NBA and FanDuel online sports betting signage is displayed on the side of a building in Phoenix, Arizona, on June 5, 2024.
Patrick T. Fallon | AFP | Getty Images
“This is the insider trading saga for the NBA.”
That was FBI Director Kash Patel’s message at a news conference Thursday, announcing the arrests of Portland Trailblazers coach Chauncey Billups and Miami Heat player Terry Rozier.
The two were among more than 30 people charged in an illegal poker ring involving organized crime and cheating, according to prosecutors. The U.S. Attorney, FBI and other law enforcement agencies are also charging Rozier as well as former Cleveland Cavaliers player and assistant coach Damon Jones with a sports betting scheme to throw games or make illegal wagers on inside information.
It’s the kind of news that could prove damaging to the legal gambling industry — or, perhaps, a real opportunity.
Legal licensed sportsbooks in the U.S. have enjoyed massive growth in recent years, but they’re still trying to expand. The market leaders FanDuel, DraftKings, BetMGM and Caesars don’t have access to the two most populous states, California and Texas, because they have not legalized sports gambling.
When state lawmakers debate the pros and cons of legalizing sports betting, there are persistent questions about sports integrity and the opportunities for cheating. Players arrested on federal charges, accused of manipulating game play and profiting on illegal activity provide solid evidence for a sermon against the dangers of gambling.
The commercial gambling industry knows it. And it’s seizing the moment to reiterate its protections.
“Today’s events are deeply disturbing, and should concern fans, athletes, and everyone who loves sports and values integrity and fair play,” FanDuel, owned by Flutter, said in a statement to CNBC shortly after federal prosecutors and law enforcement wrapped up their news conference.
“We are unwavering in our commitment to rooting out abuses by those who seek to undermine fair competition and the games we love,” FanDuel said.
The American Gaming Association blasted out its statement: “Today’s revelations are a stark reminder of the pervasive and predatory illegal market, ensnaring countless individuals and operating in the shadows … It is important to recognize that the regulated legal market delivers transparency, oversight, and collaboration with authorities that assists in bringing these bad actors to light.”
A DraftKings spokesman told CNBC, “We fundamentally believe that regulated online sports betting is the best way forward, to monitor for and detect suspicious behavior.”
Sportsbooks and the integrity monitoring companies that work with them were involved in alerting authorities to unusually large wagers on Jontay Porter prop bets that resulted in Porter being banned for life from the NBA last year and convicted on federal charges.
Prosecutors say Porter’s activity was part of the same conspiracy ring operating between 2022 and 2024 that resulted in six arrests this week.
A rapid response from the sportsbooks with carefully crafted crisis communications messages could be designed to ward off threats from state gaming regulators to crack down on player props, which are often the basis of parlay bets.
Parlays, which combine several bet criteria into a single wager, are very profitable for the sportsbooks and popular with customers, even though there are lower chances of winning.
The negative headlines over illegal gambling could ultimately prove to be an opportunity in the long run for commercial and tribal casinos if it prompts more enforcement action against unlicensed operators.
After all, unlicensed gambling in the U.S. is estimated to bring in $674 billion in wagers annually, the AGA said in August.
