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The Difficulty of Profiting from a Corrupted Referee

By Jeffrey Standen

The big story this week concerns an NBA referee with a gambling problem who allegedly endeavored to fix game outcomes to favor his gambling cronies, to whom he was apparently indebted. At this point none of us know the full details, and maybe we never will. Nonetheless, the media reaction to this development has been apocalyptic, and that's putting it mildly. I've heard the event described as the biggest American sports scandal since the Black Sox; some commentators have predicted the demise of the NBA itself.

Time to get a grip everyone. A game fixing scandal is not that big of a deal. But if it becomes one, what I fear is not the scandal but the measures that the NBA (and potentially other sports leagues) will take in response. If this scandal leads to the demise of the NBA, it won't be because of the rogue actions of a particular referee. It will be because David Stern, perhaps pushed by an irate Congress or an over-reactive public, makes a profound error in judgment.

1. The Black Sox scandal was such a big deal because, well, who knows. It's part of the lore and legend of baseball, and, like many such memories (see the "Curse of the Bambino," for instance), the scandal is probably oversold in its significance. Well within the memory of players and fans at the time of the Black Sox was the practice of "hippodroming," which in the early years (before the formation of the first professional baseball league) involved two club owners staging private baseball games for the benefit of local gamblers. So baseball was no stranger to gambling, and only in the wake of the 1919 World Series (and the trial acquittal of the White Sox players) did the major league employ a commissioner to eradicate betting. So the famous scandal became notorious not because it was shocking or novel or unexpected, but because it marked what came to be regarded as a turning point in baseball's history. (A little like Paul Revere's ride in that its contemporary significance paled in comparison to the importance the ride is given in the common historical narrative).

2. Other sports have had their scandals, even involving game fixing, and have survived intact. College basketball, probably the most corrupted sport given the number of instances of fixing that have surfaced over the years, appears to remain unblemished in the public eye. Why do these commentators, so upset about the possibility of an NBA game being fixed, happily watch (I presume) college basketball? One solution already proposed to the NBA scandal is to give the referees a pay raise. How perplexing that move would be for the refs. Here they are, cowering in their off-season homes with a worried eye on the developing story, and then the hammer comes down: pay raises for everybody! That will teach them. More money would give the refs a greater investment (performance bond) in doing a good, honest job, but on that theory we should give a raise to college athletes (who are paid, in effect) and to everybody else in a position to fix a game. Besides being expensive, how much is enough? At what point does a referee or player make enough money to forgo the bribe? At what point would a person risk shutting down his career to make some immediate cash? I don't know; I suppose the amount would vary quite a bit. Raising everyone's pay seems problematic at best.

3. Lots of games are fixed, in a sense. Wrestling for one. Horse racing has had its problems. Given the willingness of some players and teams to use performance enhancements, isn't it just as true that, in a signficant way, games involving those teams are fixed too? The probability of a particular outcome (victory by the druggies) is enhanced. Reading recently about the drug scandals surrounding teams in the Tour de France makes clear to me that certain teams were pre-ordained to be competitive or to have no chance, depending on their decisions to use illicit drugs. Aren't baseball games involving Barry Bonds fixed, in that Bonds' steroid use gives the Giants a (big) leg up on the opposition? Does not the Giants' management, well aware of Bonds' drug use, essentially pay Bonds a large salary precisely because his cheating enhances the Giants' chances? A referee can't guarantee bettors a particular outcome; he can improve the chances, perhaps significantly, and so in the betting world, where even slight edges are worth lots of money, bribing a referee pays off. But does it pay off more than other inside knowledge, such as knowing a particular pitcher is doping, or knowing a wide receiver is having marital troubles, or realizing that a particular guard, in a contract year, will shoot the ball even to his team's detriment? The point is that lots of games are fixed in this broad sense, yet we still love to watch the games and seem to enjoy them just as thoroughly.

4. If baseball can survive an entire generation's worth of sluggers and fastballers shooting up with steroids, basketball can survive a rogue referee's slip to the dark side. Steroids affect every aspect of a sport, from the batter's performance to the pitcher's arm speed. Every game, every day. Even a referee hell-bent on fixing a game will have to overcome the compensating calls made by his two fellow referees, plus overcome the fact that, no matter how many fouls one calls, on some nights one team just beats another, sometimes badly, and there's not much a ref can do about it. Plus some referees are corrupted, not by a bribe, but by the screams of the home crowd, the reputation of the players, the speed of the game, and so on. No, these refs are not corrupted in their intention (as is a referee who is bribed), but the result is the same. Part of the NBA's appeal is the fan's chance to comment directly on the performance of the referees. Unlike football, where many actions that lead to penalties are hidden from public view beneath the mass of linemen's bodies, in the NBA most actions subject to foul calls are nearly as evident to spectators (especially those at home) as they are to the referees. Now, along with incompetence and mistake, fans can cite intentional corruption in their catty remarks.

