Compliance Culture

Practical insights for compliance and ethics professionals and commentary on the intersection of compliance and culture.

Integrity of game play: Unethical leadership by coaches

This is the fifth in a series of five posts on the topic of integrity of game play. The first post in the series was about the negative impact of player misconduct on sportsmanship and game outcomes. The second post pondered whether tanking can ever be ethical and judged numerous examples of the practice in different sports to assess potential morality of these actions. The third post covered referee bias in different sports, analyzing its prevalence or presumptions of it and how this type of bias may relate to overall ethical decision-making and choice theory.  Last week’s post discussed examples of organizational cheating operations by teams.  Today’s post, the fifth and final in the series, will delve into examples of unethical leadership by coaches.

Coaches are some of the most popular, visible, and influential leaders in society. Their tone and conduct can have a ripple effect on the behavior by and achievements of the players and teams they influence. To the public, coaches often provide the institutional identity for the team, expressing their mission and values in the media as well as defining the terms on which the organization wishes to compete and be known. Within team organizations, coaches are the most important people managers, tasked with both developing individuals and demonstrating operational commitment to the team’s strategy for the game, season, and beyond.

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Integrity of game play: Institutional cheating

This is the fourth in a series of five posts on the topic of integrity of game play. The first post in the series was about various types of player misconduct and its implications for sportsmanship and game outcomes. The second post discussed the moral character of different types of strategic tanking and looked at various examples of tanking from a variety of different sports. Last week’s post was about referee bias in diverse sports and how it relates to overall decision-making and judgment.  Today’s post looks at examples of organizational cheating operations by teams.  The fifth and final in the series, on March 21, will analyze examples of unethical leadership by coaches.

Institutional cheating by sports teams has sparked repeated scandals in the media and inspired outrage from observers who perceive sustained operations by teams to cheat or gain unfair advantage as an assault on the competitive objective of game play. These cheating campaigns can have a dramatic, and disastrous, impact on both reputation of teams and their future competitive possibilities or the sustainability of their prior achievements that may have been reached dishonestly.

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Integrity of game play: Referee bias

This is the third in a series of five posts on the topic of integrity of game play.  The first post discussed the impact of various types of player misconduct on sportsmanship and game outcomes.  Last week’s post debated whether tanking can be ethical and looked at numerous examples of tanking across different sports to compare how it happens and what its effect is. Today’s post is about referee bias and how it affects games, players, and teams.  The fourth post, on March 14, will be about organizational cheating operations by teams.  The fifth post and the last in the series, on March 21, will be about unethical leadership of coaches.

Teams and their fans often accuse referees of being biased or making unfair calls. Whenever players or spectators disagree with the call made or penalty assessed – which, for those on the wrong side of the outcome of the decision, is not all that rare – bias is often suspected or assumed.

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Integrity of game play: Ethics of tanking

Editor’s note: Check back in the coming days for additional content to this post which will feature a deep-dive discussion on the moral code of tanking and the practice’s themes and applications between me, from a compliance and ethics perspective, and my husband, Bill Afonso, from a sports management and strategy perspective.

This is the second in a series of five posts on the topic of integrity of game play.  Last week’s post discussed player misconduct, such as penalty embellishment, like diving and flopping, and equipment cheating.  Today’s post is about the ethics of tanking and will question the morality of the practice across various sports and situations.  Next week’s post, on March 7, will be about how instances of referee bias impact games, players, and teams.  The fourth post, on March 14, will be about institutional cheating by team organizations.  The fifth and final post, on March 21, will be about coaches who have demonstrated unethical leadership practices.

Tanking is loosely defined as relying upon poor performance in order to ensure future benefit or competitive advantage based upon bottom of the table results. Internal decisions within the team organization can be planned and intended for the purpose of gaining future advantage via sustained losses or refraining from employing the most competitive strategies.   This can include roster manipulations such as sitting key players or keeping others in the minor leagues or farm systems, as well as actually instructing players actively in the game to underperform or to pursue strategies they expect to be unsuccessful or unproductive in order to deliberately lose the game(s).

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Integrity of game play: Player misconduct

This is the first in a series of five posts on the topic of integrity of game play.  Today’s post will be about player misconduct, such as penalty embellishment, individual cheating and misconduct, and time offenses.  Next week’s post, on February 28, will be about the ethics of tanking.  The third post, on March 7, will be about referee bias.  The fourth post, on March 14, will be about institutional cheating.  The fifth and final post, on March 21, will be about the unethical leadership of coaches.

