What to Make of the NBA Sports Betting Scandal

Transcript

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Speaker 1 This is Michael Lewis from Against the Rules, the big short companion. This podcast is brought to you by FedEx, the new power move.

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Speaker 1 Welcome back to Risky Business, a show about making better decisions. I'm Maria Konikova.
And I'm Nate Silver.

Speaker 1 So today on the show, Nate, we'll be talking about kind of core risky business topic, which is, you know, poker, sports betting, gambling, all of these things.

Speaker 1 We'll be talking about the two indictments that came out last week on Thursday the 23rd that involve NBA players, other personalities who allegedly took part in some unsavory cheating behaviors.

Speaker 1 It's a little bit like two federal indictments, five mafia families, eight co-conspirators, and a partridge. It's sorry.

Speaker 1 It's almost. No, please, please continue, Nate.
No, I think it's not. Nate,

Speaker 1 you have some very Christmassy lights behind you because you are not in New York. I am in FBI.
No, I'm just kidding. I am in Ciudad de Mexico.
I'm in Mexico City.

Speaker 1 I'm not supposed to be in Mexico City right now.

Speaker 1 I am supposed to have flown home tonight, but you know, there was some at least good risky business airline strategy employed last night, which is why I'm getting out today and instead of staying even longer.

Speaker 1 I didn't bring my microphone, right? That's why I have my phone dangling for my headphones. I'm at the El Camina Real Hotel near Terminal 1 of whatever it's called, Benito Juarez Airport.

Speaker 1 Although I did make a good decision yesterday, Maria, talking about like decisions under pressure.

Speaker 1 So getting the flight, you know, a little slow on the tarmac after about, actually, I don't think we've even pushed off the tarmac, right? And the pilot is like, well, we're just taking care of some

Speaker 1 just paperwork right here, right?

Speaker 1 I feel like I'm already being like gaslit a little bit so he's in another 40 minutes or so on the paperwork and then he comes back on and by the way i can tell 40 minutes on the paperwork night that's never i mean taking care of some paperwork is not 40 minutes

Speaker 1 i'm an experienced flyer i can tell within microseconds by the tone of the pilot's voice just how bad the news is right so it's like another delay for like so we're now like an hour and 30, 40 minutes without having pushed back from the gate.

Speaker 1 Now there's some clarity that's an engine problem with an undetermined time of resolution, right?

Speaker 1 I start using what little Wi-Fi I have to ask, not that you can redescement with your own common sense about being a frequent flyer, right?

Speaker 1 But like I asked ChatGPT and Claude, like, what are the chances that we're really going to get off on this flight tonight, right?

Speaker 1 And Claude's like, yo, they're gaslighting you, bro.

Speaker 1 Claude tells it like it is. They're gaslighting you, bro.
You're not going to get off tonight. What are you talking about? 30% chance, right?

Speaker 1 And then we deplane and then claude's like immediately right now rebook your ticket and so and so we did and so we got i think one of the relatively few seats available on the same flight today probably gonna be a middle seat not gonna lie maria probably gonna be middle seat but like i'd rather rather i'd rather middle seat like houston or something but the important thing is you have to act quickly yes in these very tribal decision nightmares.

Speaker 1 After my partner and I checked in, we went back out to the lobby to go get an Uber to dinner. And like there's a line an hour and a half long.

Speaker 1 You have everybody else from our flight who did not behave so proactively, who were gaslit by, I like Delta, but Delta Airlines, you know, you owe me one, you owe me one, you owe me a free flight somewhere probably.

Speaker 1 So act decisively. Sometimes the equilibrium of like, oh, let's kind of wait and see is like actually quite, quite a bad equilibrium.
Yes, absolutely. That's really good advice.

Speaker 1 I am going to echo that. Act quickly.
And when shit seems like it's going wrong, it'll probably go wrong. But now

Speaker 1 let's turn to

Speaker 1 the hot topic of the day, which is so in the risky business domain. It's not even funny.
Core risky business.

Speaker 1 Nate, has anything been happening with the NBA and sports betting and poker? I don't think there's anything in the news, do you? It's been an exciting start to the NBA season.

Speaker 1 Victor Wembanyana looks like an

Speaker 1 Yama looks like an MEP already. Steph Curry has already had big comebacks.
I'm a big NBA fan, but which day was it? It was was Thursday, I think, early morning, is that right? Yep. So it was Thursday,

Speaker 1 the 23rd of October. So there are two federal indictments,

Speaker 1 which at first might appear unrelated, but actually have a lot of co-conspirators, as they are called. And remember, the things we're going to be discussing here are allegations.

Speaker 1 Maria and I are not lawyers. We have

Speaker 1 a right as journalists and citizens to engage in Bayesian priors about how likely some of these things are, but they are accusations, allegations. They are not proven yet.

Speaker 1 They are disputed by their clients' lawyers in at least some cases. But two big federal indictments, one of which concerns cheating essentially at sports betting.

Speaker 1 There are a couple of different forms of this.