5. How often would a corrupted referee fix games? Imagine you're a gambler controlling an NBA ref. It is likely you made a large investment in getting the ref to the point where he'll try to fix a game. You wouldn't want him making it too obvious. Once the ref were exposed, your investment would be lost, along with all the future games from which you could profit. Instead, you'd probably look for games likely to be close (so the ref's corruption might better affect the game outcome), and that involved enough betting action to allow you (the fixer) to get down a large amount of money without that bet being traced to a single source. (Bookies know what fixed games look like too, just from the bets that are made.) Probably you'd pick out three or four games, hoping the modest edge your "fixed" ref gives you allows for the game outcome in the majority of them to be tipped in your favor. My point is: we don't need to search through meaningless Hawks vs. Bobcats contests to look for objectionable calls by the corrupted referee; look at games where a lot of money was down. Even then, good luck finding corrupted calls: basketball fouls are intractably subjective, and people see what they want to see. (Some people claim to see losing NBA teams "tanking" for draft position, even where all logic and anecdotal evidence is to the contrary.)

6. Here's what will happen: after as much detail as possible is learned, the NBA (and other leagues, I predict, will follow suit) will "get tougher" on referees who gamble. Given that the current rule prohibits gambling and calls for the single sanction of immediate termination, I'm not sure what more the league can do. Perhaps refs will be given periodic lie-detector tests; perhaps also referees will be required to make detailed disclosures of their financial statements to alert the league to unusual gains or losses. Similar restrictions on players, who are equally able to fix games, might follow. At this time, all the leagues prohibit players betting on their sport; some also prohibit sports betting entirely. None, outside of the NCAA, prohibit all gambling activities, and if the story is right, it is non-sports betting that got this particular NBA referee into trouble. Could contemporary professional players, flush with cash and with a proclivity for wagering action, plausibly be prohibited from engaging in any gambling activity at all? Would the NBA or any pro league really suspend a notable player just for playing cards at the local casino? My point is that taking the anti-gambling rules much further brings the leagues into a position with which few of us would be comfortable.

7. Here's what should happen. The NBA should investigate, find and fire the miscreants, and move on. The FBI and the U.S. Attorney's office can take care of any violations of federal law. Gambling in general is not that bad. There are lots of ways referees and players can get into deep financial trouble, and some of them involve perfectly legal bets like stocks, bonds, real estate and business start-ups. A player or referee, by having some (marginal) control over game outcomes, always has the potential to sell that control to a bettor or to others who may be interested. (For instance, couldn't wealthy boosters of a college football club be just as likely to fix a game by bribing the opposing quarterback as would a gambler? Even people in no particular financial difficulty might be inclined to sell their control over game outcomes, just to make some money.) So there's really nothing the NBA can do to legislate away financial troubles, and little the league can do about the opportunity referees and players have to sell their valuable ability to marginally affect game outcomes. At the end of the day the league has to trust people, and we fans implicitly know that every once in a while that trust will be broken. It's not a shocker; the league won't fail. That a trust given will occasionally be broken is an expected aspect of the human condition, a fact of which everyone except certain notable commentators seems well aware.

Addendum:

This ESPN interview with an oddsmaker makes a good point: that an NBA referee, although unlikely to be able to dictate game outcomes in terms of victory, is able to influence the total points of the game. Betting "totals," or the "over/under," is another common bet proposition, along with bets on the winner. Two thoughts to add. First, totals bets are not as widely available as are bets to win. Some bookmakers don't like to offer totals, much like they don't like to offer any wagers on more obscure games featuring unknown teams, simply because information (which gives professional oddsmakers their edge) is harder to come by.

Second, a major bettor (and I would assume any bettor who invested in corrupting and controlling an NBA referee would be a major bettor) would want to get down some very heavy action on the particular game his corrupted referee were under instruction to try to influence. Big bets on totals are hard to get down. Most sports books limit the size of these bets much more than they do the size of the bets to win (for that same unpredictability and information reasons). Now, to most of us, a betting limit of $5000 or whatever sounds like no limit at all. To a professional gambler looking to get down over a quarter million dollars on a total bet, this limit can pose a real problem. Plus, even to get down a bet at or near the book's maximum, most gamblers need to have a prior, established relationship with the bookie. Bookies only maintain losing relationships, if you get my drift. A successful bettor with inside information would have a seriously difficult time getting his bet down, even through cut-outs (other people placing bets for the big bettor). Bookies are very watchful of their customers. Worse, once the bookies figure out the bettor is winning, the spreads or totals will move with his bets, instantaneously, thus making it progressively more difficult for this bettor to get the action he needs to make this venture profitable.

I'm not saying money can't be made from a corrupted NBA referee; of course it can. I'm again suggesting that this scandal might not be as substantial as some are assuming it to be. Having inside information (a biased referee) and making money off of it are two different things, much like having the ability to access illegal drugs and making (and laundering) proceeds from it involve two different levels of complication. The money part is a lot more tricky.

Full post as published by The Sports Law Professor on July 22, 2007 (boomark / email).