Player misconduct is any instance of an act committed by a player which is unfair, contrary to the laws of the game, or interferes with other players or the active play of the game.  These acts can occur in a variety of circumstances, including during active game play, when the play is paused, during intermissions, or before and after the game.  Some types of misconduct – such as those that are eligible for disciplinary sanction, including cautioning or dismissal from the game – are subject to significant referee discretion or technical construction.  Other types of misconduct – such as those fraudulent acts by players that are the result of sustained conspiracies or pre-meditated efforts to cheat – can be more subtle, harder to detect, and challenging to prevent or punish effectively.

Players may be motivated into misconduct out of emotion, competitive ambition, game dynamics toward some outcome or interaction with another player, or, like many other fraudulent acts that threaten game integrity, desire for financial gain and future success.  No matter the varied reasons for why players engage in malfeasance, it remains true that these misconduct events happen across all sports, all national cultures, and all types of events.  Furthermore, manipulation of plays and games by player misconduct negatively impacts the integrity of sporting events and interferes in the unadulterated experience of sporting with real stakes that other participants and fans expect and deserve.

  • Penalty embellishment – Penalty embellishment generally describes anytime that a player seeks to gain unfair competitive advantage by exaggerating contact with another player in order to imply that a foul has been committed against him or her.  Assessments of whether players are embellishing penalties are highly subjective and can become notorious personality evaluations of various players who are accused of chronic or shameless embellishment.  These pretended injuries or simulated contacts with other players are a fundamental exercise in dishonesty and player misconduct which impugns the quality and veracity of game play.  In various sports penalty embellishment takes different typical forms, as described below.
    • Diving (football) – In football (referred to as soccer within the United States), penalty embellishment is also referred to as diving.  Players do it in pursuit of chances to score via free or penalty kicks or in order to cause the opposing player to be sanctioned by the referee and therefore unduly disadvantaging the other team.  Diving is actively studied as a powerful example of “non-verbal deception.”  Leagues have begun to give out punishments and fines more frequently for diving, as the practice of exaggerating contact and injury has the potential to endanger or slow response to other players who are in actual danger.  Footballers who become known for chronically diving further face the reputational damage of being labelled as perpetrators of this deceptive behavior.  Check out these examples of diving from 2017:

Diving is also practiced by players in hockey, where perpetrators are subject to 2-minute penalties for embellishment and can receive fines as supplemental discipline for repeat offenses.  Check out this compilation of diving in the NHL:

    • Flop – Similarly, in basketball, flopping is when players fall on purpose after minimal or no contact from another player in order to provoke referees into calling a personal foul.  This way the player who flops wishes to be awarded free throws and possession of the ball or possibly to cause the opposing player to be fouled out and dismissed from the game.  Flopping has been regulated against in the NBA since 2012 with the potential of fines and, like diving, subjects inveterate practitioners of it to public scorn.  Nevertheless, many players in the NBA do it and even see it as a form of strategy which they practice and perfect over the course of their careers, much to the derision of some of their peers but possibly to their own competitive benefit.  This archived Grantland post gives an interesting perspective on the long history of flopping:  Flopping in the NBA: A History of (Non)violence.  Check out this collection of floppers from the NBA:

  • Time offenses – Time offenses generally refer to the actions of a player or players on one team which use up the remaining time on the clock but don’t serve any other tactical or strategic purpose.  This is possible in any sport which is timed and therefore is a prevalent practice employed to prevent the other team from getting adequate opportunity to score before the period of the game or the game itself ends.  Players will often do this when their team is winning by a small margin, or tied, in sports where overtime play is possible and/or regulation ties or non-regulation losses are still awarded points.
    • Time-wasting – The term time-wasting typically applies to football.  Late in the game, such as during the extra minutes from injuries or other stoppage, substitute players are brought on and time can be wasted both by exiting and entering players who do so deliberately slowly.  These and other less obvious forms of time-wasting, such as putting the ball out of play from the corner or returning to the ball to play slowly, can subject players to punishment.  Check out these ridiculous and overt examples of time wasting by footballers:

