SBJ Betting: MLB found its latest headache after a simple request

When the now-exiled NBA role player Johntay Porter went belly-up in two games to pay off his debt to a Brooklyn bookie earlier this year, it resulted in the reddest of red flags. The bookie and his associates placed large wagers on bets that otherwise attracted miniscule action, which they won when Porter checked himself out of both games. The suspicious bets led the NBA to ban Porter and federal prosecutors to charge the bookie, who was arrested along with two others earlier this week.

Most of the 11 players the NFL has suspended for violating its betting rules were caught after geolocation services found them placing wagers from team facilities, another easily identifiable red flag. Geolocation also led to the criminal charges filed against 16 college athletes charged with improper wagering.

There was no red flag to be found around the bets that got one MLB player who wagered on his own team’s games banned this week (there were also suspensions for four others who bet while playing in the minors). There was no reason to believe the bets were tied to the manipulation of games. Baseball has no rule against betting from a team facility, unless the bet is on baseball, which is a cardinal offense anywhere, at any time. The players weren’t underaged, nor were they wagering under someone else’s name.

Tucupita Marcano, the utility infielder who received the most severe of league-imposed sentences , placed 231 MLB bets totaling $87,319 while on the Pirates disabled list during the second half of last season, including 25 bets on Pirates games. For Marcano, who earned about $720,000 last year as a 23-year-old, betting $400 a game would not have stood out as high stakes.

The bets placed by the other four players who were suspended were even less noteworthy.

A’s P Michael Kelly placed 10 bets totaling $99.22 on nine MLB games the week after his Triple-A season in the Astros organization in 2021. Pitcher Jay Groome placed 32 MLB bets totaling $453.74 while with the Red Sox's Single-A Greenville Drive affiliate in 2020 and 2021. Infielder José Rodríguez placed 28 MLB bets for $724.09 while with the White Sox's Double-A Birmingham Barons in 2021 and 2022. Pitcher Andrew Saalfrank placed 28 MLB bets for $444 while injured and in the Diamondbacks system in 2021 and 2022.

Sportsbooks don’t run random checks to see if anyone on an MLB club’s 40-man roster has an account. They require reams of information when you open an account, including a Social Security number, but there’s not an "occupation" pull-down that includes "baseball player" or "pro athlete."

The only way those bets would come to light is if someone was sent looking for them.

How MLB's latest issue came to light

Though MLB has been admirably transparent about the findings of its investigation, providing dates, amounts and results of all the bets it uncovered, the league has declined to discuss the root of the search, citing confidentiality.

But sources familiar with the process said it began before the start of this season, when MLB asked the largest of U.S. operators, league sponsor FanDuel, to crosscheck its customer rolls against MLB 40-man rosters to see whether players had bet on baseball.

When FanDuel came back with indications that some had, MLB launched an investigation into those players that extended beyond FanDuel. A source at another sportsbook said MLB approached it to check "a handful" of names in April.

There’s nothing unsavory about a league asking a sportsbook to check whether players are betting on their sport, especially since you can find all the information you’d need to make a preliminary identification on the back of a trading card. Sportsbooks don’t want to take bets from players who may have inside information, so they’re more than happy to try to ferret them out.

So long as players’ personal information -- full Social Security numbers, for example, coupled with name and date of birth -- wasn’t compromised, there’s really no harm done here, other than to those who broke the rules -- and perhaps the law.

But here’s where I landed after lots of calls and texts and emails trying to determine how MLB figured out what it figured out. Good on MLB for catching players betting on baseball, even for small stakes while in the minors. But wouldn’t it have been better for everyone if sportsbooks had known to decline the bets before they were made?

Gambling regulators in every legalized state have a process by which individuals can ask to be excluded from betting, typically used to assist those who are addicted. But exclusion also can be used to block the handful who are prohibited from betting by law, which, in some states, includes athletes and team and league employees.

That universe of prohibited bettors, and the process for excluding them, varies from state to state. The more effective way to block players, coaches, officials and execs from betting on their sport would be to get their names and other identifiable information into the hands of sportsbooks, who could deny bets that ran afoul of league, or NCAA, rules.

