Explosive allegations by an ex-referee rocked the NBA today in the midst of an NBA championship series designed to reinvigorate the league. Tim Donaghy claimed that the NBA routinely encouraged refs to call bogus fouls to manipulate results as well as asking them to withhold technical fouls on marquis players to increase ratings. Quite an interesting development given the league’s historical opposition to sports betting on the grounds that it is a corrupting influence on the sport. For example, the International Herald Tribune wrote recently about David Stern’s opposition to awarding Las Vegas an NBA franchise due to sports betting activity in that city:

David Stern, the NBA commissioner, has made “integrity of the game” his battle cry and says that local gambling on the league, though regulated, would violate that tenet. He maintains that casinos must take all NBA games off their oddsmakers’ books before Las Vegas could be a viable site.

This would seem extremely hypocritical should Donaghy’s allegations turn out to be truthful. Let’s hope that the true story eventually comes out. In the meanwhile, here is an interesting interview with Professional NBA sports bettor Haralabos Voulgaris on his thoughts regarding this brewing scandal. A key quote:

The Donaghy scandal basically made me question whether or not I wanted to continue betting the sport. For one, after the details emerged I have heard from several people who knew about the games while this was going on.

This could get ugly.

I found this interesting post by the author of the best-selling book Freakonomics. In it he discusses a recent editorial in the New York Times by noted economist Justin Wolfers in which he seems to suggest that one way to combat the problem of corrupt sports officials is to legalize sports gambling.

It seems that one of the reason that sports betting can easily be fixed is due to the lack of regulation. Increase regulation (presumably by legalizing it) and you reduce the ability of corrupt referees to alter the outcome of games. It seems to me that a determined ref could still alter the outcome of a game with a bad call or two, but I’ll defer to these two brilliant economists on this one.

Jeffers writes on the subject:

The competitive advantage conferred by regulation may also channel problem gamblers into the legal sector. If policymakers build in sufficient safeguards, we can direct victims of compulsive gambling into treatment. Instead, today’s problem gamblers are channeled by illegal bookmakers into ever-higher losses, and their mounting financial pressures sometimes lead to criminal conduct.

Point-shaving is a crime of opportunity, and the opportunity comes from the structure of sports betting markets. The commissioners of the major sports need to address these systemic issues. A transparent and well-regulated gambling sector could easily out-compete the unregulated offshore bookmakers and the illegal onshore ones. More important, it would reduce the number of betting scandals we’re likely to see in the future.

As noted in the Freakonomics blog, Jeffers also offers a link to a paper by a Stanford economist who makes the case that point shaving in the NBA is a regular occurrence.

March Madness is upon us and the time is right for office pools, buzzer beaters and cinderella stories. I’ve scoured the web for the absolute best final four betting tips and strategies on earth and summarized them below for your wagering pleasure. Good luck and enjoy!

1. If possible, buy multiple pool entries and select a different champion for each entry.

   This seems pretty basic but it may not be obvious to most people just how greatly this strategy can benefit your odds of winning. Most pools use top-heavy scoring which greatly rewards entries that pick the championship team correctly. If you don’t get this one right, you’re almost certain not to win the pool.

2. If two teams are about equally likely to win the national championship and one of them is the local favorite, then go against the local favorite.

   This is mainly for office pool betting and it makes sense intuitively. Everybody likes to root for the hometown team, especially casual gamblers who only bet once a year. The pool entries will reflect this bias. Bet against the grain and you’ll be likely to jump to the top of the leader board if the local team gets knocked out.

3. Don’t fall into the fallacy that last year’s spoilers will be able to pull an upset again this year.

   You watched last year in amazement as an underdog beat the odds to defeat a heavily favored rival early in the tournament. Since it’s a good idea to pick some first round upsets, why not pick this team to do it again this year? Unfortunately the rest of your pool particpants will also remember this thrill-ride of a game and bet according to the same logic, consequently the benefit of getting a win with this pick is greatly reduced. In addition, other teams will be better prepared for the cinderella squad this year, no longer taking them lightly and hence preventing another upset.

4. Pick your tournament winner first and work backwards.

   Most people start filling out their sheets with the first round. This is a bad idea. By starting at the top and working backwards you reduce local biases related to the different regions – for example you may be more knowledgable about teams in your region and be swayed to focus on those matchups too heavily. Again, with the top-heavy scoring system, it’s more important to be accurate on your later picks than the first rounders.

5. Check the road record – pick teams that do well on the road.

   For most teams, every tournament game they play will be a road game. Look for teams that have had a favorable road record during the regular season. In a toss-up game where teams are evenly matched in all other respects, this can be a good criteria to decide which team to pick.

6. Use some non-mainstream ratings sites to help you chose.

   Don’t immediately head over to espn.com or look at the AP Ratings to decide your picks. Instead, check out some reputable ratings sites that are slightly off the beaten path. Some good examples are Massey Ratings and Greenfield’s Ratings.

7. Don’t over analyze your picks.

   This is supposed to be fun. Spend too much time on research and number crunching and you may miss that fact, especially when Debby from accounting walks away with the big prize…

Good luck!

I stumbled across this plain looking site with a funny name and was amazed at the wealth of advice it had on betting the NCAA tournament. On top of that, the owner of the site is advising anyone who benefits from the strategies posted there make a donation to charity rather than pay it to him! From Poologic.com:

“$250,000. That is my minimum estimate for profits made by the users of this site, assuming they played the recommended multiple-entry strategy. Please donate some of your winnings to the Jimmy V Foundation for Cancer Research”

Poologic Web Page

Updated March 03, 2007 @ 12:22 AM: It turns out that the guy behind this site is a professor at Yale and an expert in probability modeling (Update: the site was actually created by Tom Adams, Kaplan joined him later). You’d think such a smart guy could come up with a better domain name (I kid – I finally figured out that he was going for the pronunciation of “pool-logic” rather than “poo-logic”). More details in this Inc. Magazine article:

Edward Kaplan, a Yale School of Management professor, is an expert in operations systems, probability modeling, and mathematics. As an academic, Kaplan models the spread of AIDS and other diseases for public policy analysis, but in his spare time, set out to find a way to win his NCAA office pool. “We used to enter these things for fun, and always for bragging rights, [but] we would always lose,” he says. “We realized we were going about it randomly and not systematically.”

So Kaplan and a colleague hired a research assistant to pull basketball data from sports gurus’ ratings, regular-season records, and the Rankings Percentage Index (RPI) to create a complex web of relationships between teams, evaluate their strengths, and find a way to optimize points for a tourney bracket. Recently, he’s also been using Las Vegas odds to incorporate late-breaking information.

Kaplan calls his system “fairly complicated,” and says that with the opening-round play-in game, there are an estimated 18,000,000,000,000,000,000 (that’s 18 billion billion, as mathematicians say) options that his calculations examine.