Speaker 1 So one form involves one particular NBA player named Terry Rosier, who is kind of a 40th percentile mediocre NBA player, but has still made over $100 million in his his career, allegedly removing himself from games early to help his co-conspirators win prop bets.

Speaker 1 Now, look, our audience probably will know more about prop bets than the average bear, but if you're not familiar,

Speaker 1 if you think about sports betting, you might think about, okay, I can bet on coin spreads, I can bet on money lines, which is just the percent, the odds, the percentage chance that a team wins, or totals or over-unders, as they're sometimes called, right?

Speaker 1 And you can bet on futures since you win the Super Bowl, that kind of thing. However, recently you can also bet on how individual players will do.

Speaker 1 And it almost doesn't seem to matter how obscure the player is. So Terry Rozier is a mediocre player.

Speaker 1 Jante Porter is a player who is less than mediocre and was suspended for life by the NBA last year for a, I guess, proven to the NBA's satisfaction allegation of like a similar scheme, right?

Speaker 1 You're like, hey, look, bet the Underbros on this. I'm going to ask out of the game after the first quarter, right? Cite some injury, and then you'll cash in big on your under bets, right?

Speaker 1 It's like allegation 1A.

Speaker 1 Allegation 1B concerns inside information leaking to the gamblers about the availability of key NBA players.

Speaker 1 So a person named co-conspirator 8, who is almost certainly, because the clues are not very subtle, currently suspended Portland Trailblazers, coach Chauncey Billips, a former member of the Detroit Pistons, other teams, who has now been suspended by the league, but a Hall of of Fame player who allegedly tipped off his gambling buddies about when key personnel were going to participate.

Speaker 1 Damian Jones is a Los Angeles Lakers, former player. Actually, Damian Jones is like a confidant of LeBron James.

Speaker 1 LeBron James is not accused of anything whatsoever, but like he was a friend who had access to like, is LeBron practicing? How's he feeling?

Speaker 1 Knowing whether LeBron James will play in the game, obviously very important if you're trying to bet on the Lakers or against the Lakers for that matter, right?

Speaker 1 And there are several allegations of inside information leaking before it became publicly known according to the NBA's officially very diligent injury reporting protocols, right?

Speaker 1 And by the way, this mostly happened in the 2022-2023 NBA season, which is a year where I bet the regular season every day.

Speaker 1 It was kind of an experiment, side hustle for the book to see what the ins and outs like really were for a professional gambler. And so some of this stuff looked fishy in real time.

Speaker 1 The second indictment is for

Speaker 1 Operation Royal Flush. Operation Royal.

Speaker 1 Can you try a little harder, right?

Speaker 1 Can you try like, I don't know,

Speaker 1 Operation Full House or

Speaker 1 I don't know. Operation Royal Flush Nate.
Yeah, this one is poker related about cheating in games from LA, Vegas, New York, even the Hamptons.

Speaker 1 I realize that's also New York, but games all over the country.

Speaker 1 And there's one person who's in both indictments, we assume, because as you said, person of interest, you know, eight in indictment number one is probably Chauncey Billips.

Speaker 1 Chauncey Billips is named in indictment number two. And these were illegal underground games where lots of famous faces, they're known as the face cards in the indictment name.

Speaker 1 A lot of famous players and you know, famous personalities were in games. Some of them were apparently involved in this, allegedly involved in this.
The games were crooked.

Speaker 1 There were crooked card shufflers. There were x-ray tables.

Speaker 1 There were sunglasses and contact lenses. And basically, I don't even understand.
Like it's like layer upon layer upon layer.

Speaker 1 If the technology of cheating exists, it seems like they used it at one point or another in these games.

Speaker 1 And the most striking thing, Nate, about all of these things is it's the first time I've seen, you know, the famous New York crime families working together.

Speaker 1 You know, it's the five families is what you traditionally think of. In this particular case, four of them are in the indictment.

Speaker 1 But in my mind, it's the five families uniting for a worthy cause, which is there are so many suckers here.

Speaker 1 Let's see how we can fleece them because allegedly they were all involved in these games, in backing them, in helping them take place, and in helping to collect outstanding debt.

Speaker 1 when people lost over $7 million.

Speaker 1 I mean, that's for poker.

Speaker 1 Like, I understand that for a basketball player who makes hundreds of millions, $7 million might not seem like a lot, but for a poker game, you know, $7.1 million, that's a lot of money.

Speaker 1 What I've never done is play in a underground game as opposed to a home game. To me, the big distinction is not as complicated as people are making it out to be is, are they taking a rake

Speaker 1 for a profit, right? If they are. Yeah, and by the way,

Speaker 1 let's just caveat this for one second. People who aren't our poker listeners, listeners, rake means that out of every pot played, so say Nate and I are in a hand together, Nate bets $10 and I

Speaker 1 call the $10. So there's $20 in the middle and the house will take...
depending on the rake, let's say a dollar out of it or $2 out of it, you know, whatever it is. And that will go towards the house.

