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The NBA Gambling Scandal:

In a New York Times op-ed piece today, Justin Wolfers, a very smart Wharton Business School professor, argues that legalization of a certain type of betting can reduce the risk of players or referees acting to affect betting outcomes. Wolfers' key assumption is that most gambling scandals involve point shaving but not throwing of games. That is, players take money to do something like miss a shot (or not take one) in the last few seconds when their team is behind by ten points and they are nine point underdogs, or the referee calls a foul on the nine-point favorite with a few seconds left, enabling the underdog to add two points and beat the spread. The solution to this problem is to legalize gambling but only on the question of which team will win the game. This type of bet, sometimes called a "moneyline" bet, gives the gambler who bets on the underdog favorable odds on the bet rather than "points," or a "spread." You can make such "odds" bets rather than "spread" bets in many places, although betting with a spread is much more common in basketball and football. (I believe that moneyline betting is the predominant approach for baseball).

Wolfers' suggestion is clever, and it just might work. Of course, off-shore bookies would still take spread bets, but if odds bets were legal and regulated, perhaps the market for spread bets wouldn't be very big. What is more interesting to me, however, is an implication that Wolfers does not address: if he is correct that nearly all gambling corruption involves only shaving points in a way that doesn't affect who wins, the public shouldn't be too concerned about the current NBA scandal. Sure, it isn't anything to be happy about if the corrupt referee was blowing the whistle (or not) at the end of games in an attempt to manipulate the final score. But this wouldn't fundamentally undermine the integrity of the competition for the vast majority of fans who care principally about whether their favorite team wins or loses. It undermines the integrity of the game for gamblers whose primary interest is whether their team beats the spread, but the NBA doesn't care about fairness to the gamblers. If my team is favored by six points and is up by five with ten seconds remaining, I don't care if the player with the ball throws up a final shot or just holds the ball and lets the time run out, or whether he's trying his best to make that last second shot or not. If Wolfers' tonic will cure the ailment, this itself is proof that the ailment itself isn't very bad.

The big question, then, is whether Wolfers' empirical proposition about the nature of sports corruption is correct. That is, when it happens, does it rarely affect who wins and who loses? The claim strikes me as unlikely. Even if it is true that players rarely are bribed to try to lose (rather than just shave a couple of points), or that crooked referees aren't trying to affect who wins (just the spread), any crooked activity before the last few seconds of a game could well affect the outcome. If we just had odds betting, gamblers might still try to bribe players to miss just a couple baskets or referees to ignore just a couple of fouls throughout the course of the game. This would be enough to give them a betting advantage.

Steven Lubet (mail):
Betting is strictly odds-based in boxing, yet fixed fights are notorious. That seems to undermine Wolfers' main assumption.
7.27.2007 3:27pm
Smokey:
Caesar's wife must be above reproach.
7.27.2007 3:33pm
BruceM (mail) (www):
It only affects who wins or loses if you're talking about throwing a game for an odds bet, rather than missing a shot for a spread bet. I think this is a good idea.

At the end of the day, though, a player being paid to miss a shot that has no effect on the game itself (i.e. final shot of the game, score is 112 to 102 with a spread of 10.5) is always going to be likely because the opportunity cost is low: How can you prove someone missed a shot? The missed shot effects nobody but gamblers (and the player's own personal stat's which he obviously considers worth less than the money offered).

A question I'd like to have answered is this: If sports is just entertainment, who cares if the players cheat other than gamblers? Nobody seems to care that WWE wrestling matches are fixed/fake. It's entertainment. By caring about cheating, we are saying we're all gamblers, and/or sports is more than entertainment.

I don't think sports should be more than entertainment. If it's not entertainment, what is it?
7.27.2007 3:33pm
BruceM (mail) (www):
Steven Lubet: Well, people also bet on what round someone will go down in. A boxer who could knock out someone in the 5th but holds off until a later round, intentionally, is not throwing the match but is doing something more analogous to missing a shot that has no effect on the end result (i.e. who wins).
7.27.2007 3:36pm
mgarbowski:
It is not proper to assume that fixes of games with a line do not affect the outcome. Anybody who wants to fix a game will not do so on the basis that the crooked player or ref only has to act in the last few seconds if doing so would affect the line. They would want a guarantee going in. If the fix is that Team A loses by 9, it requires, at a minimum, that Team A lose. If Team A wins, and the player(s) or Ref(s) who were supposed to fix it say, "But Mr. gambler, I would have made sure Team A lost by at least 10 if it ever became clear that the loss was inevitable," the fixer will not be happy.
7.27.2007 3:43pm
abcdefgh:
Boxing is a little different though. Because it's one-on-one, any fighter can basically guarantee a loss by deliberately throwing the match. This makes it an ideal target for fixing.

