Bettors Should Have Legal Recourse Against Leagues Where Cheating Takes Place

Rigged Matches

‘Fraud on the market’ is a doctrine that should be applied to sports betting, academic paper argues

free fixed matches

According to an article published earlier this week in the German newspaper Die Welt, a pair of Wimbledon matches are under investigation by the International Tennis Integrity Agency (ITIA). The reason for the investigation? Suspected match fixing.

Of course, this wouldn’t be the first time the tennis world has seen match-fixing scandals, but having it happen at Wimbledon is … well, it’s not good.

According to the report, several suspicious bets were placed, and several bookmakers reached out to the authorities to report the action, and several other monitoring firms confirmed the action.

The first case was a first round men’s doubles match, where after the favorites won the first set, heavy action came in on the now even greater underdogs. And the underdogs won.

The second case involves a singles match, where after the second set, a bevy of bets came in — totaling in the five figures — on the exact outcome of the third set. That bet also hit.

These reports are the 33rd and 34th times the ITIA has been contacted since the start of 2021. It has become increasingly clear that there is a major match-fixing problem in the world of professional tennis.

And while many hands will be wrung over this, and Very Important People will demand that Something Must Be Done, there is one class of people who will be wholly ignored, and they’re the people who are the only ones who are truly suffering: the average bettors, who wager on sports with the expectation that the games they are risking money on — be they tennis matches, or games involving the 2017-18 Houston Astros, or maybe games where Major League Baseball insists the ball is the same when, in fact, it was juiced — are on the up and up.

For these bettors, there is no recourse, no institutional body to make things square. The best they can hope for is the sportsbooks themselves refunding their bets, something that happens occasionally, but certainly not something that can be banked on.

Well, a trio of college professors have a solution for this seemingly growing problem, and it’s been hiding in plain sight in the securities world. It’s known as “fraud on the market,” and it would allow gamblers to have legal recourse against the leagues and organizations where the cheating took place.

And if that were the way things worked, we wouldn’t have to depend on the sportsbooks to ferret out cheaters. The leagues themselves would be forced to massively step up their game when it comes to policing their respective sports.

Twenty years ago, this idea would have been laughed out of court.

Today, though? It’s not nearly as far-fetched.

Rigged Matches

Rigged Matches Fraud on the market

“Fraud on the market” kind of sounds like an R.E.M. album, but it’s actually something that — if this idea is ever adopted outside of the securities world — would certainly cause a lack of REM sleep among league owners and commissioners.

In very basic terms, “fraud on the market” is a doctrine adopted by the U.S. Supreme Court, and it assumes that the price of a stock reflects all information about the stock. If a person buys a stock, and it’s later found the company lied about information, there is a boatload of securities law that would punish the no-goodniks, and there are avenues for investors to have legal recourse.

“The idea is that the stock price encompasses all available information,” said John Holden of Oklahoma State University, one of the three authors (along with Gregory Day of the University of Georgia and Brian Mills of the University of Texas at Austin) of Fraud on Any Market, which will be appearing in a forthcoming edition of the Indiana Law Journal. “If the company does something to hide or inflate the stock price by not disclosing something, or attempting to conceal it, that’s the fraud. You’re withholding that information and it will have an effect on the price on the market.”

And how — and why — do companies generally avoid the trap of not disclosing or concealing something?

“There’s the argument that if you apply pressure to these organizations — and we do it all the time in the financial industry — then there are consequences if you aren’t making sure you’re following the rules,” Holden said.

So how does this apply to sports betting?

Well, in the paper, the authors discuss a few “no-goodnik” sports betting situations, including the landscape of Major League Baseball after the 2015 All-Star Game. Studies have shown the ball used post-ASG was, at minimum, subtly changed. As a result, home runs went up, scoring went up, and games that hit the overs went up.

In fact, according to the paper, bets on the over pre-ASG lost, on average, $3.63 (per $100 bet). After the ASG? Overs won, on average, $4.05 a bet. This is a massive swing.

And bettors who bet the under post ASG — who rightfully thought they had all the information about the “stock price” of a baseball — have no recourse.



More news

Rigged Matches

Be the first to comment

Leave a comment

Your email address will not be published.