the negative fallout, began to preach restrictions, notably proposing to restrict prop betting.

00;04;21;01 - 00;04;45;18
Mark Conrad
Prop betting is particularly susceptible to corruption because of the particularized nature of the gambling as it focuses on the player rather than the result. Will X's next pitch be a strike? Will Y hit a home run? Will Z score the next two baskets? I wonder why states did not foresee the potential corruption before enacting these legalization schemes

00;04;45;21 - 00;05;14;04
Mark Conrad
that have increased this practice. Was the betting industry utilizing political clout to get what it wanted? Were politicians looking at the increased tax and licensing revenues? It's hard to say. But what is not hard to conclude is that the genie is out of the bottle as a pandora's box of horribles may have been unleashed. Although I supported legalized sports betting, second thoughts course through my mind.

00;05;14;07 - 00;05;40;24
Mark Conrad
Yes, gambling existed illegally for decades and yes, it was logical to think that highly-paid professional athletes would not be susceptible to corruption. But the ease of betting especially through mobile devices and the patch-quilt nature of state-by-state regulation makes me wonder if the idea of legalized sports betting was a mistake to begin with. At the very least,

00;05;40;27 - 00;06;12;24
Mark Conrad
Leagues, teams, and medical groups should pressure states to restrict prop betting. But I would not count on changes in state laws so fast. There is simply too much money going around. For the Sports Business Podcast at Fordham's Gabelli School of Business, I'm Mark Conrad, or Prof. C. Have a great day!