In team sports, it's much more difficult. You need to walk a fine line and play badly enough to sabotage your team without being so bad that the coach just pulls you. Even if you're a superstar, getting benched won't necessarily guarantee your team a loss.

Shaving points is somewhere in between. As long as the point spread was reasonably accurate, it's not too hard for a player to miss a few shots, drop a few passes, or commit a stupid foul late in the game.
7.27.2007 3:48pm
HSC:
Prof. Wolfers' suggestion also fails to address "over/under" betting scandals. Some have suggested that this was the specific issue in the current NBA scandal. By calling more fouls, an official can increase scoring, increasing the chances that the game will exceed the over/under mark. No team would necessarily benefit, but the integrity of the game (and the fans' enjoyment) is compromised.
7.27.2007 3:53pm
robertemmet (mail):
I do not know if betting on the spread even existed in baseball before 1919. If it did not, Wolfers has to explain why betting only on the outcome has a different outcome despite empirical evidence that it does not. The Black Sox scandal may be most well-known, but there were a number of betting scandals earlier than that, involving not only players, but umpires.
7.27.2007 3:56pm
frankcross (mail):
I think this would be terribly counterproductive. I find it naive to suggest that players (much less refs) wouldn't be willing to throw the outcome of a game, rather than just a point spread. However, fans other than gamblers don't care about point spreads, just wins. If there is to be illegal fixing, we want it to be about point spreads, not won/loss. Therefore, we should focus gambling interest and associated cheating on matters like point spreads, about which we are indifferent, rather than winning or losing.
7.27.2007 3:57pm
Grange95 (mail):
As a long-time high school basketball referee who places the occasional sports wager (usually football or college basketball during the NCAA tourney), my thoughts are that it would be easier for a referee to affect the over/under (a/k/a total points) line than the spread. A ref could call more fouls on both teams, which generally pushes up the score yet does not appear to favor either team. In fact, this approach is what many people suspect the NBA ref in question did (there are several good articles that go into a lot of analytical detail on the issue at ESPN.com).

It would likely be easier for a player to affect the point spread, since an extra turnover or two, or a couple missed free throws late in a game would be tough to recognize as intentional. A ref, on the other hand, would need to make multiple calls favoring one team to keep the spread "correct" for his wager, and would expose him to a greater chance of discovery (particularly at the NBA level where nearly every call is given great scrutiny, although the major college conferences also do significant reviews of referees).

As for the moneyline option, I doubt it would make much difference in deterring misconduct by referees or players, because many games are already fairly close (5 point spreads or less). So, instead of shaving a few points and winning the game, the ref or player shaves a few points and loses. For that matter, a player or referee could make even more money by throwing a game where they are the big favorite (and thus a better moneyline for the underdog), although that would open them up to more scrutiny (perhaps the ref calls several quick fouls on the favored team's superstar). The thought of losing the game might deter some players, but likely would have little or no deterrent effect on referees (who probably don't care who wins or loses). And if a player or referee is bothered by his conscience enough to be opposed to throwing the game, those concerns may go out the door when faced with a massive gambling debt and no way out but to throw the game.

At the end of the day, as long as there is gambling in any form, there will be cheaters and angle-shooters looking for any edge possible.
7.27.2007 3:58pm
LGVV:
"No team would necessarily benefit, but the integrity of the game (and the fans' enjoyment) is compromised."

I'd go even further. The team that could shoot free throws the best would definitely benefit, as would any team that employs primarily a drive-to-the-basket offense (cough, Heat, cough) rather than a jump-shooting attack where there a fewer opportunities to call a foul (cough, Mavs, cough).
7.27.2007 3:58pm
highway61:
I think you're making a false assumption that a referee who is shaving points limits ill-motivated calls to the final moments of a game. A referee with an eye toward fixing a spread in favor of a given team has the same incentive to make calls in favor of that team throughout the game, and only needs to make those last second calls if he or she has done a poor job of fixing the game up to that point.

As to your question of why a little point shaving matters, one answer is that it's not uncommon for point shaving and game outcome to overlap--with a 1.5 point spread, a fixed game could certainly result in a team losing an otherwise winnable game. But as a fan, my primary aversion to all point shaving, no matter how disconnected from the game's outcome, is that it undermines competition generally. It undermines the players' ability to play with confidence in the system.

