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Monday, December 17, 2007

NBA Referee Fixes NBA Games

A few months ago, there was a scandal were an NBA referree, Tim Donaghy, was accused of betting on NBA games and fixing the outcome. He pled guilty to federal criminal charges.

Why is this any of the government's business? The referee did do something wrong. He broke his contract with the NBA. However, I don't see why this is classified as a crime when it's really a civil case.

Suppose I don't care about the NBA at all. Why should the government collect money from me, via taxes, and then spend it helping the NBA? Why should I be forced to pay for resolving a private dispute between the NBA and one of its referees?

What should the penalty be for the NBA referee? It should be whatever his contract specifies. If the contract specified a jail term as the penalty for fixing NBA games, then that's what the penalty should be.

What about the people who bet on the games with assistance from the NBA referee? They didn't have a contract with the NBA, so the NBA does not have a claim against them. However, those people have a contract with the casino where they placed the wager. As part of the terms of the contract where they placed their bet, they should have agreed that they weren't attempting to influence the referees or players. The people who bet on the fixed NBA games and lost then have a valid claim against the casino. It's a small claim, because you could argue that someone betting on an NBA game should be aware of the possibility that it might be dishonest.

Similarly, anyone who bought tickets to one of those NBA games or watched it on TV has a valid claim against the NBA. It's a very small claim per person, probably not worth pursing. You could argue that they should be aware of the possibility that the game might be dishonest.

In a truly free market, the NBA should hire an insurance service, against the possibility that a referee would do something dishonest. The insurance service would also be responsible for auditing the referees. The insurance service would be responsible for conducting the investigation.

What actually happened is that the police were investigating another crime and discovered the misbehavior by the NBA referee. In that case, they would turn their information over to the NBA's insurance service in exchange for a reward for helping the NBA.

In the sources I read, the referee was fixing the over/under total rather than the game's outcome. By calling extra fouls on both teams, a referee can increase the game's final score. It probably was a lot easier to fix the over/under total for "over" than to fix in favor of a given team. As long as extra fouls were being called equally on both teams, the players might not complain much.

The NFL has a system where every referee is graded on every call. If the NBA had such a system, it should have caught the referee's misbehavior quickly. If the expense of auditing every game is too high, then a random sample of games could be audited.

Some gambling experts say they could have detected misbehavior by comparing game scores and betting lines, and correlating it with the identity of the referees. Large bets were placed immediately before the game started. These bets were large enough to move the line, and were right disproportionally often.

Government intervention discouraged self-reliance by the NBA. Government intervention means there's less demand for free-market services that investigate corrupt referees.

The dispute between the NBA and one of its referees isn't any of the government's business. Because the government intervened, that encourages laziness on the part of the NBA, because they expect the government to investigate for them. The blame is exclusively placed on the referee. The NBA isn't blamed for improperly supervising its referees. Nobody points out that this issue isn't any of the government's business.

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