Speaker 1 That's the rake. You take a cut out of every pot that's in the middle just automatically as like a fee, a courtesy fee for running the game.
And that is not legal.

Speaker 1 So even even though home games are legal almost everywhere, if you don't take rake, as soon as you rake them, it becomes completely illegal.

Speaker 1 Yeah, and we should clarify a couple of things here, right? You know, all of the home games I play in include some collection for

Speaker 1 booze, catering, if you bring in an external dealer. So if there are shared expenses, I mean, if somebody is the host,

Speaker 1 nothing says they have to like eat all the expenses themselves, right?

Speaker 1 But they're not trying to directly profit from the game. Maybe they're trying to build the network.

Speaker 1 Maybe they think they're a winning player in the game, but they're not, they don't make money per hand or per hour just by the mere act of running a poker game, right?

Speaker 1 So that's, that's one clear distinction. By the way, if you want to be technical,

Speaker 1 you know, check the laws in your local state. As far as I am aware, where have I ever played private games? I guess New York, California, those states, poker is pretty clearly legal, I believe.

Speaker 1 If you're not taking a rake,

Speaker 1 you always got to be careful. The feds didn't always interpret gambling law law that sympathetically, if there's a lot of money changing hands,

Speaker 1 if there's a bunch of drug use or prostitution or things like that at your game, then, you know, but typically poker gets kind of like caught up. You know, if I had to guess,

Speaker 1 well, I don't know. If I had to guess, I would think that the NBA investigation came first and then poker kind of got dragged into it.
Maybe that's wrong.

Speaker 1 But in terms of kind of like what things the feds typically prioritize more, maybe it's wrong. The poker was actually more money, allegedly, right?

Speaker 1 And a total of more than 7 million, at least, quote unquote, they say.

Speaker 1 But I would actually think that, I mean,

Speaker 1 from

Speaker 1 my perspective, it seems like the poker would probably not have been, that would not have happened without the sports betting. Because in the sports betting, there are just many more.

Speaker 1 parties that are directly related to state institutions, right? Because now that sports betting is legal in over 30 states,

Speaker 1 states are actually reliant on tax revenue from sports betting, from the big companies, from all of that legal stuff.

Speaker 1 So there's a lot of, now it's been formalized in such a way that like it just draws a lot of attention.

Speaker 1 It's not just an internal NBA thing, right, where the NBA can say like, oh, I've investigated my player and everything seems to be okay or not.

Speaker 1 But now you have all of these different organizations with different incentives because I think that on its own, like the NBA isn't necessarily incentivized incentivized to go over after everyone so ardently, but together, once you have the sports betting companies, once you have state involvement, once you have all of these things, then that's where, like, that's where shit hits the fan.

Speaker 1 And we'll be right back after this break.

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Speaker 1 I am

Speaker 1 not as sympathetic to the people who are defrauded. Let's say, it's not a victimless crime, right? The victims entered into this den of iniquity kind of.

Speaker 1 Which one we're talking about poker now? For poker, right? Where they're playing in games that, if you're playing at high stakes, you ought to know that there are various kinds of risks, right?

Speaker 1 I mean, it's just like people don't realize the extent to which everything that a casino does, right? From like

Speaker 1 what they do when you cash your cash cash in for chips to like, you know, burning a card before dealing, the flop, right?

Speaker 1 Even things people don't think about, like, you know, why are there,

Speaker 1 why is a two color deck, black and red instead of four colors, which they'll use in recreational games sometimes. Well, it's because like it's hard to distinguish.

Speaker 1 If you only see two colors and black and red kind of both appear kind of dark, are they kind of dark hued colors, right?

Speaker 1 You know, if a dealer mistakenly or unmistakenly

Speaker 1 flushes a card, you can see the bottom of the deck, right? That gives you less information if you don't know as much about the suit, right?

Speaker 1 And so like all these procedures that have been put into place for many years have made poker in casino environments relatively safe enterprises, which is not the equilibrium otherwise, right?

Speaker 1 The equilibrium otherwise is that,

Speaker 1 you know, it's someone cheats. Whereas for the NBA scandal, it's not just that like,

Speaker 1 the betting companies are defrauded and the league is defrauded. It also affects the interests of fans.
It affects the interests of the integrity of the NBA.

Speaker 1 It also affects like people like me who are trying to win money the right way at sports betting, right? You can try to read the tea leaves of what kind of like a,

Speaker 1 I don't know if you call the line rigged, but you know, you can often detect the presence of frankly, of inside information in a line, right?

Speaker 1 It's hard to know when it's inside information versus like when is there sharp movement from a particularly skilled gambler or from a syndicate, right?

Speaker 1 Billy Walters, a famous NFL, another sports better, right? You know, he placed a lot of action, tends to come in late in the day. That's his philosophy, right?

Speaker 1 And

Speaker 1 if the bookmakers know which way he's betting, that might move the spread materially, right?

