Major League Baseball held its opening game this week under the shadow of a gambling scandal. Reports have surfaced that the National Basketball Association is investigating players for fraudulent betting. And college basketball fans are awaiting the outcome of a review of an unusual bet on a men's basketball game.
The incident highlighted the trade-offs made when professional sports leagues embrace gambling.
Leagues use gambling to increase fan engagement by signing lucrative marketing deals with betting apps like FanDuel and DraftKings. But this new source of income also opens the door to fundamental dangers. The explosive growth of sports betting could threaten the premise of fairness at the core of sports competitions.
“The risk is that the game becomes like professional wrestling and becomes match-fixed.'' Fay Vincent, MLB commissioner from 1989 to 1992, said, “No one bets on professional wrestling. “If it became professional entertainment in the same way, professional wrestling would be over.”
It's unlikely the league will completely abandon gambling. But is there a way for those who profit from gambling to protect their image?
Clubs can no longer blame gambling itself for scandals. When Pete Rose was banned from baseball in 1989 for betting on games in one of the most famous gambling scandals in sports history, Vincent's predecessor, Commissioner A. Bartlett Giamatti, declared that gambling was corrupt. accused of being an act. But after a 2018 Supreme Court ruling paved the way for states to legalize gambling, leagues are now working directly with sportsbooks. The NBA signed an estimated $25 million deal with MGM Resorts in 2018, and MLB has an exclusive multi-year deal with FanDuel.
“You can't put toothpaste back in the tube,” said Patrick Risch, a sports business professor at Washington University in St. Louis. “The flow of money is too strong.”
Leagues may support restrictions on prop bets. This allows gamblers to bet on factors such as the first player to score over the outcome of the game. Since the outcome of these bets is often determined by his one player, the individual athlete is susceptible to additional pressure from bookmakers and other players. NCAA President Charlie Baker said: This week we encouraged states to ban prop bets., the stock price of Flutter, the parent company of DraftKings and FanDuel, fell. (Some analysts said the ban would have minimal impact on sportsbooks' revenues.)
Increased self-monitoring may be helpful. The nation's largest sports book company announced this week that it is creating an organization called the Responsible Online Gaming Association, which will be able to share information about customers banned for problem gambling.
“This is real money and real participation,” said Chris Grove, an analyst at Eilers & Kreisic Gaming. “However, it should not just be a pat on the back. What information will be shared, especially about individual players, and what actions will be taken based on that information sharing? There are many questions about it.”
The league could also extend the ban on in-sports gambling to individuals associated with players, such as personal assistants. Jeffrey Kessler, a sports law attorney at Winston & Strawn, said anyone who works for a team “should be subject to the same rules that we hold our players to.”
More taxes may be due. “State governments are also big beneficiaries of regulated gambling,” Grove said. “They have an obligation to do everything in their power to help alleviate whatever problems they may have.”
States have raised taxes on sports betting, ranging from 6.75% in Iowa to 51% in New York, Rhode Island and New Hampshire, and are using the proceeds to pay for things like real-time data monitoring and state-assisted teletherapy for gambling. This could potentially be used to fund monitoring activities. Addict.
A flat tax increase may be welcomed The biggest betting sites, FanDuel and DraftKings, are better equipped to make an impact than their smaller rivals — “although they would never say that out loud,” the Globe said. he said.
However, many are wondering whether this will happen anytime soon, given that the tax increase is likely to spark a backlash from other countries. Both professional sports teams and casinos “have a very strong track record of lobbying state legislatures,” said Mark Edelman, a law professor at Baruch College who studies the history of gambling.
Will recent events hurt the league? Given the long-term nature of TV contracts and the relatively fixed nature of fans, the immediate impact may be subtle. According to Keith O'Brien, author of “Charlie Hustle: The Rise and Fall of Pete Rose,'' attendance at Cincinnati Reds games has been minimal since Rose was fired for gambling. It is said that it only fell. A year later, the stock price is up about 25%.
“So the fans wanted to come and wash away the scandal? I don't know,” O'Brien said. “As someone who lived in Cincinnati in 1989, I can tell you that baseball was ruined. It was ruined. And it was a lost season.” — Lauren Hirsch
In case you missed it
Jay Powell said the economy's resilience will give the Fed more flexibility in when to start cutting rates. The Fed chair suggested yesterday that strong consumer spending and a strong labor market will allow the central bank to be patient. He reiterated that he wants to be more confident that inflation is falling sustainably before taking action.
