Friday, 06.13.08

The NBA's Real Problem

TIMOTHY A. CLARY/AFP/Getty Images

Tim Donaghy, a former NBA referee caught gambling on games he officiated, alleged in a court filing this week that the league "sought to manipulate games using referees to boost ticket sales and television ratings," and in particular conspired to fix game six of the 2002 playoff series between the Lakers and the Kings.

The claim that the NBA fixes its own games is dubious (though not entirely implausible). What's far more likely is that some of the sport's other participants--players, coaches, and referees--shave points now and then. In fact, it's a near certainty. Illicitly changing the course of an entire playoff series--whether it's the league doing it, or freelance hustlers--is almost impossible without being detected, simply because so many variables operate in every game. If an influential player performed poorly enough to throw one game to the opposing team, for instance, he'd likely spend much of the next game on the bench, rendering him useless as a fixer. But point shaving is a more subtle art: Players on the take don't get paid to throw games--they get paid to win by just a little less than they're expected to.

Point shaving works because of the point spread. Invented in the early 1940s by Charles McNeil, a prep school math teacher and bookmaker, the spread is the number of points that one team seems likely to beat another by, as set by individual bookmakers. Whether the bookie is on the up-and-up at a Las Vegas casino or Paulie Walnuts in a North Jersey social club hardly matters: to make money, bookies just need to get an equal amount of cash wagered on either side of a contest. They accomplish this by adjusting the spread. If the Lakers are favored to beat the Celtics by seven points, say, and suitcases full of money start coming in betting on the Celtics to cover, the spread will get bumped down in an effort to get more people to take the Lakers. This balancing act guarantees a profit because of what's called "the vig"--the fee that gamblers pay their bookie on any winning bet (calculated at 11/10). Since bookies take in 100 percent of the money from losing bets, but pay out only 90.91 percent of the money for winning bets, they profit no matter who wins the game -- so long as they can cajole the public into putting up an equal amount on both teams. There's nothing objectively "right" about a given spread: it just reflects where the public is parking its money, and how bookies anticipate the action. And the public doesn't always behave rationally.

As a result, it's not all that hard for a crooked player to exploit the spread--just lighten up a little on defense, make a few key turnovers, slip once or twice in transition, and the crucial two or three points are shaved off your team's victory margin. College basketball seems particularly vulnerable to funny money, since the players tend to be young, easily influenced, and cash-deprived. An analysis by Justin Wolfers, a University of Pennsylvania economist, suggests that point shaving corrupts perhaps 6 percent of games with large spreads at the college level (or 500 hundred total games over the 16 years he investigated).

In the pros, the motivations for point-shaving are murkier, since you'd think that NBA players make far too much money (and have far to much to lose) to be susceptible to hustlers. Yet a study last year by Jonathan Gibbs of Stanford suggests that NBA gambling displays a level of unexplained irrationality that would indicate some kind of fishy behavior (like insider trading) if it showed up in another market. Gibbs argues that this irrationality results from point shaving, and he calculates that players or coaches on the take distort the outcome of perhaps five NBA games a season. To explain his findings, he speculates that short careers, hyper-competitiveness, and the me-first attitude pervasive among pro players lead them into the bookie's sinister embrace. And when you think about the barge of anecdotal evidence attesting to the Dionysian gambling appetites of NBA players, and consider that a huge percentage of them--possibly upward of 60 percent--end up broke not long after their careers expire, it's not hard to see where the motivation might be coming from.

Moreover, Gibbs's study doesn't even take into account the possibility of crooked officiating. Simply by virtue of the number of fouls called per game, and the fact that basketball officiating is notoriously difficult and error-prone, NBA refs can sway the outcome of a given game without attracting much attention. And given that referees earn far less than players and lack their ancillary income, like endorsements, it's not surprising that they'd be tempted to upend the spread once in a while (especially if, like Donaghy, they're problem gamblers anyway).

Point-shaving doesn't even require getting in bed with hoods like Henry Hill any more. Any player, coach, or ref involved in the Lakers-Celtics Finals right now can go online and place some well-considered wagers on Sunday's Game Five (or ask their cousin to do it). There's a huge amount of money to be made: R.J. Bell of Pregame.com estimates yearly worldwide NBA gambling at a knee-buckling $70 billion. Mavericks owner Marc Cuban has even proposed a hedge fund that would find arbitrage opportunities in the gaps between spreads set by different bookmakers. So when ESPN's Scoop Jackson says, "I personally know of players who have debts to people in the streets that exceed $6 million," the wonder isn't that there are players, plural, in that ludicrous position. It's that a far bigger gambling scandal has yet to engulf the NBA.

— Timothy Lavin

Filed Under: basketball, gambling, sports

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