There are privacy concerns associated with that, since the majority who would be on a list of prohibited bettors likely have no intention of signing up for a sportsbook account. Asking someone to sacrifice privacy, and the risk of a data leak, to open an account is one thing. Asking them to do it to keep them from signing up for a product they don’t want is another.

At last year’s G2e gambling industry conference in Las Vegas, Matt Holt, CEO of the company then known as U.S. Integrity, hosted a panel in which he pitched a software product called ProhiBet, which he said would allow leagues and college athletic programs to load rosters with uniquely identifiable information onto an app that would live on their servers, allowing sportsbooks to access them while they remained encrypted.

Using name, date of birth and any two of the other 13 data fields sportsbooks commonly require during signups, and setting restrictions on what type of bets anyone on the list can place, ProhiBet could catch 99% of bets before they were placed, and then alert leagues or schools of who had tried to place them, Holt said.

Among those in an audience of about 20 was Leo Villalobos, an MLB lawyer who works on sports betting and compliance matters. He was familiar with the product and said he saw merits in it, though he conceded that leagues with players unions would have to navigate a more complicated path to it than early adopters, such as college conferences and the UFC.

Since then, league and industry sources have indicated that discussions between the company -- now known as IC360 -- and MLB have continued, and that it remained the most likely of the major leagues to be a first-mover on ProhiBet, at some level.

A product like that almost certainly would need buy-in from unions. Some leading sportsbooks have questioned whether it’s necessary for the larger leagues, suggesting they could perform the same functions working directly with the sportsbooks. Software such as ProhiBet can’t work unless the sportsbooks sign on to use it.

But whether it’s through this product, or some other product or tactic, keeping players and other prohibited staff from betting on their sport is far better than catching them betting on their sport.

What Jontay Porter did when he conspired to make $1 million for a bookie who had threatened him is the poster child for the sort of integrity risk that the leagues feared when states began legalizing sports betting. Not nine $10 bets placed by a Triple-A pitcher who now stands to lose a season in the big leagues because of it.

Nine bets that easily could have been prevented.

The revelation that  FanDuel stands ready to replace Bally  as the brand on the Diamond Sports RSNs if they emerge from bankruptcy reorganization as a viable business marks the end of what once appeared to be a promising tie-up between a media company with a vast footprint and a small regional casino chain with high aspirations.

Struck in November 2020, the  10-year deal had Bally paying $85 million  to put its brand on 21 RSNs holding the rights to 41 MLB, NBA and NHL teams, a seeming masterstroke that would enable Bally to flex its ad dollars into states as they legalized.

Though online sports betting was legal in only eight states with major pro teams at the time, expansion was coming rapidly. As states legalized, RSNs would appear to be an ideal -- and relatively cost-effective -- vehicle to expose the Bally’s brand. "State-by-state advertising is essential for reaching targeted audiences in sports betting markets," Sinclair CEO Chris Ripley told analysts shortly after announcing the deal. "We bring that in spades."

The rub was that, for all its ambition, Bally wasn’t capitalized sufficiently to slug it out with the likes of FanDuel and DraftKings to acquire customers as new states opened up. At the time of the deal, it said it hoped to be available in four states by Q2 2021. Sinclair had an RSN in only one of them, Indiana.

Eventually, the map would have come to them. Bally had its brand on RSNs in Arizona, Michigan, Ohio, Tennessee, North Carolina and Louisiana -- but it didn’t operate sportsbooks in any of them. Today, with the deal dead and buried, Bally Bet still is available in only two of those states, and seven states total.

FanDuel is in all of them.

• Fanatics named Selena Kalvaria, formerly with Gucci, as the company’s next CMO of its betting and gaming division, notes the WSJ.

• Illinois' new budget is "raising the state sports betting tax, now a 15% levy on post-payout revenue, through a tiered structure that would see the largest sportsbooks paying a 40% tax and the smallest paying 20%," notes the Chicago Tribune. The change is "expected to bring in $200 million in new operating revenue."

• The ACC and Integrity Compliance 360 have a new comprehensive partnership that will equip each of the conference's schools with access to IC360’s monitoring tech and insights, reports SBJ's Rob Schaefer.

• Legal retail and online sportsbooks opened in Ohio last year, and my colleague David Broughton notes the state now has 19 physical sports betting sites.