Speaker 1 But like you very often, if you're betting the NBA, have a sense that somebody knows something that I don't.

Speaker 1 Yeah, you know, it's really interesting in both of these things. I think something that came to my mind as someone who has spent a lot of time with con artists, right, and in that world,

Speaker 1 in both, you know, sports betting and in poker games, there's this real

Speaker 1 blind spot when it comes to yourself for most people and being objective about kind of your own edge and like what, you know, what is,

Speaker 1 what is right versus not in the sense that like, if, you know, the

Speaker 1 Cliche is cliche for a reason. If it seems too good to be true, right? It probably is.
And yet, right, when it comes to you, you think that, oh, it's not actually too good to be true.

Speaker 1 I've just found a really great spot. I found a really great edge, et cetera, et cetera.
And with sports betting, Nate, it's that. So unlike poker, which I do play, I've never bet on sports still.

Speaker 1 No, not even once. I've never placed a single sports bet.
Oh, my God.

Speaker 1 I promised Eric Seidel when I first started playing poker and when he agreed to coach me and kind of mentor me, he made me promise that I wouldn't sports bet. So I have kept that promise.

Speaker 1 And yeah, he he

Speaker 1 firmly believed that sports betting was the way to ruin for a lot of people. Not that I'd be become a gambling addict, but that he has hardly ever met anyone who has a true edge, right?

Speaker 1 So unless you have information, and he, by the way, bets on sports himself, but it's very hard to have an edge. So no, so I haven't personally ever bet on sports.

Speaker 1 However, what you were just talking about, I think that there's a lot of like, oh, like, is this line right? Like, you're trying to figure out, is this too good to be true or not?

Speaker 1 And as you wrote in the Silver Bulletin earlier this week, like there were times when you took something and it ended up that it was too good to be true, right?

Speaker 1 That like it just looked so good and you were like, I'm going to bet it anyway. And it was too good to be true.

Speaker 1 And so you are like, when you are fucking with the integrity of it, like you actually are affecting a lot of people in very real ways. And that's a huge problem.

Speaker 1 It's a problem for poker, obviously, but sports are kind of America's national pastime. And you have to believe that you're watching fair competitions, right?

Speaker 1 That players are trying their best, that everything like that they want to win, like that they're playing their best game, that they're trying to kind of do, do whatever it takes. And if that faith is

Speaker 1 you know, fractured, right? If all of a sudden you're like, oh my god, you know, that that's not what's happening.

Speaker 1 I'm watching something that's rigged, but it's not supposed to be rigged, then you, I mean, that's heartbreaking in some ways, right?

Speaker 1 It kind of shatters, it shatters a dream, I think, in a lot of ways.

Speaker 1 Let me hit on both the points you raise. Let me first talk about like

Speaker 1 both poker players and sports betters

Speaker 1 are often naive about how thin their edges are, right? Yes. Now,

Speaker 1 you know, live cash poker against fish, fish or bed players, you can have

Speaker 1 objectively pretty large edges

Speaker 1 there, right?

Speaker 1 So, you know, sometime i you know it might be rational in some sense to say like okay there's a little few risks here but this game is so good right

Speaker 1 um

Speaker 1 but yeah no i mean like a lot of these things are you know i don't know if you're as much of a nba geek as i am probably not a lot of these things are things that like are already problems with the league anyway so the fact that like

Speaker 1 teams will try to lose. They will tank in order to get a better draft pick occasionally for other reasons to manipulate their playoff spot to get a more favorable matchup, right?

Speaker 1 For what I understand, the league has not been very diligent about like the cause for why somebody isn't playing. Also, you know, you might strongly suspect, I mean, again,

Speaker 1 when I was betting in the NBA, you know, you usually get a pretty good idea about like certain guys aren't going to play in certain games if they're back-to-backs for a bunch of games in a row.

Speaker 1 Teams tend to like obfuscate that into the last minute for like a competitive edge, right? And the league has...

Speaker 1 depends who you talk to, not enforced that as rigorously as they could. No other sports league like the NBA, again, maybe my favorite sports league, has this problem with teams tanking games and

Speaker 1 trying to lose.

Speaker 1 There's so as listeners of the show know, I'm working on a book about cheating and games, which is very germane here.

Speaker 1 The other sport where you see like so much cheating taking place, but it's not, it's a very different level is tennis, right? Because that's somewhere, once again, where it's individual.

Speaker 1 And individuals, like you can easily affect the

Speaker 1 outcome because it's not a team sport, right? From what I can tell, basketball is the other one

Speaker 1 just because of the way that the sport works.

Speaker 1 And so I think that a lot of organizations, including the NBA, Nate, if we put this back in kind of a game theoretic lens, they often are not thinking kind of long-term, right?

Speaker 1 They're not thinking about incentives for like long-term health. They're thinking immediately, like, oh shit, I need to cover my ass, right? Like, it's better for me if I don't look too closely.

Speaker 1 It's better for me if I clear this player. It's better, you know, people think everything's fine.

