20112015.pdf - Widespread Corruption in Sports Gambling...

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Widespread Corruption in Sports Gambling: Fact or Fiction? Author(s): Richard Borghesi Source: Southern Economic Journal, Vol. 74, No. 4 (Apr., 2008), pp. 1063-1069 Published by: Southern Economic Association Stable URL: http://www.jstor.org/stable/20112015 Accessed: 28-03-2017 20:41 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected] Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms Southern Economic Association is collaborating with JSTOR to digitize, preserve and extend access to Southern Economic Journal This content downloaded from 139.78.253.128 on Tue, 28 Mar 2017 20:41:33 UTC All use subject to http://about.jstor.org/terms
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Southern Economic Journal 2008, 74(4), 1063 1069 Widespread Corruption in Sports Gambling: Fact or Fiction? Richard Borghesi* We examine whether point-shaving is widespread in National Collegiate Athletic Association basketball by comparing bet and game outcomes with those in professional sports. Results suggest that unusual patterns previously suspected to be indicators of point-shaving are ubiquitous throughout sports and unlikely to be caused by corruption. We suggest that line shading by sports books may explain the anomalies in game and bet outcome distributions. JEL Classification: G14 1. Introduction While approximately $1 billion is wagered legally on college sports each year in Nevada, between 30 and 100 times more is wagered illegally throughout the United States (Public Citizen 2001). Legal and illegal gambling markets are intertwined because illicit bookmakers often balance their positions by placing bets at legitimate sports books. Furthermore, legal casinos may unwittingly play an essential role in the ability of corrupt gamblers to fix sports contests via point-shaving. Point-shaving is a scheme in which an athlete is promised money in exchange for an assurance that his team will not cover the point spread. The conspirator then bets on that team's opponent and pays the corrupt player with proceeds from a winning wager. Given the high cost of bribing players and enormous risks inherent in violating federal laws, the orchestrator must place massive bets for conspiracy to be worthwhile. Since local bookmakers are generally unwilling to accept unusually large bets, conspirators must wager at legitimate casinos. So, ironically, while the economic viability of legal sports betting markets depends on the perception that transactions are fair, Nevada casinos are potentially instrumental to gamblers who conspire to fix games.1 Because few cases of point-shaving have been documented, most market participants believe that legal sports books are fair.2 However, this perception has recently been called into question. In examining 44,120 men's college basketball games played between 1989 and 2005,
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