FBI Arrests NBA Players, Coaches in Sports Gambling Scheme

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2:08We'll hear a portion of Danny's conversation with Schwartz and Meckies from the sidelines of the Formula One Grand Prix in Austin, Texas. All that and more is on the way on the Bloomberg Business of Sports. But first, we've got news this week of a major illegal sports betting scheme going on in the NBA. That's right, Michael. More than 30 people across 11 states were arrested in connection to a sprawling gambling scheme that involved current and former NBA players and coaches. That's right, Vanessa. Miami Heat guard Terry Rozier and Portland Trailblazer head coach Chauncey Billups were among those arrested as part of two separate criminal gambling schemes.

2:43Now, according to the allegations, one scheme involved using non-public information about players and teams to make bets, and the other involved a nationwide scheme that allegedly used special technology to rig poker games. Both of these schemes went far and beyond the NBA and involved organized crime families. On Thursday, FBI Director Cash Patel held a press conference announcing the bust alongside several federal officials, including interim U.S. attorney for the Eastern District of New York, Joseph Nocella, who detailed the schemes. Between December 2022 and March 2024, these defendants perpetrated a scheme to defraud by betting on inside non-public information about NBA athletes and teams.

3:31The non-public information included when specific players would be sitting out future games or when they would pull themselves out early for purported injuries or illnesses. That is U.S. Attorney Joseph Nussela in an FBI presser on the massive illegal gambling scheme of allegations involving both former and current NBA players. For more on what we know about the scheme, we welcome Bloomberg senior reporter Miles Miller. Miles Miller, welcome to the Bloomberg business of sports. I wish it was on a happier note, but this is very serious. And you know it's serious when the House Minority Leader, Hakeem Jeffries, says that this is a case that is stunning and should shake NBA fans.

4:14Tell us about it. Yeah, so this is a criminal indictment that charges that NBA players, current and retired, were involved in two separate schemes. You've got the one scheme that involves NBA players being involved in sports betting. and basically you wouldn't say throwing a game, but removing yourself from a game early so that another party is able to make money off of that. In this instance, we're told by Brooklyn prosecutors that the Miami Heat guard, Terry Rosier, was one of the people who was responsible for this. And it goes back to a game he played when he was on his former team. Back in 2023.

4:58Exactly. And he went out saying that his ankle was hurting, his foot was hurting. But prosecutors say in this case, the truth of the matter was that, you know, he knew someone was placing a bet that would go a certain way. And the only way to facilitate that happening would be for him to leave the game. You may be thinking, why are federal prosecutors in Brooklyn interested in this? And, you know, the reason is this goes back to 2023. We're going back to the case involving Jonte Porter. Now, the reason why he is so central to this case is because he had said that he had a gambling addiction. And that was the reason why he had gotten involved in some of these illegal sports betting schemes.

5:43And then what happens? You know, you know a good thing is going on, so you bring your friends into it. And that is what prosecutors are alleging. The reason why these NBA players were involved was because, you know, they have a central link in one NBA player. It's really unbelievable, all of the moving parts to this story. And like you had mentioned, this incident that happened with Terry Rozier in 2023, he was under investigation at the time in 2023. And the NBA found that there was what their conclusion was nothing illicit had happened at the time. But now it comes back around. When you found out this new information, was there any indication that it was this big and there were so many moving parts to this?

6:21Yeah, you should have seen. I mean, if you saw the press conference, you saw how many people were involved in the case, right? This was a wide ranging case that started in 2019. So they've been working on this case for quite some time. To your question about this, it boggles the mind that the NBA says that they closed their investigation and they found no wrongdoing. when you see very clearly the wrongdoing that was found by federal prosecutors here. The one thing that's important to note is that federal prosecutors have said that the NBA is cooperating in this case. But how is it that you hire an external law firm and you have folks look into this?