Speaker 1 And yet, over the long term, if you don't pay attention to these sorts of things, that's when trust in the integrity of the game is going to flounder. And that's what actually matters.

Speaker 1 And so, I think that, you know, this is true, you know,

Speaker 1 this is true in poker and punishing cheaters, but people are very short-sighted and they think, oh, immediately bad. Like, I don't want the bad press.

Speaker 1 And yet, if you actually pay attention, if you actually punish, if the punishments are harsh, that's how you disincentivize the behavior and create a game that people believe in moving forward.

Speaker 1 And so, you know, I would love, obviously, you know, these indictments right now.

Speaker 1 allegations, we don't know what's going to happen, but I would really love for there to be, if there's the evidence, very harsh punishments, right?

Speaker 1 Punishments that would deter anyone from towing even close to the line um for for whatever reason because that's what you know

Speaker 1 you're i'm starting to get into basketball night because of you

Speaker 1 i'm only starting to to see how fun this game is and i don't want to i don't want to get into it just to be disappointed because i think that players are trying to you know tank games or something like that and so i think that it's just so incredibly short-sighted to be lenient or to say oh you know it's it's okay.

Speaker 1 And harsh is better. You want the fear of repercussions to be real.
And I think in the past, that hasn't been the case. I think the NBA, I mean, it's

Speaker 1 a little bit trumpian in the sense that, like, hey, look, deny it. And then when people aren't paying attention on a Friday, put out some press release that it's been solved or suspended somebody.

Speaker 1 And like, you know, if you're ever in like a PR situation or PR crisis of any kind, like people have short memories. The news cycle is busy.

Speaker 1 There's lots of exciting things that are happening at any given time in the NBA or in the world, right?

Speaker 1 But it kind of has like a cumulative

Speaker 1 effect, right?

Speaker 1 We'll be back right after this.

Speaker 2 They're now the best network, according to the experts at an OOCLA speed test, and they're using that network to launch Supermobile, the first and only business plan to combine intelligent performance, built-in security, and seamless satellite coverage.

Speaker 2 With Supermobile, your performance, security, and coverage are supercharged. With a network that adapts in real time, your business stays operating at peak capacity even in times of high demand.

Speaker 2 With built-in security on the first nationwide 5G advanced network, you keep private data private for you, your team, your clients.

Speaker 2 And with seamless coverage from the world's largest satellite-to-mobile constellation, your whole team can text and stay updated even when they're off the grid. That's your business, supercharged.

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where you can see the sky.

Speaker 2 Best business plan based on a combination of advanced network performance, coverage layers, and security features. Best network based on analysis by UCLA of Speed Test Intelligence Data 1H 2025.

Speaker 1 Being a small business owner isn't just a career, it's a calling. Chase for Business knows how much heart and effort go into building something of your own.

Speaker 1 That's why we make your business growth our priority. Our team takes the time to understand your mission, where you are now, and where you want to go.

Speaker 1 Our broad range of solutions is designed with you in mind so you can bring your ideas to life.

Speaker 1 From banking to payment acceptance to credit cards, you can conveniently manage all your business finances all in one place with our digital tools.

Speaker 1 Looking for tips and advice, our online resources are always available to give you the solutions you need to help your business thrive. See how your business can go farther with Chase for Business.

Speaker 1 Learn more at chase.com/slash business. Chase for Business, make more of what's yours.
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Speaker 1 you know you mentioned tennis um

Speaker 1 you know the reason why basketball is vulnerable number one these bookmakers are turning a team sport into an individual sport so it's not just the fact that like um so like you know jalen brunson the new york knicks blink guard one of my favorite players has spoken about how like people will be tripping at him from the sidelines but like jalen you're supposed to score 22 points and you have 21 You know, what the fuck's going on, right?

Speaker 1 And that kind of thing, and you'll get like death threats and nasty messages. And so like,

Speaker 1 yeah, one of the protections in a team sport is that if one conspirator or a couple are cheating,

Speaker 1 it certainly shifts the odds enough that you have a very profitable bet. But like famously, sometimes these things don't work, right?

Speaker 1 There was a Boston college college cheating scandal, which did involve the mafia in the 1970s, but like, you know, only like one and a half players were doing it.

Speaker 1 And they like, I think the mafia didn't actually win the majority of its bets, right?

Speaker 1 so the fact that you're kind of turning a team sport into an individual sport with prop bets is problematic too but I want to go at like

Speaker 1 why do you think

Speaker 1 Terry Rogier made 115

Speaker 1 more than that made over a hundred million dollars in his career right yeah Chauncey Bill's probably similar current head coach I'm sure he gets paid pretty well lots of he can do speaking gigs and advertisements whatever else why do you think Maria people like that are participating in these

Speaker 1 in these schemes

Speaker 1 Well, you wouldn't think they were desperate for income. You never know when somebody has a gambling problem or another type of problem.

Speaker 1 But why do you think they're doing this? I mean, I think it depends on the exact situation, but I think oftentimes it's not for the money, right?

