One could argue that last week’s news of PGA golfer Phil Mickelson’s involvement in an illegal gambling ring was timed perfectly to help bolster the American Gaming Association’s new partnership with law enforcement, a partnership aimed at quashing these types of schemes.
Though Mickelson has not been formally charged and is not under investigation, a wire transfer of $2.75 million, to be used for an illegal sports betting operation, allegedly was his money, according to ESPN Outside the Lines, which broke the story. In the Justice Department indictment, Mickelson was referred to as an unnamed “gambling client” who allowed his funds to be laundered by a pair of shady operators.
It is hard to say what reputational damage Mickelson will incur from this, given that his fondness for gambling is well-documented. But this and other blunders by well-known professional athletes provide anti-illegal gambling crusaders with a theme for convincing the public that illegal gambling is not a problem that disappeared with the Great Depression.
Mobsters with thick New York accents and political machine bosses are no longer the prominent faces of illegal gambling. They have long since been replaced by well-known athletes such as Alex Rodriguez, Jaromir Jagr, and Pete Rose – all implicated in such schemes with varying degrees of public outrage and negative consequences. Other athletes, including Floyd Mayweather, Charles Barkley, and Michael Jordan, have also had more than minor flirtations with gambling, though that’s not to say their participation has been unlawful.
More shocking and sometimes violent events have occurred within schemes devised by players themselves. Everyone knows about NFL quarterback Michael Vick’s unfortunate illegal dog fighting ring. In another well-known incident, in 2010, a dispute between Washington Wizards players Gilbert Arenas and Javaris Crittendon over winnings in a card game resulted in threats to shoot out kneecaps and handguns being brought into the team’s locker room. Both players were being suspended for the season, amidst horrible publicity for both the team and the National Basketball Association.
One can argue that this theme should carry little weight because these athletes comprise a very small subset of the illegal gambling universe. The dollar amounts involved are often de minimis to the athletes (though they can sometimes be eye-popping to regular fans). That athletes are, by definition, hyper-competitive gives them perhaps some leeway. However, these incidents reinforce the argument that illegal gambling is – and always has been – a rough-around-the edges business.
Equally important, as the marijuana business is learning, is that just because an activity is legalized does not mean the bad guys give up and go home. The Central American cartels that for years smuggled dope into the U.S. can simply move to harder – and still illegal – drugs such as heroin, the price of which has plummeted in recent years, sparking a national epidemic. (In 2012, 156,000 people in the U.S. tried heroin for the first time, nearly double the number for 2006.)
Similarly, the illegal gambling business has largely been forced underground as states and local governments gradually entered the market and began crowding out the criminals – first by legalizing casinos in Nevada in the 1931, followed by the adoption of state lotteries, and ultimately by all the other forms of wagering which are legal and widespread today.
But just as with the whack-a-mole game, illegal gambling always finds new niches (as technology changes) and new ways of exploiting the existing system. Fighting illegal gambling is complicated by the fact that this is an inherently nebulous concept, spanning a broad range of activity – everything from sports betting and online wagering to internet “sweepstakes” cafes and schemes found in poorer urban areas, such as “numbers games” and card games.
Because much of this activity is nearly impossible to detect at a high level, partnering with local authorities to sniff out these schemes is important. Enter the AGA, which has launched the industry’s first-ever campaign against illegal gambling activities by rounding up support from within the ranks of state and local law enforcement officials who are already working to combat this problem.
The group has also successfully raised awareness on the scale of illegal wagering on events such as the Super Bowl and the Final Four. Why is this useful? Everybody knows that people – even otherwise law-abiding citizens – bet heavily on these events, but fewer understand the sheer dollar amounts involved and that the majority of these wagers are unlawful.
So why is a crackdown needed? First, in order for the legal and government-blessed gaming industry to solidify its own legitimacy and uphold its image, it must distinguish itself from the bad actors – wherever they might exist. The Mickelson incident and others like it tarnish the industry’s image while providing none of the public benefits of a regulated industry.
Second, a crackdown provides the chance to firmly differentiate between legal and illegal sports betting, the area most ripe for a major shift in public policy. The flip side of supporting legalized sports gambling is opposing this type of illegal betting because it damages the sports themselves, rather than being an innocuous activity.
While support for legalized sports betting is on the uptick, it could just as quickly evaporate should it be revealed that more knuckleheads are involved in these illegal activities. Thus, it is not just the casino industry that stands to benefit from a crackdown on illegal betting activity – professional sports leagues have just as much interest in making sure this behavior is curbed. In the quest to build a wide-reaching coalition to curb such activities, their support and input should also be corralled.