7:01I mean, there was an independent firm that looks into sports betting irregularities and found the bet and found the specific amount of money tied to it. So how the NBA was not able to find this is beyond me. Does that then bring up the conversation of do they now have to look at every investigation that the NBA has taken place of? Now we're talking about the Kawhi Leonard and Clippers investigation that's going on right now about cap circumvention. Do they then have to look at all the things the NBA has said that they've investigated and come up with no conclusion? You know, the U.S. attorney, I think, was very clear this is an ongoing investigation.

7:36And I thought what the FBI director said was really interesting. that this is a major scandal and historic when it comes to the NBA. This is not the last we'll hear of this investigation because it's very clear that if the NBA is led to do their own investigations into this and it leads to nothing, and then you've got all of these feds standing up there and saying, we found something. And it involves, in one instance, the four of the five crime families in New York, you You know, I'm talking about organized crime, the mafia in New York. There is much more to this. And it didn't just, it's not just these three players that are named here.

8:14They're going to continue doing this investigation. And it is clear that an FBI agent's retiring. You're going to have people retiring from the Eastern District who worked on these cases. They'll probably go join the NBA. They'll probably go join some of these law firms to start looking into these sports books and figuring out just what's happening as it relates to players and how players are using the sports books. Miles, is this only the beginning? Are we just scratching the surface of the impact of sports gambling on major sports? I got to believe that the NFL, Major League Baseball, they too have had, quote unquote, reports that, you know, maybe this player was taking himself out of games or they were doing some, I mean, referees, etc.

8:50You know, is there more coming? Oh, there's certainly more coming. And certainly from the Eastern District, right? I think it was important to note that this happened in Brooklyn because of the prior case. And all it shows me is that it's going to continue to happen. We asked about college basketball and college sports, and they said college sports wasn't involved in this. But that's not to say that this kind of scheme won't happen when it comes to college sports. He said that the sports books are the victims in this case. But it's going to be incumbent on these sports books to figure out who's making these wagers and figure out if there's any corruption happening when these wagers are happening.

9:33One more thing that's interesting. The Waterfront Commission was involved in this. The Waterfront Commission is one of the oldest law enforcement agencies in the country, really focused on the mob. They're involved in this investigation into NBA players who are doing bets or who are involved in bets where they take themselves out of games or go sick or can throw a game. That is something that should not be overlooked. And this is more than just prop bets in the game. I mean, this, the allegations of that are bad enough. This goes now into the underground poker games where you've got x-ray machines that they're alleging here.

10:17They've been used to read cards. I mean, and the mafia families made millions off of this, according to what the officials are saying. Yeah, I've got them in my bag. I should have brought them with me, the court documents here. literally you can see through the table and they had cameras under the table so basically you're playing on an x-ray machine and you could see what cards were being dealt they're watching hand signals, they've got surveillance in the room, they've got manipulated card machines, all of this happening on Washington Street down west side of Manhattan and on Lexington Avenue not far from where we are So it's really interesting that organized crime, and they say Italian organized crime, that's what they're calling it, is still alive and well in New York.

11:09And how are they able to make their money? By running these rigged games. And in some of the cases, you see people saying, hey, listen, what you did was wrong. You took my money and that kind of thing. And these people who are losing tens of millions of dollars, what do they do? what's the first thing they do they call the FBI and they say hey listen I was taken and here's who did it and here's how I how it all came together and all the text messages are right there plain as day showing how the scheme worked and and Vanessa during that press conference they were saying one person got taken for 1.5 million dollars in a poker game and they were like hey wait a minute what's going on here and then when you didn't pay according to the allegations the crime family, they got tough.

11:55They became the crime family, right? Yeah. So, Miles, can you just connect the dots there on how that organized crime and the poker games relate to this NBA investigation? Right. The easiest way to explain it is that Damon Jones, a former NBA player, is connected in both schemes. He was connected to the scheme that involved non-public information and players going out on injuries or illnesses, pulling themselves from games. And he was involved in the card situation where you could see cards on x-ray machines and all of that kind of stuff. He's the link between the NBA and organized crime in this instance.

