The Fix Is In: Unintended Consequences of Legal Sports Betting

In landmark decision, Murphy v. NCAA et al, the United States Supreme Court struck down a federal law that prohibited States from legalizing sports betting. Seizing an opportunity to generate taxable revenue, states have begun to legalize sports betting. This has opened the door to athletes increasingly becoming targets of individuals looking to manipulate games to their benefit.

On March 14, 2019, the nation woke up to headlines from major news outlets detailing the murder of Francesco Cali, a reputed mob boss, who was shot outside his Staten Island residence. His death served as a grim reminder to the masses that organized crime still exists. Beyond the romanticized perception of organized crime perpetuated by Hollywood, which involve notions of omerta and money, organized crime is better understood as a business entity mirroring legitimate industries. These illegal business entities compete amongst each other for markets in illegal services and goods.

Prior to 2018, a significant portion of the illegal services provided by organized crime was sports betting. A federal prohibition on state-sanctioned sports betting was formally instituted by Congress in 1992 with the passage of the Professional and Amateur Sports Protection Act (28 U.S.C. §§ 3701-3704). The Act carved out exemptions for Nevada and a handful of other states that already had lottery systems in place. Further, the Act went as far as giving sports leagues that are or could be the subject of sports gambling standing to bring an action to enjoin the practice outside exempted states. The Supreme Court found the Act to be unconstitutional pursuant to the 10thamendment’s anti-commandeering doctrine. Congress has improperly “commandeered” the legislative process of states by forcing them to enact a federal regulatory scheme. Congress is free to incentivize states to adopt a federal regulatory scheme, like a legal drinking age of 21, but the decision cannot be illusory or compulsory.

Inextricably intertwined with sports betting is an incentive for individuals engaged in the enterprise to manipulate outcomes in their favor. These efforts can go unnoticed by casual fans because betting is based off a point-spread and any particular team winning is not necessarily determinative. For example, keeping a game lopsided and thus outside the spread (usually a few points) can cause people who placed bets within the spread to lose, even though the team they chose did, in fact, win.

Former organized crime associate turned public speaker, Michael Franzese, is keenly aware of these incentives and the techniques used to manipulate games because he was one of fixers that manipulated games for profit. Now a frequent lecturer, Franzese candidly explains how fixing games works. At the center of all of the possible ways to manipulate or fix a game is the targeting of athletes. Using money or sheer force to make a player fumble a ball or throw an interception sends ripples through the game, helping odds-makers ensure the spread is in their favor. In the process, the integrity of the game and its players are compromised.

Notably, the legalization of state-sanctioned sports betting increases the incentives for individuals who are involved in illegal betting operations to fix games because the market for illicit sports betting has significantly, if not completely, dried up. Faced with completely vacating a once-profitable area of illicit or illegitimate commerce, organized crime entities will likely aim to retain whatever revenue streams remain viable, just as legitimate business entities consolidate or pivot to niche markets. Nonetheless, according Franzese, and others, the business of betting on sports is booming.

Economic realities make attempts to fix games across all sports an inevitability. In light of new developmental leagues such as the NBA’s G league and the American Alliance of Football, opportunities to bet and thus manipulate are only growing. Naturally, state and federal laws make coercive and fraudulent conduct unlawful; some conduct such as wire fraud can even be a predicate felony for criminal charges pursuant to Racketeer Influenced and Corrupt Organizations law (commonly referred to as RICO), making it possible to charge the leaders of organized crime with the conduct of their subordinates. But criminal sanctions do little to deter if there is money to be made.

Lost in the shuffle are the players themselves who are now at risk, having their best athletic efforts stolen by amateurism and organized crime. In particular, the NCAA must do more than pay lip service to concerned parents and the judiciary concerning amateurism and the integrity of the game – which it poses as justifications for not paying collegiate players. Even rising to the level of a professional requires a degree of luck because life changing injuries frequently occur in collegiate sports. Moreover, this is not an argument in favor of removing whatever semblance of privacy collegiate athletes have. Rather, by compensating players with more than wifi and free snacks, they will be less vulnerable to organized crime looking to exert influence over poor athletes. Ironically, organized crime and markets for illicit goods and services may further the ends of justice by making providing the straw that (finally) breaks amateurism’s back.

By Tony DiPerna

Photo credit: Jugs/History Channel

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