The Donaghy Scandal: ESPN challenges the NBA on the number
ESPN’s just released a story on Tim Donaghy, the NBA referee who conspired with several to fix NBA games. In it, ESPN concluded that – notwithstanding the NBA and Donaghy’s continuous denial of fixing games – the evidence overwhelmingly leads to that conclusion. It also concluded that Donaghy and others were enriched to the tune of hundreds of millions of dollars.
ESPN tells the entire story, starting with when, in 2002, Donaghy and a friend, sitting alone at their country club after a round of golf, decided to bet on games in which Donaghy officiated. Thereafter, the friend would bet up to $100,000 per game – and would always come out a winner! And when they bet, the bet covered the spread between 60 and 70 percent of the time. And the statistics revealed that Donaghy was calling more fouls on the team he bet against and less fouls on the team he bet on.
For the next four years, Donaghy continued to bet on his games until he was caught!
The sports gambling arena is like the securities markets. That is, there’s a defined trading session that opens in the am and closes right before the start of the game. One can even hedge, by going long or short on bets. And the data from all prior games is readily available from sports betting sites. According to ESPN, one of Donaghy’s colleagues, Battista, would review the market on any given morning to manipulate it in his favor. From 2003 – 2007 money began pouring into games Donaghy refereed, with the lines prior to those games being very volatile, like stocks in the air on takeover rumors.
After a lengthy grand jury investigation, in August 2007 and 2008, Donaghy and another colleague, Martino, pled guilty to two charges: conspiracy to commit wire fraud and conspiracy to transmit gambling information. Others also pled guilty to charges of, among other things, the transmission of gambling information. Donaghy received 15 months each in federal prison. While Donaghy admitted to betting on his own games in his plea agreement, he did not admit to fixing games.
At that time, the NBA commissioned an investigation, led by the law firm Wachtell, Lipton. The team of investigators “examined every play” to determine whether Donaghy’s calls were wrong. They concluded, in essence, that there was insufficient proof of the “foul play.” And for years the NBA vociferously argued that Donaghy never fixed games.
ESPN, however, recently dug further. In a recent investigation it concluded that “Donaghy’s foul calls favored the team that received the heavier betting 70 percent of the time.” After it eliminated the games that were blow outs, it ultimately found that “Donaghy favored the side that attracted more betting dollars in 23 of those 30 competitive games, or 77 percent of the time. In four games, he called the game neutrally, 50-50. The number of games in which Tim Donaghy favored the team that attracted fewer betting dollars? Three.” So, Donaghy’s “track record of making calls that favored his bet was 23-3-4.” Statistically, ESPN concluded the odds were 6,155-1.
It appears that, even though the NBA and Donaghy denied for years that he fixed games, the numbers do not lie!