Sam Bankman Freed is sentenced to 25 years in prison. The FTX founder was found guilty of stealing $8 billion from his customers and could have been sentenced to up to 110 years in prison. He vowed to appeal the conviction.
Visa and Mastercard have agreed to reduce swipe fees for five years. A proposed class-action settlement in a long-running dispute with a retailer could have broader implications, including reducing the profitability of credit card rewards programs that many travelers rely on for free travel.
Disney has ended its legal battle with Ron DeSantis. The entertainment giant and Florida's governor have been in a two-year battle over control of the tax district surrounding Walt Disney World. The two sides have now agreed to collaborate on new growth plans for the 25,000-acre area.
blockbuster spending
Wednesday is the deadline for Disney shareholders to vote in what is expected to be the most expensive proxy battle in history. The company's board is facing attacks from two sets of activist investors, Trian Partners and Blackwells Capital, who are pouring money into the company to win support from individual investors. Tryon spent about $25 million, Blackwells Capital about $6 million and Disney more than $40 million.
The majority of Disney's shareholders are individual investors, effectively turning this battle into a modern-day marketing campaign. And if you're looking for information about battles, you've probably come across a barrage of online ads. Take a look at how bids for Google Ads keywords related to this fight have skyrocketed over the past year.
How every company can leverage AI
Ethan Mollick, a professor at the Wharton School at the University of Pennsylvania, has built a large following for his research on how to apply artificial intelligence to work and his popular newsletter, One Useful Thing.
He speaks to DealBook about his new book, Co-Intelligence: Living and Working With AI, in which he details how to make the most of innovative new tools. The conversation has been edited and condensed.
What mistakes do companies make with AI?
They tend to see this as something that needs to be highly centralized. So, in the end, he usually ends up with some kind of high-end working group with IT and legal departments to define the rules and usage. What they often do is lock down usage.
Companies also believe that someone has the answers about how to use AI. They hire a consulting firm, and the consulting firm knows nothing. Even AI companies aren't sure how best to leverage this.
Have you seen companies use generative AI to significantly improve the way they work?
What is actually happening is that many employees are secretly working with AI and not telling anyone. That's why many companies are actually automating and achieving significant efficiency gains.
You write that we should strive to use AI more like “cyborgs” than “centaurs.” what do you mean?
The centaur's work is divided. There are jobs you can leave to AI, and there are jobs you can keep for yourself. So let's say I'm not a great writer, but I'm good at analysis. I would tell the AI: “You write. I'll do the analysis.”
Cyborg works are more blended. When I wrote this book, whenever I got stuck on a sentence, I asked the AI, “Tell me 10 ways to solve this problem.” I asked them to read parts of my book, give me feedback on it, and suggest analogies that might be helpful. That's more effective.
If an executive wants to incorporate AI into my business, what is his or her first step?
Just use it. The first use case that so many people saw was using chatbots to write fairy tales and wedding toasts. I think the real place to start is with everything you can do legally and ethically in your work. Ask questions about what you're working on. Let's brainstorm ideas. Allows you to provide feedback on meetings recorded on Zoom with your permission. That way you can learn how to handle it.
On our radar: the ancient maritime principle of the “general average”
Insured losses from Tuesday's collapse of the Francis Scott Key Bridge, which was struck by a cargo ship, could reach $4 billion, requiring a decade of litigation to sort out who will pay for the damages. There is a possibility that it will happen. Part of that battle may involve a little-known ancient maritime law principle called the “general average.”
This principle, attributed to the Rhodes seafarers in a document dated 533, stipulates that in the event of a disaster, cargo shippers and ship owners should jointly bear the costs. “General averages are a common sacrifice,” said William Fennell, chairman of the American Maritime Law Association's Marine Insurance and General Averages Committee. The principle is “everyone works together.”
The classic case involved dumping cargo. If the crew had to lighten the ship's cargo to avoid sinking, dumping some but not all of the cargo, on a general average everyone made up for their losses. In modern times, the concept has been applied more broadly, and Fennell said it could occur in the case of this week's tragedy.
If the ship owner invokes this principle and is ultimately found not at fault for the accident (which does not apply in this case), the company carrying the cargo on the ship may end up paying part of the loss. There is sex.
thank you for reading! See you on Monday.
Please let us know what you think. Email your comments and suggestions to dealbook@nytimes.com.
