Michael Franzese talks about his experiences as a mafia boss and his direct knowledge of game fixing in the world of sports. A fascinating talk giving the listener an insider’s view of the seedier side of sports betting. From a conference in the UK sponsored by PlayTheGame.org.

The big news item today is the blown call at the end of yesterday’s Chargers Steelers game. While not affecting the outcome of the game, the official’s decision to invalidate Pittsburgh’s last minute touchdown caused San Diego to beat the point spread resulting in a lost wager for those who picked Pittsburgh. To make matters worse, the play was originally ruled a touchdown and then was overturned based on a false understanding of the rules. The NY Times paints an interesting picture of the pandemonium that ensued at the Vegas sportsbooks:

As befuddling as the end of Sunday’s game between the Pittsburgh Steelers and the San Diego Chargers was for fans — when an apparent Steelers touchdown on the final play was affirmed by the referee and then waved off with little explanation — imagine if your company had bet $1 million on the point spread and more than 1,000 people were loudly demanding you pay it off.

Bob Scucci did not have to imagine. As the head of sports betting for Boyd Gaming in Las Vegas, he lived it for a harrowing 15 minutes Sunday night, when chaos reigned about the final score. Bettors who had picked the Steelers and given 4 to 5 points believed that Troy Polamalu’s final-play touchdown had made the final score 17-10, making them winners. Those who had taken the Chargers and the points insisted that the play was later reversed and the final score reverted to 11-10, making them the winners.

As he watched the mounting mutiny from behind the counter at the Orleans Casino, Scucci said, he knew that “maybe” would be an insufficient response.

“People were trying to cash all sorts of tickets — no one was really sure,” Scucci recalled in a telephone interview Monday. “They demanded an explanation. It got pretty ugly.”

Ted Sevransky, a prominent professional handicapper, said: “It was chaos. I’ve never seen anything like it.”

The controversial play took place soon after the Steelers had kicked a field goal with 11 seconds left to make the score 11-10, with the subsequent kickoff and one last Chargers play from scrimmage remaining. Philip Rivers threw to LaDainian Tomlinson, who lateraled to Chris Chambers, whose toss toward Rivers was tipped by Polamalu — who corralled the ball and ran it into the end zone for an apparent touchdown.

Suddenly the Steelers led, 17-10, with 0:00 on the clock. Pittsburgh bettors were delirious and Chargers bettors distraught, but all joined in communal confusion when the referee, Scott Green, announced that the play was being reviewed.

“It was so loud that we couldn’t hear what the ref was saying,” Scucci said.

At one point, Green signaled touchdown again, but it soon became clear that matters were not settled. Viewers on the East Coast saw CBS flash an 11-10 final score for a few seconds before the network switched to its “60 Minutes” interview with Barack and Michelle Obama. Stations in the Pacific time zone stayed with the CBS game feed.

This is one of the reasons I dislike betting on the point spread. Nothing is more frustrating for me than to lose a bet because my interests as a bettor are no longer in sync with the coach who only cares about winning the game. In this particular case the Steelers coach really had no motivation to argue the call as they had won the game regardless, and you often see examples of teams just spiking the ball at the end of the game rather than kicking an easy field goal if they feel they already have the game won.

Things are looking bad for Bodog. A U.S. based judge just affirmed a ruling that could end up costing them around $50 million dollars. Given that they are not an American company, it’s possible that they will try to not pay the amount. Bodog’s founder has claimed that the company was not served in the original suit and that the company has an insufficient presence in the United States to infringe any US patents.

From Gaming Intelligence Group

Online gaming operator Bodog has failed in its attempt to set aside a $46.6 million judgement against it in the patent infringement suit brought by 1st Technology LLC. With interest, Bodog must now pay 1st Technology over $50 million following yesterday’s ruling.

Bodog was sued by 1st Technology for patent infringement based on Bodog’s distribution of software used for online gaming. A default judgement was issued against the gaming operator on August 1st 2007 after it failed to answer the allegations made against it in the suit.

As part of the ruling, the registrar of Bodog’s domain name was ordered to remove all nameservers associated with Bodog and founder Calvin Ayre, rendering them useless. Bodog subsequently changed its name to NewBodog before finally settling on its current name of BodogLife.

Despite numerous challenges by Bodog against the original judgement by the U.S. District Court for the District of Nevada, the Court of Appeals for the Federal Circuit yesterday affirmed the lower court’s ruling.

“We are extremely gratified for our client that the Court of Appeals saw the merits exactly the way we did,” said Mr. Greenspoon, the lawyer representing 1st Technology.

In August of this year, Parlay Entertainment settled a similar patent infringement lawsuit with 1st Technology. The terms of that settlement remain confidential and there was no admission of liability by either party.

This is the latest in a string of recent problems for Bodog. Most recently in July, Forbes magazine released news of an IRS affidavit from a forfeiture lawsuit in Baltimore, Maryland reporting an investigation into the matter of the seizure of over $24M in assets from bank accounts inside the United States that are said to involved in what appears to be money laundering activities in order to process payments to users of the Bodog online gambling casino. The filings are said to involve an elaborate international structure of bank accounts at numerous institutions such as Wachovia, Sun Trust Banks, Bank of America, Regions Bank, Nevada State Bank, a division of Zions Bancorporation in the name of Zaftig Instantly Processed Payments, doing business as ZipPayments.com and business’ said to be linked directly to Bodog founder Calvin Ayre.

If you have a lot of money in your Bodog account, you may want to consider diversifying your assets.

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.