Speaker 1 So for someone like Terry, maybe it's to feel important and feel like he has influence and like be a cool, cool dude for his friends, right?

Speaker 1 Because a lot of his stuff, when I was reading the indictments, it was giving tips to like childhood friends or, you know, homeboys and trying to trying to help them out, which is why it wasn't huge amounts of money, right?

Speaker 1 This is why we're not talking millions or

Speaker 1 it was smaller bets. And

Speaker 1 I think that that kind of image creation, like I'm the chill dude who can like, you know, be cool. I think that that's actually a huge incentive for people.

Speaker 1 And I don't know much about his career or anything like that, but

Speaker 1 it seems, and please correct me if I'm wrong, that it's not like he's a top tier player who is always, you know, who people are talking about and are like, yeah, look at him go.

Speaker 1 So it's a way of, you know, kind of propping up your ego in those situations. Now, a lot of people who were top-tier players,

Speaker 1 and by the way, this talk, this is not just sports, this is true of poker, this is true of a lot of things.

Speaker 1 If they feel like either they're losing their edge or like they're they're about to or they're not quite sure cheating is a way to make certain that you at least make some money right to make certain you win to kind of solidify that, like, oh, you know, I will force you to get it.

Speaker 1 Or you feel like everybody else is doing it, right? You know, you feel like everybody else is doing it. I have to do, you know, the number of.
So that's the, yeah, absolutely.

Speaker 1 That's, that's kind of the Lance Armstrong, right? Like, why, why is someone like Lance Armstrong cheating? Barry Bonds in baseball was one of the best players in the league before steroids.

Speaker 1 And, and he's like, well, fuck these, you know, fuck these guys if Mark Maguire

Speaker 1 so are doing this shit. For sure.

Speaker 1 Yeah, for sure.

Speaker 1 And then some people just get off on it, like to be perfectly honest like some people like the idea that like i'm pulling one over on people like i'm in charge maybe someone like terry like feels slight or even chauncy um feels slighted by the league like they didn't appreciate me enough like they didn't value me enough like they didn't pay me quite enough for whatever um they did this bad thing to me i don't like what they do with x or y so a lot of times um there's a lot of work on this when people can find an excuse in their head you know why they're not adequately valued why they're, you know, why they're being overlooked, something like that, then they want to say fuck you to whoever is doing that, whether it's the league, whether it's the company they work for.

Speaker 1 So a lot of people justify, you know, stealing everything from like taking office supplies home to actually, you know, stealing.

Speaker 1 Once you get that rationalization in your head, like some people will just easily cross that line. And then, so it's like kind of sticking it to the man in certain ways.

Speaker 1 And you also think, like, you rationalize it away to say that it is kind of a victimless crime. Like I'm helping out like myself and I'm helping out, you know, my boys or whatever it is.
And like.

Speaker 1 They're a big corporation. They can take it.
Or in the case of poker, like, come on, like they get the honor of playing with me. They get this celebrity status by being in this game.

Speaker 1 And I'm giving them something back. So I'll take their money.
They're paying for the experience, right? You get all of these rationalizations in your head that make you do it.

Speaker 1 And I think that people, when they say, oh, but like they're not stupid, like they wouldn't risk it all for this. Actually, yes, they would, because they don't think they would be caught, right?

Speaker 1 Like all of these things went on for over a year. It sounds like multiple years.
And if you, the more you can get away with it, right?

Speaker 1 If you're not caught the first time, if you're not caught the second time, you start thinking that you're invincible. And you start getting this thing like,

Speaker 1 you know, I won't be caught. Like everything is fine and I can keep doing this.
So you actually think your risk is much lower than it is.

Speaker 1 And even if I'm caught, there's going to be a slap on the wrist. They'll say they investigated me and it was fine.

Speaker 1 They didn't find anything suspicious, like my leg really was injured or whatever it is. So, the repercussions are not really going to be serious enough, and I'll continue doing what I'm doing.

Speaker 1 So, I think all of these things are just layered one on top of the other and are at play in both of these situations, both of these indictments. But, yeah, look,

Speaker 1 one way you can defend the big DraftKings, FanDuels, Caesars, MGMs of the world, right, is by saying that like they are much better equipped to detect this and then either incentivize or require to report it when they do find suspicious activity, right?

Speaker 1 And so first of all, you know, they are not doing bookmaking in the traditional robust way because you have these sharp bookmakers and you have bookmakers, I'll mention DraftKings, which is a bookmarker that's regarded as being, at least when I was vetting the NBA a couple years ago, not all that sharp, right?

Speaker 1 They're a retail sports book, and their business model is customer discrimination and differentiation. Where if you're a VIP

Speaker 1 at a place like DraftKings, you know, I had a friend who literally would get cases of his favorite Cabernet mailed to his house and like, you know, and like front row seats for New York Rangers games and

Speaker 1 things like that, right? And, you know, at some level of access, you get private jets to the Super Bowl or whatever, right?

