The stunning indictment, which arrested more than 30 people on charges of illegal sports betting, including the Miami Heat’s Terry Rozier and other NBA officials, is drawing new attention to the rapidly growing professional sports betting business across the country.
Since widespread legalization, the multi-billion dollar industry has made it easy to bet on everything from the outcome of a game to the outcome of a single play with just a few taps on your phone. Today, it’s nearly impossible to go to a basketball, football, baseball, or other professional game, or watch the game on TV, without seeing ads for sports betting.
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Fans can place bets from their seats in the stadium while the “Bet” ticker scrolls through the sports on television. Star athletes are often at the center of that promotion.
In Thursday’s indictment, federal investigators accused Rozier and other defendants of violating the law by misusing players’ personal information to win bets on NBA games. Rozier’s attorney, Jim Trusty, said in a statement that his client is “not a gambler” and is “looking forward to winning this fight.”
A separate indictment alleges that Portland Trail Blazers coach Chauncey Billups and others participated in a conspiracy to fix high-stakes card games. Billups’ attorney, Chris Heywood, released a statement denying the charges and calling his client “a man of integrity.”
Regulating sports betting has proven difficult, with experts warning of the impact on gamblers who typically suffer losses. The role of professional leagues themselves in promoting gambling has raised eyebrows.
India’s government passed sweeping legislation to ban online gambling in August after official figures showed companies were stripping 450 million people of $2.3 billion a year.
The ban affected card gaming, poker and fantasy sports platforms, including India’s hugely popular homegrown fantasy cricket app.
At the time, India’s national cricket team was sponsored by Dream11, the country’s largest fantasy sports gaming platform.
The explosion of legalized sports betting
Sports betting is probably as old as sports itself. However, legal gambling really took off in the United States in 2018.
That’s when the Supreme Court struck down the Professional and Amateur Sports Protection Act, which banned sports betting in most states. Sports betting, once only allowed in Nevada, is now allowed online or in retail stores in 38 states and Washington, D.C. Missouri will become the 39th state on December 1st.
The biggest leap forward, experts say, is online through smartphone apps and platforms like DraftKings and FanDuel. Through the third quarter of this year, legal sports betting generated $10 billion in revenue, an increase of about 19% from the same period last year, according to the American Gaming Association.
The industry argues that legal gambling benefits states and deters illegal gambling. Major carriers are pointing to the technology they use to monitor for suspicious activity. FanDuel said Thursday’s news shows a “clear contrast between the legal and illegal gambling markets.”
Who benefits?
There’s a lot of money on the table, both for the people who bet to win and the platforms that make it possible. The NBA and other professional sports leagues also generate revenue streams by partnering with sportsbooks to generate advertising revenue.
Live match statistics provided by leagues are key to the relationship between the sports world and the gambling industry. Isaac Rose Berman, a research fellow at the American Boys and Men Association whose research focuses on sports betting, said the reason you can bet on what the next pitch in a baseball game will be is because Major League Baseball sells the data to platforms “for a significant amount of money.”
NBA partners with Sportradar on data rights. Sportradar provides official NBA statistics from FanDuel Sportsbook. When the deal was announced in 2022, Sportradar touted it as a way to “monetize a long-term partnership with the NBA.”
How is sports betting regulated?
Each state has its own regulations and tax rates for sports betting. There are some restrictions on where you can place your bets, and users are allowed to use the mobile app, but only if they are physically inside the casino or within a certain radius of the stadium, for example. Some restrict what betting platforms you can use and what you can bet on.
“States have kind of opened a can of worms, and now some states are starting to realize how crazy this world of sports betting is,” said Wayne Taylor, a marketing professor at Southern Methodist University.
An even more troubling factor is when players or other team or league officials are involved. The NFL, NBA, MLB, and NHL all prohibit employees and players from betting on their league’s games, although some gambling in other areas is allowed.
Legalized gambling has certain security advantages in that abnormal gambling patterns, such as large bets placed on the performance of random players, can be immediately reported. In some cases, sportsbooks may lower the odds on certain events to prevent manipulation.
Still, experts like Taylor say the companies’ own financial interests could be called into question. And across the sports market, the large number of players and wide scope for micro-bets make potential manipulation “easier to hide,” he said.
What is prop betting?
A prop is a type of bet that allows gamblers to bet on whether a basketball player will exceed a certain statistical number, such as whether a basketball player will exceed or fall over or under a certain point total, rebounds, assists, etc.
These types of bets are key to a sports betting study released Thursday. Investigators pointed to a March 23, 2023 game involving Rozier, who was playing for the Charlotte Hornets at the time.
Rozier played the first 9 minutes and 36 seconds of that game, but not only did he not return that night citing foot problems, he also did not play again that season. He had a solid first quarter with five points, four rebounds and two assists, but that was well below his usual totals for a full game. At the time, many bettors took to social media to claim that something suspicious happened regarding prop bets involving his stats that night.
More broadly, the NBA has expressed concerns about prop bets, and other sports leagues are concerned about the potential for manipulation.
Earlier this year, Ohio Gov. Mike DeWine asked the state’s gaming commission to ban prop betting after Major League Baseball placed two Cleveland Guardians pitchers on administrative leave during an investigation into sports betting.
What are the other pitfalls and social implications?
Sports betting has also faced criticism for opening the door to gambling addiction.
“The fact that it’s become the norm, the advertising is aggressive, the fact that it’s available 24/7, microbets, all of that adds up to a huge increase in person-to-person usage,” Taylor said, citing algorithms and other incentives that betting platforms use to drive engagement.
Rose Berman points out that platforms are making the most of the returning “biggest losers.” Recent research suggests that young people in low-income areas are particularly affected by the economic impacts associated with sports betting.
“More than 90% of sports bettors will not actually experience any significant negative impact, but it will be concentrated among the big losers, and it will be devastating for them,” he said.
