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The arrests of current and former high-profile NBA figures on Thursday for illegal sports betting and rigged poker games spurred fresh calls from lawmakers for federal regulation after the scandal exposed evidence of the corrupting influence of betting on sports.
Since a 2018 Supreme Court decision overturned a federal law prohibiting sports betting outside Nevada, 38 states and D.C. have legalized gambling on sports and spawned a multibillion-dollar industry, according to the American Gaming Association.
Members of the House and Senate called for “safeguards” after FBI agents arrested more than 30 people, including Portland Trail Blazers Coach Chauncey Billups, who authorities said was involved in a mob-run rigged poker scheme and supplied information to sports bettors about his team. The indictment does not suggest that Billups played any role in the placing of bets or that he received any money in return for the inside information that was used.
Miami Heat player Terry Rozier also was arrested on charges of conspiracy to commit wire fraud and conspiracy to commit money laundering. FBI Director Kash Patel described the alleged criminal activity by high-profile figures as “the insider trading saga for the NBA.”
Propositional betting, often referred to as prop bets, is facing particular scrutiny inside and outside of Congress. Instead of wagering on the game’s outcome, prop bets, which are at the heart of the federal case, allow gamblers to wager on players’ statistics during the game.
NBA Commissioner Adam Silver on Tuesday said he supports increased federal regulation on sports betting to lessen the chances for manipulation of games because of betting. He pointed to his league’s request last year to its gambling operating partners to restrict prop bets on players who split their time between the NBA and its developmental league as an example of ways manipulation can be reduced.
Sen. Dick Durbin (D-Illinois), the top Democrat on the Senate Judiciary Committee, said in a statement that he was committed to getting prop bets out of the system.
“The temptation for athletes, seasoned coaches, and professional officials to adjust performances is real. Sadly, scandals are becoming more and more frequent,” Durbin said, noting that industry leaders such as NCAA President Charlie Baker voiced support for increased regulations at a committee hearing on sports betting last year.
He added: “Congress, states, and sports leagues must all work to maintain the integrity of sports and prevent future sports betting scandals,” after the Supreme Court “struck down commonsense federal law in 2018.”
Bills designed to tighten rules around gambling and gaming have been introduced in recent years, but have failed to gain overwhelming bipartisan support in Congress. The SAFE Bet Act, introduced by Sen. Richard Blumenthal (D-Connecticut) and Rep. Paul Tonko (D-New York) in March, would require states to meet minimum federal standards in marketing, affordability and artificial intelligence, but the bill hasn’t advanced in either chamber.
Responding to the Justice Department’s indictments Thursday morning, Blumenthal posted on X that he would “continue to fight for federal legislation that provides safeguards against the excesses & abuses that lead to the kind of wrongdoing highlighted by these indictments.”
Tonko described the scandal on social media as “an inevitable consequence of the unchecked explosion of the sports betting industry,” which he said had destroyed public trust in the game with “dire consequences for countless across our nation struggling with problem gambling.”
The office of Sen. Katie Boyd Britt (R-Alabama) said in a statement Thursday that the senator was “open” to having talks “about potential solutions to crack down” on sports betting issues.
After the Judiciary Committee’s December hearing on how the industry’s widespread legalization was affecting athletes, public health and the integrity of amateur and professional sports, Sen. Thom Tillis (R-North Carolina) said he would be “very open” to an independent commission that would assess potential federal oversight.
Other legislative attempts during this Congress have taken a more nuanced approach to tackling specific gambling-related harms as opposed to calling for broad national regulation. Rep. Michael Baumgartner (R-Washington), who introduced a bill to restrict prop betting in college sports, said he was “disappointed but not surprised” by the arrests.
“The world of prop bets has opened up a lot of potential for illegal activity and issues that can threaten games,” he told The Washington Post in an interview Thursday, but clarified he was not advocating for a prop bet ban in professional sports. Such a ban would be very “unlikely” to pass through Congress, he said, because there are “many law-abiding citizens” who enjoy participating in prop bets.
While Congress might be inclined to legislate on narrower issues, such as banning prop betting on college athletics, the argument often made by the gaming industry is that offshore betting and criminal syndicates are to blame when betting issues arise. “I don’t think there’s really [an] appetite to go back the other way,” Baumgartner said, referring to the 2018 Supreme Court ruling that ushered in legalized sports betting across the country.
Sports betting companies have responded to the NBA scandal by stressing their “commitment to rooting out abuses,” as per a statement by FanDuel to CNBC. The American Gaming Association said while Thursday’s revelations are “a stark reminder of the pervasive and predatory illegal market … 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.”
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