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Volume 22 No. 14
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Strong regulation could inject integrity into sports gambling

At a meeting of sports lawyers last spring, a senior counsel to Major League Baseball — perhaps reflecting the views of his then-boss, Commissioner Bud Selig — expressed skepticism over renewed efforts to consider expanding legalized betting on major sports beyond Nevada sports books. Alluding to the horrific 1919 scandal where the “Black Sox” fixed the World Series, he suggested that MLB was not interested in experimenting with changes in its unalterable opposition to any connection with sports wagering, given the damage to the national pastime’s integrity from that unfortunate event.

From outside the United States, however, a different perspective emerges.

In many countries, sports wagering is legal and regulated, with scandals more readily exposed and violators punished. Sports in two such countries, the United Kingdom and Australia, are generally seen as fair and clean. In contrast, the two nations with the largest population of sports consumers — China and India — outlaw all forms of sports gambling. Gambling thrives unregulated in these markets, and corruption has flourished.

The Singaporean and Malaysian soccer leagues folded in the 1990s, and the Chinese football league disbanded after sponsors Pirelli and China Central TV pulled out due to endemic match-fixing. One of the fastest-growing leagues in world sports, the Indian Premier League in cricket, has also been rocked by ongoing match-fixing scandals.

For this reason, we were particularly heartened to see NBA Commissioner Adam Silver’s recent New York Times column calling for legislative reforms that would couple modification of current federal prohibition on sports gambling with tighter regulation. And even MLB’s new commissioner, Rob Manfred, has acknowledged the movement toward legalized gambling in the U.S. “I think it’s important for there to be a conversation between me and the owners about what our institutional position will be,” Manfred said recently on ESPN’s “Outside the Lines.”

The proliferation in the United States of sports gambling, legal and illegal, suggests that Silver’s message is a far-sighted and strategic move that has the potential to better secure sports against the scandals of corruption.

The expansion of sports gambling outside of Nevada sports books is no longer a taboo subject for big sports leagues in the U.S.
Photo by: AP IMAGES
Silver called for some basic and appropriate regulatory standards, including licensing of sports bookmakers and monitoring of unusual betting-line movements. The latter is one of the key benefits of sports gambling, allowing potential scandals to be nipped in the bud.

We would go further, however, and propose that — in addition to fine bottles of shiraz, a few marsupials for American zoos and quality wool — American imports from the Australian state of Victoria include what we think is close to a model for sports gambling regulation.

The Victorian regulatory regime contains a number of features critical to ensuring that sports gambling is channeled in appropriate ways and that threats to sporting integrity can be promptly identified. Most important are special regulations allowing for information-sharing, even in situations where ordinarily these matters are legally confidential, among bookmakers, law enforcement, and sports leagues.

Access to the betting records is crucial, because the money trail is the most reliable way of tracking down match-fixing and abuse of inside information. It also enables sports leagues to conduct betting checks to ensure participants in the sport are not engaged in wagering themselves. The majority of successful prosecutions for match-fixing around the world have resulted from access to this information.

A sound regulatory regime would also allow sports leagues to have a right to veto the type of bets allowed in sports gambling. Players being competitors, it is much more difficult to induce a professional athlete to actually lose a game than it is to alter his performance in some other way. For example, several Pakistani cricketers were caught in the U.K. taking money to make an illegal bowling maneuver that had a minimal effect on the actual match. Sports leagues have a special interest in working with bookmakers to identify these sorts of wagers.

Legalized gambling also inhibits a “gateway” offense of illegally providing insider information to gamblers, which in unregulated regimes can potentially lead to more serious offenses against sporting integrity. With legalized gambling, it becomes important to regulate both the integrity of sport and the integrity of the wager. Because bookmakers, leagues, and law enforcement all have an interest in preventing athletes, coaches or other insiders from providing information that might affect a betting line to certain gamblers, a regulated sports betting market facilitates detection of disclosure of inside information by participants in the sports.

To illustrate, a few years ago an unusual change in strategy by a prominent Australian Rules Football club was improperly disclosed to gamblers; authorities were able to follow the money trail regarding the family of one of the corrupted players, whilst another one was photographed making a wager at a licensed bookmaker.

Prosecutors have shown some ingenuity in obtaining convictions for match-fixing or purchase of insider information under general criminal statutes (both in the United States under broad wire fraud statutes, and elsewhere). However, the more effective approach would be explicit federal and state statutes criminalizing these sports-related offenses.

A regime of strong regulation of gambling will shift the massive underground industry into the sunlight of legalized activity. Sports leagues deserve a cut of the action, government taxes benefit the public treasury, and legalized gambling can provide enhanced entertainment opportunities. We hope other stakeholders share Adam Silver’s foresight and press Congress for appropriate action.

Stephen F. Ross (sfr10@dsl.psu.edu) is professor of law and director of the Institute for Sports Law, Policy, and Research at Pennsylvania State University. Adrian Anderson, a former partner of Australian law firm Corrs Chambers Westgarth, created the Integrity Unit for the Australian Football League and was its general manager of football operations.



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For further information, on guest columns in Street & Smith’s SportsBusiness Journal, please contact Betty Gomes at (704) 973-1439 or bgomes@sportsbusinessjournal.com.