To illustrate, I would argue the same problem exists from another source: namely, NBA referees consistently give calls to certain players (e.g. Dwyane Wade, LeBron James, or Michael Jordan in his time) that they refuse to give to others (e.g. Greg Buckner, Paul Millsap, or Kurt Rambis in his time). I think players and coaches quickly pick up on who gets the calls and who doesn't, and adjust their style of play to make the most of a bad (or good) situation. Lesser players let the superstars drive to the hole without putting up as much defense, knowing they can't get the call even if they play good defense. Superstars play with reckless abandon, knowing their odds are better. It's an impossible thing to quantify, but I think it hurts the game. Same for point shaving--people change when they know something is up.

You're entering professional wrestling territory when you mindfully control the play of a game in these ways, and that ruins the idea of real sports. If manipulation exists, you usually can't know whether it reaches the outcome itself, and the secret sauce of sports is freedom from manipulation of the outcome.
7.27.2007 4:03pm
CJColucci:
Professional wrestling is fixed?
7.27.2007 4:12pm
Wolfers Fan (mail):
I think the argument is more subtle than you made it out.

Instead, he first argues that most attempts to shave points would logically be aimed at the point spread and not at the result. The reason for this is partially detection -- a big call at the end of the game that flipped the result would receive more scrutiny than either a call at the end of a meaningless game with no direct effect or minor calls throughout a game. Secondly, there are big rewards for players for winning -- more money, more fame etc. -- and, even if they are corrupt, the cost/benefit of throwing games is probably bad whereas the cost/benefit of effecting the spread or the over under is good.

All of that said, shaving aimed at the spread can effect the results. Shaving that merely waits for the end of games is not going to be too effective or will raise too much scrutiny. (And these can be very minor -- one of the things that Donaghy is excused of doing is telling a center for the warriors to step out of the lane to avoid a three-seconds call). An effective shaver will try to effect the score, but this will have some spillover into the result -- individual players and refs effect some but not all of the game, and there is only so much they can do. If a player misses several shots that he would otherwise make in an effort to limit his teams' victory, he could be caught off-guard by the other team going on an improbable hot streak and winning the game.

And Wolfers' argument is not just a logical claim -- it is an empirical one. He shows a great deal of evidence that score are not evenly distributed, but that the line has a significant effect on the result.
7.27.2007 4:15pm
random guest:
HSC is right. What you and Wolfers are both missing is the over/under bet, i.e., the total number of points scored in the game by both teams. This is the only bet that crooked referees can consistently influence without getting noticed, and it's the specific bet that Donaghy has been accused of influencing. Unlike manipulating the point spread, manipulating the over/under can have a very significant impact on who the winner is. Take a look at some of the specific games that Donaghy reffed (e.g., game 3 of the Spurs-Suns series).
7.27.2007 4:15pm
anonVCfan:
Part of the fun of watching sports is holding out hope in the last minute or so that this game may be the one game in 100 where the losing team pulls off a dramatic comeback.

If referees and players are basically throwing in the towel at the end by saying, essentially, "the first 46 minutes are for the fans; the last 2 are for the gamblers," then I think that's worth being self-righteous and indignant about, about even if it seldom makes a difference.
7.27.2007 4:24pm
Rich B. (mail):
I think that part of the point is that it is less EXPENSIVE to fix to over/under or point-spread than it is to fix the outcome.

There is a group of athletes who will take money to point-shave, or refs to call more whistles (on both teams) who would never take money (or would require more money) to throw the outcome of the game to one team of the other.

Since it is easier and less expensive -- and the payoffs are the same -- it is where the gambling-corruption-money goes. Driving up the costs of corruption is certainly a valid strategy for driving down the total amount of it.
7.27.2007 4:30pm
ras (mail):
Even if Wolfers' assumption is correct - a debatable proposition - it would only be so because those running the fix perceive that their path of least resistance to profit is via point-shaving.

Remove that, per the prof's sugg'n, and they will adapt by fixing outcomes instead, as that would become their new path of choice.

A different possible solution perhaps, and one easily w/in the NBA's grasp, given it financial resources, is to keep spare referees on hand, and then assign a number of them - more than actually needed - only very shortly beforehand as candidates for a game. Then, pick which ones who will actually work the contest by rolling dice just before the game starts; the remainder can sit and watch.

p.s. a ref who works the over-under will nonetheless influence outcomes. For ex, a ref who tries to run up the total score is favoring the team with a better offence over the one with a better defence, esp if the offensive team has beeter free-throw shooters. It's just not that exact a science.
7.27.2007 4:33pm
Hattio (mail):
I have to disagree with two commenters.