    • Running out the clock – Running out the clock is a form of clock (mis)-management which is employed by American football players in the NFL.  Teams on the offense which are also leading on the scoreboard will plan their play strategy with minimal risk in order to run the time from the clock and avoid the potential of losing possession or having the ball go out of bounds.  Basic rushing plays down the middle of the field or multiple quarterback knees are often used as teams trade the chance of additional scoring for relative security as the remaining time in the game drains away.  Here’s an example from 2016 of players deliberately holding the other team’s defenders in bear-hugs in order to run out the clock (notice all the flags on the play):

  • Equipment cheating – Equipment cheating is a ubiquitous risk across many different sports, in any situation where the condition of accessories used by the players can be doctored or falsified.  In baseball or cricket, bats can be “corked” – filled with an artificial material to make them lighter and easier to hit a ball farther with them.  In tennis, rackets can be strung illegally.  In golf, players can use clubs which violate weight and size regulation.  In cycling, bikes can be altered so that they perform and operate unnaturally in comparison with normal equipment.  This can be referred to as “technological doping” – a threat to the integrity of the sport which comes not from illegal performance enhancing-drugs, but in fact from performance enhancing-equipment that has been fraudulently adjusted.  Check out this article on “technology doping” in cycling from 2016:  What’s Next for Sport After Cycling’s Technology Doping Shame?

Check back next week, Wednesday February 28, for the second post in this series of five, which will discuss the ethics of tanking, such as the Philadelphia 76ers and “trust the process” and the Astros tanking strategy for World Series contention.

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Ethical leadership in the Eagles’ Super Bowl LII victory

When the Eagles beat the Patriots in Super Bowl LII on February 4, 2018, they did much more than win a football championship.  To Eagles fans, the victory represented the culmination of 52 years spent waiting for their team to bring the Vince Lombardi Trophy home to Philadelphia.  Feeling disliked, disrespected, and underestimated by rivals and analysts alike, the Eagles and their fans leaned into their adopted underdog persona, making the ultimate win all the more powerful.

The media attention around the aftermath of the game has focused on the jubilation and vindication, amidst this prior doubt and dismissal, felt by the fans, the players, the coaching staff, and everyone affiliated with the team.  All this was capped off by a joyful parade down Broad Street to commemorate the accomplishment.

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Fraud in sports: Doping scandals

This is the fifth and final post in a series of five posts on the topic of fraud in sports.  The first post, from December 5, was about cheating in marathons and how incidences of it are exposed, investigated, and disclosed to the public.  The second post, on December 12, was about fraud and falsification among thru-hikers within the long-distance hiking community.  The third post, from December 19, was about fraud in sports from gambling and betting.  Last week’s post focused on fraud in sports via game/match fixing. Today’s post will be about major doping scandals in different sports and will discuss the ways some very high-profile athletes cheated by doping, how their uses of performance enhancing drugs were supported or not identified by various institutions, and how individuals impacted for various reasons by doping have dealt with this in the aftermath.

Doping has been a controversial topic in the sports world for decades, as scandals over the use of performance-enhancing substances in various athletic programs have recurred unrelentingly.  Revelations of doping by athletes, both on their own and as part of national athletic programs that have sponsored and aided them in taking drugs to artificially aid their performance, have been in the news constantly.  Heroes from sports have been knocked off their public pedestals as the truth of their cheating and drug use has been revealed.  Olympians and world champions have lost their medals and records, while state athletic systems have put the chances of future athletes, now innocent of any wrongdoing, of competing on the world state at risk because of prior systematic unethical decision-making.  Athletes who competed “clean” have been robbed of their moments of glory and missed out on professional opportunities they would have had, if they had not been bested by other athletes competing unfairly while taking performance-enhancing drugs.  Sponsors have invested in athletes based upon unreliable, misrepresented statistics.  Above all, the integrity of the game for other participants as well as spectators has been impaired and thrown into great doubt and uncertainty.

The ways athletes dope are as varied as the sports and events in which the fraud takes place.  The one reliable fact about the fraudulent use of performance-enhancing drugs in professional sports is that ongoing administrative efforts to test for it and oversee institutional protections against it are seriously lacking.  Regulatory bodies, whether part of the athletic programs or connected to national programs or international organizations, are often inadequately supervised, incompetent for the task, or insufficiently resourced.  Until major change takes place in the control frameworks and supervisory structures which exist to protect the integrity of sports from cheating and dishonesty, doping scandals will continue to undermine the credibility of athletic programs and events.

