This week is the beginning of the baseball season. To celebrate, I’ve decided to touch the third rail.
Baseball has long banned gambling to preserve the integrity of the game. This made a ton of sense historically because of the fear that players would gamble to lose games rather than win them. This most famously came to pass in the 1919 “Black Sox” scandal, the subject of several famous movies.
The taboo around gambling in sports later led to the lifetime ban of Pete Rose for betting on his team to win while manager of the Reds. As part of that ban, Rose was excluded from the Hall of Fame even though he has the most hits in the history of the game.
Recently, sports leagues have embraced gambling on their games. Draftkings has been the “official sports betting partner of MLB” in recent years and, just last week, MLB took money from Polymarket to be its “Official Prediction Market Exchange Partner”. In other words, they will be promoting ways to make it easier to gamble on their games.
But today’s post isn’t about hypocrisy. It’s about what the rules should be around gambling by athletes. I believe we have reached a point in time where one can make the case that athletes should be allowed to bet on their own teams to win.
Insider Buying
Nobody bats an eye when a CEO buys stock in the company he or she runs. In fact, it’s often celebrated as a sign of confidence.
Why shouldn’t athletes be allowed to express the same confidence? If Aaron Judge is really confident he can hit the other team’s pitcher tonight, why not let him bet on that…subject to the same transparency applied to CEO purchases?
As long as there is proper disclosure (more thoughts on that below), what is the harm? Don’t we want players trying their best to win???
One of the arguments in the Rose case was that he would “try harder” to win on the games he bet to win than the games he didn’t bet at all. While there is some logic to that, why doesn’t it apply to CEOs?
Does Jamie Dimon not try as hard to grow JP Morgan’s earnings in the years where he doesn’t buy more stock as the ones where he does???
Also, CEOs will sell their stock at times too. This would be analogous to a player betting on his team to lose. This obviously can’t be permitted.
But the nice thing about sports gambling is bets expire at the end of the night. So an insider buy doesn’t require a future insider sale! Thus, athletes betting on themselves poses less conflict than it does for CEOs.
Transparency
The only way this works is with complete transparency. All bets by players would have to be publicly disclosed pretty much instantly and only permitted up to say 12 hours before the game starts.
It’s not a good look if three minutes before the first pitch a player makes a big bet and the public can’t respond to it. The retail bettors will feel they were hoodwinked in that situation.
But, if there is a suitable window where gamblers know if any players have bet on tonight’s game, then every market participant has the same information.
Gamblers would soon start evaluating which players are good at betting on their team and which aren’t just like we evaluate which CEOs buy their own stock well. This would be very helpful information to the market and would make the odds more “efficient”.
It may be the backup catcher is the best gambler on the team and everyone starts following his moves and not the star player’s bets!
Limitations
This can only work with strong guardrails in place to make sure there is no chicanery. As mentioned, all bets must be disclosed immediately. Additionally, bets should only be allowed on winning an individual game or how many wins the team achieves for the full season.
That means no betting on the games of other teams, no betting on how many home runs they’ll have tonight, and definitely no betting on whether the next pitch will be a ball or strike (some players actually did this!)
To monitor activity, any player who wants to bet on their team would have to agree to disclose all betting accounts and let them be monitored by MLB. This is no different from when I had to share my investment accounts with my employer to validate I wasn’t violating any trading prohibitions in my personal account. It’s not a big deal.
“Game” Theory
Many fans gamble on games because they believe it makes the outcome more interesting. I would argue it would be even more interesting to watch a game knowing the star player has bet on his team to win that night. After all, if you bet on the game, it doesn’t change the outcome, but if a player bets on the game, it actually might impact who wins.
It’s a bit like the old “guaranteeing a win” in the media. It raises the stakes of the game for both team. But it’s one thing to say something to the press. It’s another to put money behind it.
TV ratings would likely spike in games where the best players bet on their team. There would be analytics around whether players perform better in these game or if they cave to the added pressure and choke.
You would have times where an opposing player hears about a bet by the other team and decides to bet on his own team in order to raise the drama – or simply to motivate his team. Managers would probably use a bet by the opposite team as a rallying cry “nobody believes we can win tonight”.
In other words, players would have to think hard about when to place a bet. It wouldn’t just be when they’re confident of winning. They would need to think about whether the knowledge of their bet could affect the outcome of the game – and not always for the better!
Sports thrives on manufactured controversies, usually around something an opponent said in the press or a narrative in the media that one team has no chance, that underdogs can use as motivation to play better than expected.
There is no better actual narrative than “their backup catcher, who wins 92% of the time he bets, just bet on his team to beat us tonight. Are we going to let that happen???”.
It adds an extra layer of strategy to games. Do you bet on your team to win when you’re most confident they’ll win? Or as a motivational tactic when you’re the underdog and want to make your team believe they have a chance?
If you’re making $20M a year, do you care about losing $20K if it helps motivate your team to play better? Or conversely, do you care about winning $20K if it makes your opponent play better?
There is a lot to consider and I’m not sure where the equilibrium lies to suggest whether players would only bet on rare occasions or if it would be pretty common.
But I think it would be interesting to find out.
Safe or Out?
So does that mean we should let players bet on themselves? I don’t think it’s necessary, but I don’t see the case against it either and it would add a fascinating new element of gamesmanship.
One argument against would be it would encourage more gambling by fans. If that ends up being true, that’s a good enough reason for me to say no.
But I’m not sure that will be the case. It is cheaper to live vicariously through the bets of your favorite players rather than lose your own money. Also, if you were inclined to bet against the Dodgers tonight and then see Ohtani has bet to win, do you really want to bet against him? You might decide just to watch.
Economically, if games where players bet lead to higher ratings and more interest from younger viewers, then it’s in baseball’s interest to let it happen.
If there’s going to be gambling, it makes a lot more sense to have the players participate in a highly regulated fashion rather than have it be the current wild west where it’s banned on paper but encouraged through advertising partners.
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