RobertEmmet cites the 1919 BlackSox scandal as a reason to suspect that making legal betting on the "moneyline" wouldn't necessarily end corruption and the possibility of corruption. But that misses the fact that salaries have soared since approximately the 70's to the point that even a bench player is making a very high salary. 8-10 years on the bench in any major sport, combined with fairly minimal financial planning, and you can retire. That just wasn't true in 1919.

BruceM asks why this matters since everyone knows that pro wrestling is fixed, and people still watch that. A couple of things. First, those who watch sports and those who watch pro-wrestling probably overlap very little. Even those who do expect different things. I may not have known when I watched Friday Night Lights who was going to win the game. But I did know it was scripted.
When you are watching something you think is unscripted, and you realize it is scripted, you feel betrayed. Besides which its just not fair to the other players. If you're a role player on Maryland, with no chance for the NBA, and you are defending Duke's JJ Reddick in the last two minutes of a pointless game, you want to shut him down anyway, or better yet block him, because you can tell that story for the next ten years (longer if JJ breaks the Duke curse and amounts to anything in the NBA).
7.27.2007 4:46pm
Lior:
To take a different angle on things, I'm rather surprised that the NBA studies individual calls rather than use statistical tools. It should be easy to look for correlations between the choice of officials and deviations from the over/under or spread. Once you see a correlation it may time to study individual calls.
7.27.2007 4:54pm
frankcross (mail):
Rich's point could be a good one, but I'm just not sure how true it is. The potential profits from gambling are so enormous, I'm not sure it is highly cost sensitive. I'm sure there's some effect here, but the difference between point spread cheating and outcome cheating is really enormous. It would take a vast reduction to overcome that.
7.27.2007 5:02pm
hey (mail):
Maybe it's just me, but I was under the impression that not every bet on sports was made in a Las Vegas sports book. In fact, I've been reliably told that several people are able to go to a local bar and place a bet, despite living in very anti-gambling states.

I'm sure it is a vicious rumour, but there have also been films that alleged that certain legitimate businessmen who tend to have a lot of free time and hangout with members of their own immigrant groups have, on occasion, let people place bets on margin. Sometimes those who can't pay are (jokingly, I'm sure) menaced with tire irons and told that their legs were going to be broken.

So if most of this activity was already illegal, how does making it illegal-er help? Will it be possible to ban any mentions of spreads and over under numbers - post McCain-Feingold the First Amendment isn't worth the parchment it is written on, but it still has some force. Will the government block all access to spread information from legal UK and Carribean sports books? It's easy to cut the money off, but cutting off the information would seem to be rather hard.

This sounds like the typical gun-control debate after a murder. The perp already violated rather a few laws, is frequently found to have already been inelligible to posess the weapons used, and often used a stolen and/or smuggled gun. But making it super-super-super illegal will stop it in the future. Just like Spector's super-duper precedents. Others would say that this fits the definition of insanity.
7.27.2007 5:10pm
Rich B. (mail) (www):

To take a different angle on things, I'm rather surprised that the NBA studies individual calls rather than use statistical tools.


Wolfers had actually done a point-shaving study very recently for NCAA basketball. He showed that 1% of all NCAA basketball games (and 6% of all games with a point spread of 12 or more) showed evidence of point-shaving.

url

But nobody cares about the statistical likelihoods. They just care about "dirty ref" or "dirty player." Since forensic economics can't tell if any individual team shaved points or just played worse than expected, it's hard to get people worked up over it.
7.27.2007 5:46pm
Hattio (mail):
Hey (the commentator, not an introduction to my post),
Did you read EV's post? Wolfer is suggesting legalizing something which is currently illegal, not passing more laws to illegalize conduct. I know it's comforting to jerk the libertarian knee against new restrictions...but at least make sure its justified.
7.27.2007 6:34pm
jacobus:
Won't the very fact that this happened discourage future spread-bettors, at least in the NBA? I mean, I know I won't take any spread bets in the NBA, knowing that the possibility exists of getting screwed by a dishonest ref.



...um, not that I bet at all, really. Too much math.
7.27.2007 6:39pm
bittern (mail):
What's the problem? Under the current system, can't each bettor just try to figure in the chances of each team throwing a few points, and incorporate that into their bet?
7.27.2007 6:43pm
John Burgess (mail) (www):
BruceM: While sports may be entertaining, they are not entertainment. No one considers pro wrestling a sport; it's an athletic entertainment. There's no real competition, there's no role for chance or excellence. We expect those things from sports.

Consequently, we want sports (perhaps harking back to the days of the original Olympics) to be clean: no drugs, no fixing, some (as I) would even prefer no gambling, even by non-players and referees.

