Chaotic Regulation Threatens US Sports Betting Integrity

sports betting integrity

States can now offer legal, regulated sports betting after the Professional and Amateur Sports Protection Act was overturned in 2018. The federal government, however, failed to follow that up by enacting regulations to protect sports betting integrity.

Nationwide integrity standards enforced by a federal agency seemed likely. US Sen. Chuck Schumer and Orrin Hatch proposed a bill to do just that. Unfortunately, several states beat them to the punch.

“Too many states had already rolled out their own regulatory frameworks, and threatening to undo these new regulatory models or cut into projected state tax revenues was not going to be a politically expedient move. Another factor working against the bill was it was effectively trying to be proactive. There was no real catalyst (other than lobbying, I suspect), no integrity disaster spurring Congress on – it was just the federal government trying to get into the weeds of an emerging industry.”

John Holden, Oklahoma State University Assistant Professor and Match-fixing Scholar

The proposed federal legislation for “integrity monitoring” would have established a committee whose sole purpose was to detect any form of match-fixing across eligible sports, including:

  • Inside information leaks
  • Athlete exploitation
  • Official/Referee Bias

Expectations were that match-fixing might become a thing of the past. Unfortunately, the regulated body never formed. And according to some experts, bettors may pay the price without even noticing. That could include sports betting in Kansas, as the Legislature recently passed legislation allowing sports betting in the state.

Private companies protect sports betting integrity

In response to each state enacting its own regulations, a handful of private companies and nonprofits have formed to navigate the inconsistent laws.

Companies like US Integrity established to “identify suspicious behavior by analyzing changes in betting data against a benchmark of normal betting activity,” according to its website. However, the company must then rely on a state’s law enforcement authority to do something.

Holden believes these private companies are doing a decent job, but they are not catching all the cases. “I think it’s laughable that we play, I don’t know, 4,000 college basketball games, and none of them would be fixed. I just don’t think that’s realistic.”

Of course, match-fixing has been going on for decades. Long before the idea of legalized sports betting was even creeping into the minds of lawmakers. Thanks to the infamous Chicago Black Sox scandal in 1919, you could say match-fixing has gone on for a century. And, historians would probably say it started long before that.

How to deal with wrongdoing

US Integrity is a 14-person private company that works with various sportsbooks, colleges, leagues, and conferences. Company President Matthew Holt recalled a college football game that they flagged.

“We saw tens of millions of dollars come in overnight,” said Holt as they watched the odds for the supposed favorite drop in a matter of hours. It became clear the next day that several players on the favored team could not play due to COVID-19 protocols. Further investigation found that the equipment manager for the team had leaked the information to bettors the day before.

Since each state has drastically different rules, Holt was unsure whether what the equipment manager did was illegal in his state.

“Not only do we have to try to identify all these things against people that are really good at hiding them, we have to do it 50 different ways in 50 different jurisdictions.”

Matthew Holt, President of US Integrity

Holt declined to name the school. Criminal charges were not brought. The incident was never made public. All that happened was the equipment manager was fired. Which is the most popular response by most entities.

“That [firing] often is the case because it avoids reputational harm,” said US Integrity COO Scott Sadin. “You want to keep these things as confidential and sensitive as possible.”

Secrecy jeopardizes sports betting integrity

One might think incidents of manipulation are rare. In reality, US Integrity sends out 15 alerts a month. And they are just one of several private integrity companies in the US.

In almost every betting integrity case, there is a thick layer of secrecy around it – mostly to save face. Pandemonium ensues if it came out that the line on a big game unfairly moved. The conference/league bigwigs seem to be taking an “ignorance is bliss” type mentality. It’s a mentality Holden has problems with.

“I have no idea why the gaming commissions are so secretive. They refuse to answer just about anything from my experience. I mean, they’re public entities. … The idea is we deter it because you tell people we’re catching people doing this. So secrecy, if anything, hinders that.”

John Holden, Oklahoma State University Assistant Professor and Match-fixing Scholar

It’ll be interesting to see if the federal government revisits this. Right now, it is legal in 30 of the 50 US states. Will they choose to be proactive or wait for a big scandal to break out and force their hand? Only time will tell.

Photo by Jason Sponseller/Shutterstock