  • The Russia doping scandal has been in the news unrelentingly for several years, stemming from accusations of state-sponsored doping during the 2014 Winter Olympics in Sochi, Russia.  Claims of systematic doping in Russia, supported by the state system there which for decades has been well-known as one of the most intense and involved national programs in the world, have dogged the state officials, the athletes both from past delegations and with future ambitions of competing, and the International Olympic Committee (IOC).  After investigations which have been dogged every step of the way with unreliable information from state-sponsored anti-doping testing centers and repeated discrediting of various athletes from past Olympics, the IOC decided to ban Russia from sending an official delegation to the 2018 Winter Olympics in Pyeongchang, South Korea.  Russian athletes will still be eligible to attend as neutral delegates, but pride of representing their country or the opportunity to stand on a medal podium for it will not be possible.  This story will continue to unfold and promises to hold only further dishonor and disappointment on many sides:  Russia doping scandal
  • For sure the continuing drama with Russia’s state sport system will go on right away, as Russia is hosting the 2018 World Cup.  This creates an uncomfortable situation for FIFA.  In the aftermath of the IOC banning Russia from the 2018 Winter Olympics under the cloud of doping suspicions, public outcry has grown for FIFA to consider banning or punishing Russia in the 2018 World Cup as well.  This is a considerably more awkward proposition, as Russia is the host of the upcoming 2018 World Cup, and FIFA is no stranger to its own controversies from legal accusations of corruption and bribery by its officials in various countries.  It is difficult for FIFA to ignore that the current controversy around Russia stems from when Russia hosted the Olympics in 2014.  Russia hosting the World Cup in 2018, then, is fraught with concerns about integrity of game play if the host country fields a team.  Barring the Russian delegation from competing in an event their country is hosting is hard to imagine, but may be just the sort of consequence that could make necessary change begin to take root:  After IOC Bans Russia From Winter Olympics, FIFA Has To Decide About World Cup
  • Despite his once-storied history as a cyclist, cancer survivor, and inspiring public figure, Lance Armstrong is best-known now for something much less honorable.  His enduring legacy as of now is of having doped for years, evaded being caught by any testing efforts, denied it constantly and extremely publicly, and then faded from the public eye upon convincingly being exposed as a cheater and a liar.  While much has been written about the puzzling and complex psychology of someone who would pull off such a brazen and persistent fraud while holding himself out as the paragon of honesty and motivation for achievement, one of the more interesting questions has always been how he got away with it for so long.  It was definitely a team effort, and subsequent reports have shown that indeed Armstrong and those who supported him and benefited from his ongoing performance created a wide-spread doping program in which they studied and exploited weaknesses in the anti-doping system and brazenly avoided detection and testers:  Report Describes How Armstrong and His Team Eluded Doping Tests

Years after his precipitous fall from grace, Armstrong is seeking to rehabilitate himself in the public eye by doing a podcast and seeking a return to his position as the foremost expert in Tour de France inside knowingly and cycling expertise.  With his race victories erased by the disclosure of his doping that got him to them, Armstrong is seeking both a platform and an identity, and wants to connect both to the sport in which he was once an idol.  However, the dishonesty of his eminence in the Tour de France while he was cheating to sustain his achievements make it difficult to imagine redemption or even revisionist acceptance of his actions to bring visibility to the sport of cycling:  Lance Armstrong: ‘A man with no platform is a lost man’ 

