Betting on Integrity: How Legal Sports Gambling Is Testing the NBA
Signed by President George H.W. Bush in 1992, the Professional and Amateur Sports Protection Act (PASPA) prohibited state authorization of betting, gambling, or wagering on professional and amateur sports. It had an easy goal: to guard the sportsmanship against gambling interest. For over 20 years, PASPA was the federal barrier between sports and gambling. Such a barrier, however, was finally demolished in 2018. In Murphy v. NCAA (2018), the Supreme Court invalidated PASPA on the ground that, while Congress had the authority to regulate sports gambling directly, it could not direct state legislatures by requiring them to prohibit it. Framing the issue as one of state sovereignty, the Court reaffirmed the anti-commandeering principle embedded in the federal structure of the Constitution.
The consequences were immediate. States scrambled to legalize sports betting, and the gambling industry changed within a blink of an eye. As of December 2025, thirty-nine states currently permit some form of sports wagering. According to industry reports, the number of users is projected to be more than 274 million by 2030, further indicating gambling’s integration into the culture of modern sports.
The NBA was not afraid of the controversial nature of gambling, leaping at the opportunity. The league signed its first professional gaming contract with MGM Resorts a few months after the decision. Shortly after, the betting industry emerged as dominant legal partners. Eventually, the league incorporated this betting industry into its brand image. Teams followed suit, entering agreements with local partners. In other cases, physical sportsbooks were hosted within arenas. The Washington, D.C. Capital One arena, for instance, has a full-scale Vegas-style betting lounge, with wall-to-wall screens, ten betting windows, and twenty self-service kiosks. No longer was gambling simply tolerated; rather, it became a part of the “show.”
And yet, legal and ethical risks have increased. The sports betting business is currently valued at over $70 billion. Where such a large amount of money is circulating, however, there is also, unsurprisingly, a heightened level of misconduct. Prop bets, based on performance of individual players, have created a second layer of corruption, primarily due to the fact that they depend on insider information: whether a player will be starting, how many minutes he will play, or whether or not he is nursing an injury. These facts are treasure troves to gamblers and discordant to the integrity of the sport.
On October 23, 2025, tensions over these varied forms of sports betting broke out. The federal investigators identified a blanket set of arrests of illegal betting rings. Some of the names mentioned included Terry Rozier of the Miami Heat. Prosecutors allege Rozier gave confidential information to third party gamblers regarding his playing status. Bettors obtained inside information from him that he was expected to perform below his usual numbers. They all received a win when he left a March 2023 game after nine minutes of playtime, as the implication was that there was a structured scheme of paying off tips, betting, and pay-offs.
In many ways, putting this in simpler terms, such a scandal holds the characteristics of insider trading; though, rather than stock prices, the data utilizes player statistics. When an individual has special access to non-public information, often disseminated by an athlete or coach (and much of which can affect the market), they exploit such information to make gains. Undoubtedly, this becomes fraud.
Historically, federal prosecutors have addressed insider-style misconduct not through sports-specific regulation, but through traditional white-collar criminal statutes, most notably wire fraud and money laundering. Under 18 U.S.C. § 1343, wire fraud occurs when electronic communications, including texts, applications, or phone calls, are used to execute a scheme to defraud. Similarly, 18 U.S.C. § 1956 prohibits the transfer or concealment of proceeds derived from unlawful activity. Violations of either statute may carry sentences of up to twenty years’ imprisonment. While these provisions offer prosecutors flexible and powerful enforcement tools, in the sports betting context they function primarily as after-the-fact deterrents rather than as a comprehensive regulatory regime. This reliance on generalized fraud statutes underscores a deeper structural problem: the absence of a coherent national framework governing legal sports betting.
Should PASPA have been overruled, then? From a constitutional perspective, the answer is likely yes. In Murphy v. NCAA (2018), the Supreme Court adhered to the federalist structure of the Constitution by reaffirming that Congress may regulate sports gambling directly, but may not compel states to prohibit it. The choice however was accompanied by a regulatory vacuum. The mushrooming of state-by-state legalization produced a patchwork that had thirty-nine individual jurisdictions with distinct standards on ads, types of bets and data sharing. It is in that patchwork that manipulation prevails. Accordingly, the injury of a player may be presented differently in New Jersey than in Florida, and a bettor is aware of how to take advantage of such loopholes.
There is an urgent need for a uniform national baseline governing legal sports betting. Just as federal securities laws protect investors through standardized oversight, sports betting regulation would benefit from a minimum federal framework. Such a framework could include uniform standards for the disclosure of player availability; second, mandatory integrity monitoring systems and real-time data reporting among sportsbooks, leagues, and regulators; and third, clear restrictions on insider information. Together, these measures would reduce opportunities for insider exploitation.
Currently, leagues are attempting to address this regulatory vacuum. The NBA, NFL, and MLB have each created so-called “integrity units,” tasked with monitoring betting activity and potential misconduct. These efforts, however, remain limited in both scope and coordination. Unless a cross-league data system is created, suspicious betting patterns are unlikely to be detected until after misconduct has occurred. Moreover, as of now, federal agencies such as the FBI typically intervene only after fraudulent schemes have been executed, rather than during their formation. This reactive enforcement posture leaves fans and the law-abiding bettors vulnerable and further undermines confidence in the integrity of professional sports.
When Congress is silent, the task falls upon the shoulders of the private actors within the sports betting ecosystem. One potential solution is the creation of an independent oversight body, funded by leagues and major sportsbooks, structured as a national Sports Integrity Commission. Such a body could keep track of suspicious bets, leaks of the data on players, and release public reports. The objective would not be to police “morality,” so to say, but to maintain institutional trust. Professional sports, after all, rely on the perception that results are competitively earned rather than artificially produced.
Ultimately, prior mentioned cases such as Rozier’s not only illustrate individual misconduct, but also the ambiguity of the boundaries governing legal sports betting. Legalization alone does not insulate the industry from corruption, nor does it provide clear guidance on the permissible flow of information within professional sports. Threats from insider betting, data manipulation and fraud will persist unless a national (and coherent) framework is developed. If public confidence in the integrity of professional sports is to be preserved, regulatory clarity must follow legalization.