Disgraced NBA Referee Donaghy Talks Impact Of Legalizing US Sports Betting

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Earlier today, we wrote about a radio appearance by former Major League Baseball commissioner Fay Vincent. On an episode of the Mad Dog Show with David DeMarco, Vincent offered his views on sports betting (read them here).

His comments weren’t the only ones of interest, though. Later in the program, DeMarco was joined by Tim Donaghy. The former NBA referee is rather familiar with the perils of illegal sports betting, and his scandalous past hasn’t kept him away from the industry.

Quick backstory on Donaghy

Donaghy, 51, was an NBA official for 792 games spanning 13 seasons. Seemingly out of nowhere, he resigned from his job as a referee in July 2007.

Soon thereafter, the reasons became clear. The New York Post reported that the FBI was investigating his involvement in manipulating games that he was also betting on. Organized crime groups were the primary targets, but Donaghy’s name had surfaced in connection.

It was eventually revealed that he done two very bad things. Donaghy had both bet tens of thousands of dollars on NBA games and passed confidential information along to bookies. Worst of all, he’d bet on games he officiated. Revealing that his family had been threatened by the mafia, he allegedly made on-court calls that deliberately affected betting outcomes. It was a public-relations nightmare for the league.

Donaghy pled guilty to two financial crimes, served 11 months in federal prison, and was treated for gambling addiction after his release. In 2009, he told 60 Minutes that he hadn’t watched a game since his incarceration and would possibly not do so again.

The period of abstinence didn’t last long, though. While still on probation, Donaghy began a new career as a professional handicapper. He now sells sports betting picks on his own website, aptly named Ref Picks.

“One door closes, another one opens,” he told DeMarco.

Donaghy on sports betting

Despite (or because of) his less-than-stellar past, Donaghy knows his stuff when it comes to sports betting. He thinks legalization is inevitable, and it’s hardly a surprise to hear him speak in support. “I think it’s better for our business, because people are going to have more options for where they can legally place bets,” he said.

This is also fairly obvious, but there are a couple good reasons to give people legal places to bet. First of all, as Donaghy highlighted, states can capture some of the revenue that’s escaping to offshore sites. And to bookies.

We tend to focus on the structured black/gray market, offshore sites that offer sports betting to US gamblers. But there’s also a substantial problem with local and web-based bookmakers. And as Donaghy will tell you, not everyone has a friendly bookie.

“It’s a big, big business for the mob in regard to bookmaking,” he said. “It’s something they very much have their hands in. And it’s something that, if it’s taken away from them, it’s going to hurt a little bit.”

Documents from Donaghy’s case reveal that his actions funneled millions of dollars into organized crime operations.

As for who Donaghy likes in the NBA playoffs? “It’s going to come down to who gets the calls down the stretch,” he said without a hint of irony.

Scandal still frames NBA’s sports betting blueprint

I think we can all agree that a match fixer and recovering gambling addict is not a good spokesperson for legalized sports betting. Still, Donaghy is a good source of knowledge on corruption, and his case speaks to the existence of modern-day organized crime.

There will always be people seeking to manipulate sports, and it can be hard to identify issues when the majority of US wagering is done outside of the regulated Nevada sports betting market. Transparency isn’t exactly a top priority for offshore sites or bookies.

Although it’s hard to measure the direct cost of Donaghy’s actions, it’s fair to say the NBA experienced some financial loss. The league now supports cautious legalization of sports betting, but lawyers have consistently warned lawmakers about the risks to integrity.

Boston Globe columnist Jackie MacMullan foreshadowed their argument in her 2007 piece about Donaghy:

Now that it has happened, you realize with frightening clarity how feasible — and how damning — it would be for referees, umpires, or linesmen to be corrupt, and how lucky the four major professionally sports leagues in our country have been not to have confronted this issue before.

This is exactly what professional sports leagues contend in 2018.

In order to mitigate the risks, the NBA and Major League Baseball have drafted a list of integrity-based proposals. Among them, they’re asking for access to betting information, control over data sources, and the collection of an “integrity fee.” They also want the ability to bring suit against match fixers. With these powers, they argue, they’d be better able to monitor their sport.

The counterpoint is that the NBA was unable to prevent one of its own officials from undermining that integrity in the past. And MLB, of course, has Pete Rose attached to its history.