Speaker 1 And they can make infinity dollars, basically. Whereas I am limited by most of the sports books and I'm not that good.
I mean, I've won a little bit of money in sports betting, right?

Speaker 1 But like, I'm not a pro. I'm just trying to, trying to be good.

Speaker 1 Nobody should be taking $100,000 worth of action on Terry Rogier under rebounds or whatever, right?

Speaker 1 The only reason someone would bet that is because they have inside knowledge or maybe if they have a very particular model, right?

Speaker 1 But like, you don't want you, you don't want some super sharp MIT kid with a model to exploit this obscure part of your menu right and you don't want people with inside information betting but they figure that okay well

Speaker 1 we know who our good and bad customers are and we don't want to fuck with our with our VIPs as they're so-called right they can do what they want and yeah every now and then they might get a tip um but like so they're not it's not a robust form of bookmaking right it's a form of bookmaking that relies on on

Speaker 1 customer identification and like so like that's part of why I'm less sympathetic and because like when the gambling companies,

Speaker 1 you know, in general, when you pass legislation, then you kind of pass the skeleton of the legislation.

Speaker 1 And then the lobbyists and the industry interests do their work to interpret that legislation in ways that like is shockingly favorable to those vested interests, right?

Speaker 1 You do have some states, Massachusetts now, and New York has looked into like, okay, should you really be able to let some people bet literally $10 on a game, but a million dollars on the same game?

Speaker 1 Probably not, right? But like, if you're drafting the regulations, like I think the average sports better doesn't realize that if you are, if they think you're good, they will limit you.

Speaker 1 If they think you're good, they will not take meaningful amounts of money from you in terms of action, right? By the way, when you look at the ads for sports betting,

Speaker 1 if you go back to the ads for daily fantasy sports, they were marketed as a game of skill, right?

Speaker 1 You are daily fantasy sports is where you draft a team and you draft a team of real players, but you compete against other people and the house takes a cut or a rake like poker or something, right?

Speaker 1 They have no interest interest particular in who wins that outcome and they'd say it's a game of skill the ads would like literally just say you are joe schmo sitting in your office drone job right go to draft kings or fan duel right you can win millions and have and sleep with supermodels it was like it was like not that subtle because you're smart and they're dumb it was like very unsubtle appealing to the male ego um and now they don't do that right they don't want to advertise that as a game of skill because if they think they're skilled then they won't let you bet very much right and so like i mean that's you know that whole thing is is is kind of bullshit it's not a unique innovation i guess of like american sports betting lines but like you know british companies were notorious for doing this too but like but still it's moved a long way from the traditional form of bookmaking and the other thing people don't realize is like sports betting was for many years in vegas what was called an amenity amei n i t y right um you're in the middle of the desert so you have lots of physical space um you know sometimes people want to be in a casino and and actually you know so if you're in a casino and you want to lose not that much money right um

Speaker 1 actually one of the better things to do might be to bet a thousand dollars on an nfl game if you're betting naively that you know that bet has a negative expected value of 46 bucks right typical point spread hold margins right for 46 bucks you know three and a half hours of entertainment watching the game in the sports book and like getting free drinks and sweating with your friends or whatever right like it's actually not that bad but it was kind of seen seen as an amenity, right?

Speaker 1 And there's kind of this mystique of some guys can beat the lions, right? And like, but it's moved away from that model. And by the way, but it was 1% of, 1%

Speaker 1 of revenues was from the sports book, right? It was

Speaker 1 almost a lost leader. And the notion that like you can have this market where like sports betting is huge and yet you limit sharp bettors is,

Speaker 1 I don't know, it's kind of at best.

Speaker 1 at best unproven, right?

Speaker 1 Yeah, no, I mean, I think that one of the things that these indictments have shown us is that, you know, we need a more centralized, rigorous approach to how do we, you know, how do we regulate this, right?

Speaker 1 How do we, what kinds of supports bets for which amounts?

Speaker 1 Like, can we standardize something that actually upholds the integrity of the games, that will avoid situations, that, you know, turn team sports into individual sports, that kind of change those incentive structures around.

Speaker 1 It's a tough ask, right? Because as you say, Nate, like, there are, you know, various forces pulling you in various directions, but I think it's doable.

Speaker 1 And I think that, you know, it's something that people need to sit down and think about.

Speaker 1 But it's not like an easy band-aid fix, like, oh, you know, we need to just like limit all bets to X or do thing Y. I think it does require a nuanced understanding of sports betting, which...

Speaker 1 frankly, I don't think a lot of legislators have.

Speaker 1 No, I wouldn't think so either. And, you know, and frankly, the media doesn't either.
I mean, the media tends to default toward like scolding us about this. And like,

Speaker 1 if you have legal sites, a lot of it goes underground, not 100%. I mean, that's

Speaker 1 the same thing, right? You know, I'm actually betting the NFL this year. Believe me, Maria, I know how, and I have at some points in the past, like

Speaker 1 made bets in the gray market using crypto and things like that. I know how to do that.
It's just not worth the trouble, right? You know, whereas if it's DraftKings or FanDuel, right?

