Just as the National Basketball Association was launching its 2025-2026 season, something untoward happened. Several high-profile NBA individuals were arrested. The Federal Bureau of Investigation arrested over 30 people in two separate investigations. In classic law-enforcement style, the investigations were given creative titles, “Operation Nothing But Bet” and “Operation Royal Flush.” The news can be expected to create a tidal wave of media coverage, criticism, and calls for action.
The calls for action represent a threat to the gaming industry’s equilibrium.
In 1986, Nelson Rose said that a scandal of significant magnitude would lead to a wave of laws banning gaming across the nation. It had happened twice before, once in the 19th century and again in the early 20th century, and Rose thought it could happen a third time, given a proper stimulus. The earlier scandals involved lotteries, but Rose thought casinos were as vulnerable. Like the lotteries in the 19th century, casino gaming had a narrow base in 1986. In that year, the total gaming revenue from the only two legal jurisdictions in the country, Atlantic City and Nevada, was less than $6 billion.
Since 1986, the gaming industry has grown dramatically. In 2024, the total GGR was $72 billion; thirty percent of it came from forms of gaming that were not legal in 1986, igaming and sports betting. Igaming revenue in 2024 was $7.9 billion and sports betting $13.5 billion. The $72 billion came from 25 states. Additionally, Indian gaming revenue was $44 billion, bring the GGR to $116 billion, 19 times the 1986 revenue.
If nothing else, the size of industry means it has many more friends, allies, defenders, and beneficiaries than it had in 1986. The numbers also mean that the level of scandal required to generate a backlash has grown with the revenue. Unfortunately, the media’s ability to cause a stir has grown apace. The internet can create a backlash far beyond that of the non-digital print media of the 1980s. Hundreds of articles about the investigation have already made the rounds. Whether this story will create a scandal large enough to impact the gaming industry is the question of the day.
The Washington Post was the first to suggest federal legislation might be in the offing. The Post said, “Members of the House and Senate called for ‘safeguards’ after FBI agents arrested more than 30 people.” Granted, that is a very vague statement, with neither names nor details, but it does mean that at least one media outlet and more than one unnamed Congressperson is thinking about federal controls. A day after the Washington Post story, ESPN reported a letter from a congressional committee to the commissioner of the NBA, Adam Silver. The House Committee on Energy and Commerce wants a Silver brief by October 31.
Silver is upset, admitting he was stunned by the news of the NBA involvement. “My initial reaction was I was deeply disturbed,” Silver said. “I had a pit in my stomach. There’s nothing more important to the league and its fans than the integrity of the competition.” Silver said he would like to see some controls on betting. He prefers federal regulation, but will settle for state-level limits on the types of bets allowed.
Silver will be joined by others calling for restrictions on bets. And there are certain to be several levels of control proposed and later imposed. First, the bookies will have to pay closer attention to the types of proposition bets they offer and adopt some limitations. Prop bets are too lucrative for the bookies to eliminate them; however, the bets can be structured to make them more difficult to manipulate.
The professional and amateur sports leagues and associations are certain to support limits on the types of bets available, particularly those tied to individual performance. The leagues are very threatened by the questioning of the integrity of the games. The sports phenomenon in the modern era is much more than athletic competitions; it is a giant lucrative industry. Gambling helps that industry grow and increase its profitability. In 2024, $150 billion was wagered on sports. Those bets were made by the same people who watch the games and buy the merchandise association with the players and teams. No one wants to alienate those fans or the advertisers that cater to them.
Sports betting is only half of the story; the other half is high-stakes poker. Here, the athletes are not accused of gambling or controlling the games. According to the indictment, the athletes and a head coach were used as figureheads to draw players into the games. It is alleged that the games were run by four New York Mafia families. Using high-tech equipment, the games were rigged to cheat the unsuspecting poker players. The poker half of the story will not resonate as much with media, lawmakers, or industry insiders as the sports side.
Backroom poker games do not have a constituency like sports do; that people cheat in those games is not news or surprising, nor does it imply that legalized poker is corrupt or corruptible in the same manner. But when organized crime is introduced, it becomes serious. The implication of Mafia involvement always brings out the feds. The feds rooting around looking for Mafia tentacles in gaming has always been a significant threat to legal commercial gaming. That said, whatever the results of Operation Royal Flush, the spotlight will be on sports.
The fallout from Operation Nothing But Bet is uncertain. The situation is dynamic and new developments are surfacing at a rapid rate. Besides the call from Congress, the NBA is beginning its own review of policies. The NFL has issued a warning to players; MLB is very aware the dangers of gambling undermining the integrity of the game. The only thing that could be worse than the suggestion that the World Series is corrupt is that the Super Bowl is.
Thus far, nothing suggests that the level of influence by gamblers on sporting events has reached the level necessary to trigger the Nelson Rose model. That predicts a wave of anti-gambling legislation sweeping the nation from one or more corruption scandals involving legal-gambling activities. The current events are less than that. Still, they are highly likely to bring some major changes in the regulation of sports betting, both locally and nationally.
It is too early to predict the result of the FBI’s work. But it’s not too early to say this has serious implications for commercial gambling in the United States.
