Welcome back to Money Games, my monthly take on sports, business, and all things leadership. Thanks for reading and subscribing, and please share with your friends and colleagues.
— Joe
What sports gambling scandals, AI, and the dotcom bubble have in common
RTO basics for the remote work generation
How we won in Montana
Ever since the Supreme Court legalized sports betting in 2018, the world of sports has been shaken over and over again by gambling scandals. It doesn’t matter if it’s at the college level or in the pros, players, coaches, even umpires and translators have gotten in on the illegal action. The latest big busts were the NBA’s Chauncey Billups and Terry Rozier, netted as part of an investigation into a gambling ring run by the mafia.
Every time some kind of illegal sports betting gets exposed, there’s an investigation, suspensions, fines, even arrests, but the problem hasn’t gone away.
Why is that?
Well, the cause is pretty simple, and it’s something we’ve seen in many different areas over the years: People’s behavior changes when there’s money to be made, and if they think they’ve figured out a way to cheat the system to make more money, they will do that until they get caught.
Let’s go back to the 1990s. I’d equate what we’re seeing in AI right now to the dotcom boom and the internet in the ‘90s. From 1994 until 2000, the market was going up. Everybody wanted to own dotcoms, and the rise of the internet aligned with a boom in day-trading. There were roughly 850,000 people doing hundreds of trades a day, and they did really well for a while because everything with a “.com” in the name went up. If you were long, you made money. It was easy.
There were plenty of companies coming to market, but a lot of them weren’t very good and were just taking advantage of unwarranted market enthusiasm. They saw that there was easy money to be made in the short-term. Then the bubble burst and there was a recession from 2000-2003 as a result. A few of those tech companies that launched in the ‘90s went on to become major players. Many did not.
We saw this play out more recently with the SPAC craze. The vast majority were expecting incredible returns 5-10 years down the road, but the whole reason you go to a SPAC rather than an investment bank is that you’re probably having trouble going to an investment bank to begin with. The reality is that of the 250 SPACs out there, probably 200 didn’t make it all. A lot of terrible companies came to market with SPACs, just like during the dotcom boom. (When our investment team got into our first SPAC, I made sure we wouldn’t do it at all, unless the company we acquired was really legit. We were one of the survivors.)
Today, AI firms are coming to market, and they’re raising money, just like the dotcoms and SPACs did. Many of them are borrowing a ton of money from private equity and other groups. As a technology, AI is phenomenal and it’s going to change industries across the board, but there are a lot of bad actors. There are some people who want to get the job done and then there are people who want to take advantage of it. It’s the same dynamics that enabled Sam Bankman-Fried to take advantage of enthusiasm for crypto.
All of these are connected by the simple fact that there’s a lot of excitement about them and they’ve attracted a lot of people who are trying to exploit the system to make fast money. It’s all about money.
With gambling, there are many, many more people involved than in any of these other areas. For a lot of people, it’s just something they do for fun. They put $100 on the Giants or whatever, and if they win, they buy lunch. As sports betting has been legalized—which is something I’m very much in favor of—it’s been easier to do it in the open. This makes it safer and easier to regulate, but that accessibility makes it so much more visible as well. Plus, technology is making the gambling itself so much easier with mobile betting.
And there are plenty of ways to cheat. There are lots of calls in football, basketball and baseball, and they can go a lot of different ways. A pitch right on the corner can just as easily be a ball or a strike. The guy bumping into another player? It’s either just a little physical contact or it’s a fowl. If I’m a key player on the team, and Vegas says we’re supposed to win by 10, I can ensure that we win, but not by more than 10. It’s just a matter of missing a shot or two or going out of bounds “accidentally.” If I want to throw a strike or a ball because people are betting on the next three pitches, I will. No problem.
That’s when athletes start to justify their behavior to themselves. “ We still won the game, and the bet went the way I wanted it to, and I made an extra $100,000. That one wild pitch didn’t change the outcome of the game, but I’m that much richer.” Of course, these things do matter. It hurts people who are betting legally, within the rules, and it hurts your team. But a lot of people will cross the line when money is involved. It’s a fact. It’s human nature for some people to try and do things under the table.
Enforcement is going to have to continue; there’s no doubt about that. Some people have proposed getting rid of prop bets (the kind of small outcomes like upcoming pitches) as a way of making cheating harder. That might help a little, but the vast majority of people making those kinds of bets are doing so legally. The people who are cheating are going to find a way to cheat. Just like the markets, professional sports can be driven by fear and greed.
Think about it: Cheating at sports betting means being able to either acquire insider information or getting to a player, referee or umpire and then making them into an accomplice. Not only do you have to get in touch with them, then you have to convince them to do what you want. It’s a whole, complicated process. That’s just not something the average person just having fun betting from their couch or barstool is doing. If cheaters aren’t able to take advantage of prop bets, they’ll find another way. Guaranteed. It’s a behavior, and it’s driven by money.
In my most recent piece for Forbes, I broke down some commonsense advice for young people transition from remote work to being full-time or hybrid in the office. The biggest takeaway? Take advantage of being there. Show up ready in the morning. Don’t think about the office as being a hardship. It’s an opportunity. You can read the piece over at Forbes.com.
We just had the 12th anniversary of Coastal Carolina’s victory over Montana in the playoffs. It was the coldest college football game on record, and it took tremendous effort to get our team from South Carolina ready to play in those harsh conditions. It’s still the greatest game I’ve ever been a part of.
Michael Jordan is one of the greatest athletes of all time, and his philosophy perfectly incapsulates all of the leadership principles that I’ve used as a coach over the years.
“I can accept failure. Everyone fails at something. I can’t accept not trying.”
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