  • Chris Fromme is a successor to Lance Armstrong in the world of professional cycling. For years, cycling has been tormented by disclosures of doping and the impact of drug abuse on the sport.  Athletes have been discredited and records vacated seemingly without end.  Fromme is one of the stars of a cycling squad, Team Sky, which is very vocal about their zero-tolerance policy for doping and their commitment to clean racing.  So, if his drug test results that indicate he’s doped are upheld, he could be subject to a yearlong ban and major reputational risk for both himself and his team.  Fromme is arguably the biggest superstar in cycling since Armstrong, so if he ends up discredited too, then professional cycling will have a major existential crisis on its hands.  An overhaul of cycling’s doping rules and enforcement practices to improve and simplify doping regulations could both improve credibility and ensure more transparency and clarity in the system in the future:   The Only Solution To The Chris Froome Problem Is The One Cycling Will Never Accept
  • Like cycling, track and field is another sport which has been oppressively troubled by allegations of doping and dishonesty.  Athletes in track and field were disproportionately impacted by the Russian doping scandal as it unfolded during the 2016 Summer Olympics in Rio, Brazil and showed that the world records, qualification times, and even prior medal-winning races lacked integrity due to the participation of athletes who were on drugs.  Many track and field stars, including some whose own careers had been negatively impacted by dopers who won medals and impacted sponsorship and professional chances they should have had, thought this was the moment for reform in anti-doping supervision and regulation.  However, this change has not come, and the opinion of athletes in the sport is unanimously that current drug testing schemes and rules are inconsistent and insufficient, do not work or represent the interests of athletes, and are therefore not fair to anyone:  We Asked Veteran Track & Field Athletes How To Possibly Fix The Doping Problem

One possible solution which has been bandied about is a reset of the annual records in track and field events to reflect only those from after 2005, which is when new anti-doping standards in track and field were implemented.  This may be an attempt at radical fairness, but it may be too much about optics and not enough about substance, and therefore not the right move to truly address and promote credibility in the sport: Track And Field May Scrap Its Records Because Of Doping Scandals. Is That A Good Idea?  Newer testing technologies, re-testing of old results to catch and bring to justice prior cheaters, and cultural encouragement of whistleblowers could all be better to improve the odds of catching sports dopers or discouraging them from cheating at all:  Sports Doping Cheats Fear Whistle-Blowers and Retests

If you enjoyed this series, look back to the ethical leadership in sports coaching series from last year.  Check out the last post in that series, which includes links to all the previous in the set.  In March, a new series on sports and ethics will begin, this time focused on integrity in game play and discussing topics such as the ethics of tanking, referee bias, penalty embellishment, and much more.

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Fraud in sports: Game fixing

This is the fourth in a series of five posts on the topic of fraud in sports.  The first post, from December 5, was about marathon cheaters and how the frauds they perpetrate are discovered, investigated, and reported.  The second post, on December 12, was about fraud and falsification in the thru-hiking community.  December 19’s post was about fraud in sports gambling and betting. Today’s post will focus on fraud in sports both in history and current-day worldwide via game fixing. The fifth and final post in the series, on January 9, will be about major doping scandals in different sports and will focus on the ways athletes cheated by doping and how their use of performance enhancing drugs were supported or not identified by various institutions.

Game fixing is when a match is played to a final result which is partially or totally pre-determined.  Players, on their own or in conspiracy with others, may do this in an ongoing conspiracy in order to make money for and from gamblers.  Coaches and team administrations may also orchestrate losses for various reasons, including to impact their odds for the next season, including in draft position as well as for a friendlier schedule or playoff access.  For purposes of this post, game fixing also includes institutional operations to spy and cheat by teams personnel and coaches, with or without the cooperation of referees and/or players.

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Institutional responsibility and the US Olympic Committee

The end of 2017 has been an explosive and revelatory time for public disclosures about culturally-pervasive sexual harassment and abuse. In most cases the reporting has focused on exposing various individuals, who committed their offenses with the full force of their power and prominence within their communities, organizations, and industries. All too often, the courageous narratives presented by the individuals who come forward to tell their stories include the fact that their harasser or abuser systematically prevented them from work advancement or access to work at all, in many cases withholding employment opportunities and in some cases, even coordinating with other men in positions of authority to prevent the women from working in the future.

The many (and continuing) disclosures about the inappropriate and dangerous behavior of these high-profile men has been a cultural watershed moment. Hopefully this heightened awareness will lead to a transformation in the public discourse about societal expectations around these dynamics, as well as justice for the women who have had their lives negatively impacted and their careers curbed or ended. However, many questions remain in what structural progress, if any, will come from the individual cases, no matter how numerous they become.

Thus far, far-reaching institutional responses to the misconduct of these individuals has been lacking or entirely absent. The best most organizations have been able to muster is routine HR statements that the accused men are being suspended or will resign, sometimes accompanied by saccharine denials of knowledge and expressions of regret, and seldom followed up with any significant sort of commitment to organizational change or an authentic intention toward setting a standard for corporate social justice.