Speaker 1 I mean, literally, even like the year I was betting the NBA, I was like staying at the win. I guess it was for the win December poker tournament, right? And there's like, here's the NBA bet.

Speaker 1 I'm going to bet $1,100. And it has an expected value of like

Speaker 1 one percent probably right so the expected value is like twelve bucks right do i want to go down to the fucking sports book window and like place this bet right and feel like a degen no it's only worth twelve dollars i'll stay in my room and and yeah um so there's like like that where like even that friction of like the ease of online betting.

Speaker 1 So yeah, there are a few categories. You know, one, one has to do with like, you have to limit the menu of bets, right?

Speaker 1 If you want a bread on LeBron James or Nicole Yokovich, Yokovich, it's going to do fine, right? But like not. Yeah, that sounds like low-hanging fruit.
I think that that's low-hanging fruit.

Speaker 1 That that's something that could immediately be done, right? Yes, the menus should be limited. Number two, I think you need some constraints on this limiting your price discrimination, right?

Speaker 1 I'd go radically, but I guess I'm self-interested. I'd go radically and say, everybody gets the same price, right? You post some limits.

Speaker 1 You know, if you want to say, okay, we can have a spread of 2x or 4x or 5x or something, okay, that's fine, right?

Speaker 1 But like, it lets you, it lets you put irresponsible lines up that are subject to cheating or manipulation, right? If you only take bets from people who you think are going to lose on them, right?

Speaker 1 It's like a, it's, it's like one of these carnival games where, where it looks easy to like, you know, throw the ball at the bullseye and get the free stuffed animal, but like it's actually pretty difficult.

Speaker 1 And number three is probably like, you know, creating more friction. If you had a

Speaker 1 24-hour waiting carrier between you deposit money and when you bet, right, that would create meaningful friction. If you required, you say, okay, you know, in the UK,

Speaker 1 don't know if it's still true. I guess it must still be true, right? You go and there's like a lad broke's shop, right?

Speaker 1 You get your chippy and then you get, you go to the betting window and whatever, right?

Speaker 1 You know, say, okay, you know, you want to bet, you just have to go to a physical location and that adds some additional protection.

Speaker 1 You can have, know your customer laws, you know, if somebody seems like they're drug credit line or abusive, right? You You can deny their action, that kind of thing, right?

Speaker 1 And so like, you know, say, yeah, you want to bet? Okay. And there's going to be a little draft king's office maybe even then throughout New York.

Speaker 1 And maybe there's a nice little bar there if you want to watch your games, right? But you have to physically be in a location to bet. You know, I wouldn't go that far.

Speaker 1 I wouldn't advocate for all of this, but like, but,

Speaker 1 you know, public opinion is turning against us, right? People are, for both good and bad reasons, people are prudish, but like

Speaker 1 the industry, I think, has been short-sighted. It was a power grab and or a money grab, right? And now they're paying the price for that.

Speaker 1 Yeah. So I think that our three major recommendations, because I do agree with the framework, is one, limiting menu of bets.

Speaker 1 So basically actually taking a look at what makes sense, what doesn't make sense, what's kind of in the spirit of the game versus not. Two, transparency and standardization.

Speaker 1 And three, adding some friction in for the ability to place bets so that people aren't kind of in this spiral where like, you know, they get into

Speaker 1 they get into situations that they can't then get out of.

Speaker 1 I think that these, those are kind of three buckets that are probably really good places to start so that sports betting can regain its good reputation because I don't know if it ever had a good reputation, but like

Speaker 1 can get public sentiment more on its side. I think that that that would be helpful.
And I think that if those types of improvements come out of this scandal,

Speaker 1 that will be something. On that note, Nate, I wish you the best of luck getting out of Mexico.
I wish I could have drafted candies on the runway. If I would have fucking gotten like

Speaker 1 plus 300, your flight will not take off tonight, right? I mean, that would be.

Speaker 1 That would be great. That would be great.
You had some inside information. You would not be seeing at the El Camino Real.
I'll tell you that much, Maria.

Speaker 1 Well, I hope that this is your last night at El Camino Real, or that last night was your last night, and that tonight you will safely be in your New York City apartment.

Speaker 1 Let us know what you think of the show. Reach out to us at riskybusiness at pushkin.fm.
Risky Business is hosted by me, Maria Kanakova. And by me, Nate Silver.

Speaker 1 The show is a co-production of Pushkin Industries and iHeartMedia. This episode was produced by Isaac Carter.
Our associate producer is Sonia Gerwit. Lydia, Jean Cott, and Daphne Chen are our editors.

Speaker 1 And our executive producer is Jacob Goldstein. Mixing by Sarah Bruguer.
If you like the show, please rate and review us so other people can find us too.

Speaker 1 But once again, only if you like us, we don't want those bad reviews out there. Thanks for tuning in.

Speaker 1 Okay,

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