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The bombshell NBA scandal that took place as part of an FBI investigation last week has led to many questioning the sports betting market, even the legal side of it.
That was especially the case with Miami Heat guard Terry Rozier, who was among more than two dozen arrests for his role in the sports betting FBI probe where he allegedly gave non-public information regarding his injury status and when he would be exiting a game to hit certain prop bets.
There was a similar situation last season with ex-Toronto Raptors player Jontay Porter, who was banned from the NBA indefinitely and pleaded guilty to conspiracy to commit wire fraud. Porter, who is connected to this current FBI investigation, had previously been found guilty of disclosing confidential information to sports bettors about his own health status and bet on games in violation of league rules.
So, seeing a situation like this happening on a perhaps larger scale, Fanatics Betting & Gaming CEO Matt King was “disappointed” to see “criminal elements” come into play in a market that has grown exponentially as more states legalize it. But given his expertise, King explained why he feels this situation proves the legal side of sports betting is working.
“If you look at the chronology, the suspicious betting activity was flagged immediately, was reported immediately, investigations were kicked off immediately,” King told Fox News Digital earlier this week. “You had the right people involved. Obviously, the leagues were out ahead trying to aggressively understand what was happening, but they don’t have subpoena power, so they’re able to see part of it. But everybody worked in collaborations with the FBI, who were able to have subpoena power and really dig in. Ultimately, the perpetrators were caught, and I’m confident they’re going to be brought to justice.”
Fanatics Sportsbook is a newer operation and was in the early stages of its development when Rozier was accused of being involved in potential betting irregularities in a March 23, 2023, game. But King’s experience in this industry goes beyond the work he does with Fanatics Betting & Gaming now, having served as CEO and CFO of FanDuel during previous years.
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So, regarding the question about the future of sports betting, especially the prop betting market, King gave a perfect analogy.
“This type of thing is inevitable, and I look at it through the lense of – the parallel I draw is the stock market,” he explained. “People have traded stocks for hundreds of years, and there’s always been the risk of insider trading. Consequently, there’s a healthy and aggressive regulatory enforcement regime around making sure people don’t trade on insider information. This is no different from that.
“I look at it as a great case study of the market and regulation all working and the industry participants working in concert together. I’m hoping the perpetrators were made an example of, because the deterrence element is equally as important.”
King also gave some perspective on how these instances were caught from the start, and what an operation like Fanatics Sportsbook does when that flag comes up when wagers start coming in.
“A lot of times, the first flag that comes out of suspicious activity is a volume well in excess of what we would’ve expected,” King said about a suspicious bet. “That typically tips off and tips you into further investigation. In particular, when an under [prop bet] or low-grade tennis match or something like that is ahead of expectations, then it’s really the question of, ‘Where is it coming from? Who’s making the wager? Where are they making that wager from? Is this consistent with their historical betting patterns?’ Questions like that. We have a lot of analytic resources and a lot of people on staff that kind of spend time looking at this data and make sure we understand.
“Now, a lot of times you get a false flag. You dig into it and it’s like, ‘Hey, we didn’t expect this much action on the underdog, and it turns out the popular underdog that had a big Instagram story, and people are just piling on some narrative that exists in sports,’ which is great. It’s healthy. So, there’s a lot of false flags, but ultimately a chunk of those flags that get raised turn into something suspicious and we report that to the appropriate authorities.”
In short, King knows that, like any market prediction, there is going to be those who want to gain an edge. So, the future of betting in any professional sport will have those trying to cheat the system.
However, King feels the strongest point to get across about this alleged criminal activity is having a legal market, coupled with aggressive regulations and monitoring, can at least diminish the potential for illegality.
“The most important fundamental point of this conversation is for everybody to understand that sports betting is going to exist no matter what,” he said. “You can’t show me an era of history, a country in the world, a sport that’s popular and doesn’t have some level of sports betting. We just have to accept that sports betting is going to exist. It’s then simply a question of do you want this to exist as a legal market or an illegal market?
“The reality is this activity was caught because it is a legal market, because you were able to have relationship with leagues and have integrity monitoring services that you could flag data for and people could investigate. If you didn’t have legalized sports betting, all you’d have is the illegal markets that don’t have any commitment to integrity or consumer protections, which is the other side to remember. If you’re betting on an illegal sportsbook, they have no requirement, no interest to make sure you’re betting within your means or things like that.”
“I would argue the best thing for the integrity of the game, the best thing for consumer protection is a two-pronged strategy of a legal and robust market paired with aggressive enforcement against the illegal market.”
Fanatics Sportsbook, as well as having key Responsible Gaming tools for consumers, also has a unique “Fair Play” policy, which protects bettors from early player injuries.
This consumer protection addresses those situations where it’s clear key players get injured, but also the potential of something like the Rozier case. Being a starting guard on a team, Rozier’s prop bets are abundant every night he’s on the court, but if he leaves early and never returns, Fanatics Sportsbook voids that bet through Fair Play.
Overall, there is no true way to root out the illegal side of sports betting, but operations like Fanatics Sportsbook, and leaders like King, continue to put the necessary regulations, technology and collaborations with leagues in place to ensure a fair and level playing field for all those wishing to play.
“We will always be front of the line with leagues and regulators for what’s the right mix of prop bets to offer,” King said. “What I would say, though, is there’s a balance. Because ultimately, if you have a legal sports betting market, but one where regulations were strict with what you can offer to the point where it’s not giving consumers what they want, they will then go into the illegal market. You undermine the value of having a legal market. So, I look at it as finding that right balance that ensures we can limit, and make common sense decisions, but also make something the consumers want.”
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