Corporate boards and senior management at organizations under fire for the unacceptable behaviors of their principals and often most visible representatives have proven lacking in the unfolding of this cultural moment, which is driven by individuals and targeted at individuals. While certainly these are cases where bad people did bad things, it is important to acknowledge that they were empowered to do so, implicitly or in some cases expressly but with a blind eye toward their malfeasance, by the organizational structures which promoted and supported them and oppressed and marginalized their victims.

For more on the complicity of corporate leadership and the dubiousness of their malleability to change even amid the major societal focus on these issues, check out these great pieces from Wired:  Corporate boards are complicit in sexual harassment and Making the silence breakers Time’s Person of the Year won’t change anything.

One particularly beleaguered institution that is confronting the limitations of its definition of its own institutional responsibility is the US Olympic Committee. Ethical and integrity questions about the actions of individuals associated with the US Olympic Committee are nothing new. Incidences of cheating, doping, and abusive behaviors by coaching and medical staff are, unfortunately, nothing new. Because the US Olympic Committee relies on a vast network of local personnel who train, recruit, develop, and support athletes often from a very young age. Under these conditions, athletes, their schools, and their families place tremendous trust in the representatives and related parties to the US Olympic Committee that they rely upon to bring their Olympic ambitions to fruition.

All too often, predatory coaches are reported by a victim only to have multiple other athletes come forward to say that they too were mistreated and abused. Organizations within the US Olympic Committee’s umbrella ban individuals proactively upon revelations of sexual abuse, and make efforts to distribute guidelines and ensure education, but underreporting of instances of sexual assault mean that predator coaches prey on athletes for entirely too long undetected.

The reality is, the US Olympic Committee has 48 national governing bodies underneath it which thousands of club teams and gyms underneath that. The sheer volume of organizational and administrative entities through which these abuses pass and would need to be addressed or investigated, all without a national entity or a mandatory supervisor to set a compulsory standard for this, is one of the greatest forces working against effective identification and removal of predatory coaches. In this context, major organizations such as the US Olympic Commission too often focus on removing individuals without identifying root causes or building defense structures against the underlying problems.

Changes are too often driven by media exposure and fear of reputational damage, and too infrequently motivated by compassion or justice. Until these institutions adapt their approaches to address sexual abuse as directly as they can their commercial concerns, and until adequate oversight and control measures are taken with meaningful enforcement actions to back them up, individuals will continue to be harmed.

Organizations must change from operating independently on these issues, which provides them with the plausible deniability of jurisdictional ignorance and a patchwork of ineffective rules and procedures for processing sexual assault claims and investigations. Instead, senior leadership must stand up and make these processes uniform and coherent so that they can be not just a pretense, but also effective in protecting individuals and taking responsibility. Only then can the brave testimonies of individuals lead to organizational change toward practices that will respect and protect them.

For more about the US Olympic Committee’s challenges in defining and enforcing a meaningful code against sexual abuse and misconduct in its ranks, check out this article from Harper’s Magazine:  Pushing the Limit.

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Fraud in sports: Betting and gambling

This is the third in a series of five posts on the topic of fraud in sports. The first post, from December 5, discussed the motivations of marathon cheaters and the methods through which their frauds are discovered and publicized. Last week’s post, from December 12, was about thru-hiking fakers, discussing a collection of imposters and scammers in the long-distance hiking world. Today’s post will be about fraud in sports gambling and betting. The fourth post, on January 2, will focus on sports fraud via game fixing. The fifth and last post in the series, on January 9, will be about major doping scandals in different sports, including novel ways athletes cheated through the use of performance enhancing drugs and systematic efforts to either identify or support these fraudulent actions.

Sports gambling, both legal and illegal varieties, is a widespread social and cultural activity. Sports fandom goes to the core of many communities, in which cities and cohorts are bonded together by the activity of following and watching games or teams or entire leagues. For every spectator who attends or watches games, on a casual or a devoted basis, there are others who take their interest to a more commercial or financial level by engaging in various types of wagering, hoping to make money off predicting game or match developments and outcomes. Legal bets are placed through a bookmaker or sports book, which can be found online as well as in states or jurisdictions where sports gambling has been legalized and a marketplace with service providers within it has emerged. On the other hand, illegal bets are placed through individuals or privately run operations known colloquially as “bookies,” usually operating on a person-to-person, word of mouth basis.

