Are Recent Integrity Incidents a Sign that Legal Sports Betting Works?

A discussion about integrity at one of the biggest gaming conferences in North America came amid a recent spike in stories that could raise integrity-related concerns.

Last Updated: May 12, 2023 12:47 PM ET Read Time: 4 min
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Sports betting sites are facing something like the chicken-or-the-egg question at the moment. Is legal wagering creating scandals, or uncovering them?

Indeed, the recent burst of gambling-related incidents in the worlds of college and professional sports could be viewed as a byproduct of the spread of legal sports betting. However, some in the industry see the fact that these incidents are coming to light at all as proof the regulations and systems put in place around event wagering are working, even if the general public may not see it the same way.

One of the final panels of the SBC Summit North America in New Jersey this week was “Integrity's role in sports and betting,” which was timely given the aforementioned issues.

Asked about what sort of thing will be the hot-button issue at this time next year, Leonardo Villalobos, counsel, sports betting and compliance at Major League Baseball, pointed to the public perception of the reports about integrity-related incidents. 

“I think people here, people in the industry, might appreciate that stories like this are a sign that the regulated market is working,” Villalobos said. “I think maybe fans might not have the same appreciation and might look at stories that happen like this and say, ‘Hey, what's going on, legal sports betting is going off the rails.” 

A timely conversation

The discussion about integrity at one of the biggest gaming conferences in North America came amid a recent spike in stories that could raise integrity-related concerns. For example, the Colorado Rapids of Major League Soccer announced on Wednesday that a player was removed from all team activities following reports of allegedly unlawful sports betting. MLS is investigating the matter.

"We take matters of this nature seriously and seek at all times to protect the integrity of the game," the club said in a statement.

That investigation comes as a criminal probe is reportedly underway involving sports betting and athletes from the University of Iowa and Iowa State University. 

"The [Iowa Racing and Gaming Commission] does not currently have any information that would call into question the integrity of any sports wagering contest or event involving the University of Iowa or Iowa State University," the regulator said in a press release.

But there is more. Alabama recently fired its baseball coach amid an investigation into suspicious betting activity. Meanwhile, the National Football League announced in April that it suspended five players for violating its gambling policy.

Nevertheless, while the spread of legal sports betting has made wagering more accessible, creating the potential for shenanigans, regulated markets also allow for ways of monitoring suspicious activity. It was reportedly an integrity-monitoring company that alerted Ohio regulators about the allegedly suspicious activity involving Alabama baseball.

Furthermore, bettors continue to have access to offshore and illegal sportsbooks that don't abide by the same sort of rules and regulations as legal markets. If an offshore site sees some suspicious wagering activity, there may be no requirement for them to tell regulators. In Ohio, sports-betting licensees are legally required to report "suspicious wagering activities" to state watchdogs.

A fine-tuned machine?

Rhea Loney, chief compliance officer at BetMGM, noted during another SBC panel that the industry works with integrity monitors that share information about any suspicious activity with other operators. Still, Loney said launching in new markets remains challenging, even with all the experience acquired by operators.

The state-by-state nature of regulation means sportsbooks can't just copy and paste their compliance efforts, as some states allow betting on in-state colleges and others do not, for example. There are also different kinds of responsible-gambling requirements in different jurisdictions, such as which helpline number must be advertised. 

Yet these are concerns for legal operators because they want to remain legal. 

“We are a highly regulated industry with a lot of integrity and a lot of protective mechanisms and the illegal market has none,” Loney said.

Working together

Illegal operators likely lack the sort of lines of communication that legal operators can utilize. 

For instance, the allegedly suspicious activity in connection with Alabama baseball was reported to regulators by U.S. Integrity, a Nevada-based monitoring firm. And moderating the SBC integrity panel on Thursday was Scott Sadin, U.S. Integrity's chief operating officer, who was asked about the incident. 

"This is not going to be something I'm going to be able to comment on all that much," Sadin said. "But I would say is that I do think it was an illustration of how the different key stakeholders across the ecosystem worked with one another efficiently to identify a circumstance that warranted some further investigation."

Similar circumstances will probably arise soon enough. Villalobos and his fellow panelists expected those integrity-related stories to keep popping up, and the MLB representative said it will be interesting to see how mainstream media handles them.

“Because I think we've also seen what impact stories from the mainstream media can have on the industry,” Villalobos added.

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