College Sports Betting: More gambling doesn’t mean more point shaving

Imagine that law enforcement in a random state acquired new technology for detecting speeding on the state’s highways with exceptional precision. The state decides to implement the new system on January 1 of the coming year, shifting responsibility for monitoring speeding away from patrol officers. The switch flips on the first day of the year, and a status report one month later finds that speeding tickets issued increased significantly since the new technology was put in place.

The speeding scenario is analogous to what is currently happening in the college sports world in the context of sports betting.

Before sports betting was allowed in many states, gamblers who wanted to place sports bets legally could only do so in Nevada. Otherwise, they looked for black market alternatives with independent bookies or shady offshore shops.

With more states legalizing sports betting, a growing number gamblers have access to legitimate gambling operators such as BetMGM or FanDuel. That’s bad news for bookmakers who previously took illegal bets, as their clients now can take their action to regulated, well-capitalized competitors with infrastructure to handle transactions seamlessly – and it’s all above board.

Importantly, the publicly traded companies setting up shop in states with legalized sports betting have the resources to ferret out attempts to fix matches and shave points using state-of-the-art techniques. They also face pressure from investors, including sophisticated institutional investors like mutual funds, to keep up with their competitors on matters of security and integrity.

So as legal operators suck up market share and drive underground bookies out of business, aspiring point shavers will have to contend with monitoring systems that can identify irregular betting activity with ruthless efficiency. In addition to spotting malfeasance, knowing that kind of monitoring exists deters efforts to try to fix matches in the first place.

Over time, we can expect the number of speeding drivers in our hypothetical would decline as the likelihood of getting caught went up. The same applies to point shaving.

All of which brings us to the concerns arising from recent betting scandals in college sports at Alabama and the two major universities in Iowa. Could legalized sports betting create more incentives to shave points and trade inside information among athletes, coaches and athletic department personnel?

Let’s return to the speeding scenario and the increase in ticketed violations. Either more drivers started speeding that month for some reason, or the monitoring system got better at identifying speeding. Which seems like the more reasonable explanation for the increase in tickets?

Similarly, it’s safe to assume point shaving has been taking place to some minor degree prior to broader legalization of wagering on sports – beyond the historical cases we already know about it. If we do see a rise in attempts to fix matches, we’re likely witnessing the effects of better monitoring, as opposed to changes in participants’ behaviors.

But perhaps there will be more attempts to shave points as the market for sports betting grows and athletes and the people in their orbits can place bets more easily. If so, that just means more match fixers will get caught.