Because some corruption seeps in, most of us are unwilling to say, "oh, what the hell, let 'em do it.' Instead, we prefer to see games played by clear rules, with more or less equal chances of winning, by beings playing without unnatural enhancement. 'Pure', in other words.
7.27.2007 7:02pm
Joshua:
Wolfers' proposal misses the boat, not just for the reasons already discussed, but because it doesn't account for how Donaghy's betting was done.

There are basically three ways to bet on sports in the U.S. One (and the only clearly legal) way is to physically travel to a licensed brick-&-mortar sportsbook in a jurisdiction where sports betting is legal. Another way (that's in legal limbo) is to visit an offshore-based online sportsbook. In both of these cases, bettors post their money up front as they're placing their bets.

But Donaghy didn't bet through either of these channels. He used the third (and clearly illegal) channel of unlicensed local bookies. Unlike the sportsbooks, these rogue bookies often take bets on a line of credit. Of course, once that runs out and you can't repay that money in a timely fashion, you're likely to have some less-than-pleasant encounters with the, ahem, "collection agents" of the rogue bookie's financiers. That's how Donaghy got in trouble.

The best way to keep sports, and sports betting, on the up-and-up is (1) to encourage transparency and easy traceability in betting, and (2) to discourage would-be bettors from relying on a bookie's line of credit. In other words, to legalize and tightly regulate sports betting nationwide (thus giving would-be bettors readily available, safe, clean and legal alternatives to rogue bookies) while at the same time pursuing the rogue bookies without mercy.
7.27.2007 7:56pm
Tim Howland (mail) (www):
FWIW, you can't do a point-spread bet on a baseball game because of the mechanics of the game; it's turn-based, and not clock based- this means that if the home team is winning after eight and a half innings, they won't play the bottom of the ninth. This would give an unfair advantage to people who bet on the visiting team.
7.27.2007 9:06pm
djh5:
The illegal bookmakers money is funneled into the legal bookmaking operations in Las Vegas. That is how the bookies lay off their action and we end up with a nationwide point spread. In fact, I believe it was the Las Vegas bookmakers who discovered the Boston College point shaving scandal which was revealed by excessive "action" on Boston College basketball games.

What all sports should do is quit stifling criticism of the refs by players and coaches. As others have pointed out, looking at individual calls is stupid and unlikely to catch a crooked ref. Almost any call can be justified by a Rodney-King video frame-by-frame review. Look at how timid the NFL replay system is. Players and coaches in the aggregate would have a better feel for an out of line ref -- after all they see a variety much larger variety of refs and calls. Let them complain about the refs.

Refs are like judges -- they deprive themselves of honest feedback by insisting on total deference.
7.27.2007 9:30pm
hey (mail):
hattio... it seems like i wasn't clear: with huge amounts of betting already illegal, why would one, rather unsatisfactory, legal method be an improvement? You'd have to get the Vegas lines banned, and block the internet and phone lines, and then you'd still have the bookies. There were lines before Vegas, and I'm sure the "legitimate businessmen" could recreate a non-Vegas line. So this works in what universe?

This proposal has the same utility as one that proposes legalising heroin to reduce crack use, thus cutting violence. It still keeps the black markets, that already face serious time if caught, and doesn't show why users of the really bad flavour would switch to what's seen to be less bad. The problem is the black market and the loansharking that puts a gambler in a dangerous situation. Full legalisation could help (very few people would still use their connected bookie - but how do you replicate risky unsecured loans that provide much of the bookies' action?), but partial steps are more likely to be a complete waste of time.
7.28.2007 4:53am
JohnO (mail):
There is a difference between players and referees. Players may have "competitive morals" such that they would shave points but not throw a game. For example, even if the dirty player is on the underdog, he might play all out and try to win, and once the chance to win is effectively gone, he might tank to make sure the other team covers the spread (though the gamblers paying the player might greatly prefer that the player make sure his team loses against the spread, which would require the player to make sure his team loses and loses by more than the spread).

For a referee, any time the money is on the favorite, he HAS to try to affect the outcome by making sure the favorite wins, and I doubt a referee willing to fix a game against the spread would have any competitive or moral scruples that would make him refuse to make sure the favored team wins.
7.28.2007 8:58am
Lior:
Rich: Indeed, "forensic economics" will only give an indication of cheating. However, this is a good place to start. Once you establish a correlation between the presence of a particular referee and deviations from the book-makers line, it is time to scrutinize their calls in games where there were such deviations. For an example of the statistical side see wolfer's "racial bias" study, which estimates a bias coefficient for individual referees.
7.28.2007 1:06pm