Betting on sports results has led to a number of integrity-sensitive scandals and crises in the sports world. Apart from match fixing, which will be covered in next week’s post on its own, gambling fraud is facilitated through illegal betting and investment scams or other unregulated wagering activities. Fraud in this area can lead to other tangential illegal activity, such as money laundering that is facilitated by the fraudulent wagering transactions, and market abuse or violations of investor protections due to investment scams.

  • Advanced technology and the ever-increasing influence of the internet is impacting every area of human life more each day, and sports betting, as well as the fraud committed through it, is no exception. In this era of “fake news” and controversy about and confusion between fact and fiction on social media and in advertising, credibility of data comes into question. Activities that rely heavily on an empirical basis, such as predictive betting on outcomes of sporting events, are particularly vulnerable to the scourge of data manipulation and falsification. Fraudulent identities, records, and news about players and team developments can spread quickly and destructively with the aid of social media, putting the information bettors rely upon on shaky factual ground:  Fake news, manipulated data and the future of betting fraud
  • The state of New Jersey, bolstered by its desire to give a much-needed tourism and gaming business infusion to Atlantic City and its other gambling venues, is leading the charge to legally defeat the nationwide ban on commercial sports betting at the federal level.   The law being challenged is from 1992 and excludes states where sport betting or lotteries were already legal at that time, such as Nevada and Delaware. One of the principal arguments of proponents of rolling back the ban is that illegal sports betting is facilitated in huge volumes all over the country, and legalizing it would serve to bring that activity under regulatory and supervisory authority, and therefore strengthen risk controls and protections for market participants. In the current regime, the vast majority of sports gambling happens in illicit markets which are vulnerable to fraud and scams and devoid of investor protections that a regulated market could ensure and enforce:  Justices Skeptical of Sports Gambling Ban
  • Another motivation to further regulate and supervise sports gambling comes from the potential that criminals could use betting transactions and proceeds, whether legal or illegal, to conceal and process funds from illicit activities. Sports wagering is a cash activity with high volumes and therefore an attractive fit for criminal operations. Money laundering by organized crime enterprises, for example, is often thought of as taking place through match fixing but in reality happens much more frequently through sports betting. Markets and exchanges in which this betting takes place are often not transparent and therefore are susceptible to and useful in manipulation by criminals. In on-going efforts to ensure that the world of sport is cleaner and transparency wins out over anti-corruption forces, focusing on regulating and improving the efficacy of honest sports gambling markets is a key focus of organizations such as the International Centre for Sports Security:  Betting fraud, not match fixing, is main enemy: expert
  • Conmen and scammers also find their marks under the guise of sports betting operations. In the case of Peter Foster, his fraud involved a betting club that he held out to funders as an investment opportunity. This was an international scheme which purported to be an online gambling service but rather functioned as an offshore syndicate operation where investors’ money was moved out of the country and gambling returns and activities were falsified along with the identities and records of the principals allegedly involved in the operation. Claiming hugely successful investments in different major bets and alleging impressive records, all that definitively happened through the Sports Trading Club was that a lot of investors lost their money in a fraud of the type that is repeated over and over again in any business in which trusting individuals can be attracted to give up some of their funds in hopes of winning big through someone else’s management efforts:  Peter Foster implicated in international betting scam
  • Finally, the world of fantasy sports presents a daunting challenge on all of the above themes – unregulated markets, varying user expectations, and diminished participant protections. Fantasy sports, where users assemble hypothetical teams and play against each other in simulated games and seasons, began years ago in grassroots origins, where participants mostly self-assembled into leagues that they administrated themselves. This system pre-dates the internet and was revolutionized by the advent of online, forum-based league play. In the ensuing years corporate interests came into the community and set up corporations that offered daily or weekly play and uncannily resembled gambling platforms, yet were purportedly for entertainment purposes only and therefore escaped the regulatory scrutiny to which gaming or sports book companies would be subjected:  Scandal Erupts in Unregulated World of Fantasy Sports

Check back in two weeks, Tuesday January 2, for the next to last post in this series of five, which will be about game fixing, describing game-throwing conspiracies by players or institutional operations to spy and cheat by teams and coaches.

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