12:40He's the one who was the connector of those dots. In addition to that, when it comes to the card games, they would use these NBA players to get high-quality folks in. Oh, you've got this NBA player who's going to be sitting in the game. A face card. A face card, right? Oh, I'll get to take a picture with him, and I'll get to spend time. Maybe I'll have a drink with him. And then also trying to use these NBA players to basically enforce when they lose all this money to say, hey, you need to pay these guys back. It's not all right. And, you know, if you have a big celebrity telling you to do that, you know, you're going to find any way to do it so that you're, you know, you're not in any more trouble.

13:23Our thanks to Bloomberg senior reporter Miles Miller for joining us. Up next, we stick with the NBA and some controversy surrounding Clippers star Kawhi Leonard. For Damien Sassauer and Vanessa Perdomo, I'm Michael Barr. You are listening to the Bloomberg Business of Sports, Bloomberg Radio around the world.

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14:51This is Bloomberg Business of Sports from Bloomberg Radio. This is the Bloomberg Business of Sports where we explore the big money issues in the world of sports. I'm Michael Barr. I'm Damian Sassauer. And I'm Vanessa Perdomo. On top of the illegal gambling probe we learned about this week, there's also some controversy brewing in L.A. with Clipper star Kawhi Leonard. The NBA is investigating whether the Clippers were able to work around the league's salary cap to get extra money to Leonard. Oh, dear. Joining us now to talk about it is Bloomberg News Global Sports Business Reporter Ira Budway. Ira, welcome back to the Bloomberg Business of Sports.

15:27Good to be here. You said in your article NBA Commissioner Adam Silver has a Steve Ballmer problem. Explain that. Well, the league has recently launched an investigation into Balmer and the Clippers over allegations that they have circumvented or tried to circumvent the salary cap. And that is a big deal in the NBA. It's kind of, as Commissioner Silver once called it, a cardinal sin. And so he's going to have to get to the bottom of this. But it's a very tricky situation when you're dealing with disciplining owners in any sports league because you work for the owners as a commissioner. So he's in a bit of a pickle.

16:05I mean, it's interesting because he came into the league, Adam Silver, I mean, when he came into the league and was, you know, started as commissioner, he essentially came in and fired one of the owners, banned them for life, banned Donald Sterling for life, which is the team that Steve Ballmer then buys. but he did that pretty swiftly and without any issues right kind of seemed like everyone was on his side donald certainly was in the wrong but this is very different do you think this is probably the hardest thing he's had to deal with and trying to make a decision on this if he is found guilty i mean it is very different and we should be clear that sterling got in trouble for making racist comments that were recorded which is a lot different than trying to get around the salary cap But I think it's interesting going back to that moment 11 years ago when Silver banned Sterling for life, which led to Sterling having to sell the Clippers and the buyer was Steve Ballmer.

16:59That was interesting because at the time, even though nobody thought Sterling was in the right or really should own this team, it was a question whether Silver had the authority to force him to sell. And he was just three months into his tenure and he figured out a way to make it happen. And it was pretty bold. First, he did the lifetime ban, and then they switched the ownership to Sterling's wife, and then that led to the sale. So he managed to force a sale without sort of forcing this question in front of the owners of whether that was allowed. Now he's got a thing where Balmer is the wealthiest owner in the league, and he's been very active.

17:34He's a huge fan. He's front row. He's always loud. He's very well-known, former CEO of Microsoft. He just spent$2 billion of his own money to build a new arena for the Clippers, the Intuit Dome. That's supposed to host the All-Star Game in February. So it's a very tricky thing because salary cap circumvention is a big deal. Because if teams are doing it, then your salary cap kind of doesn't really exist. Well, Ira, we're talking about the integrity of the league here, right? And so, you know, you're bringing us back to the Sterling's Dome in 2014. I want to bring you back to 1999. I want to bring you back to the Joe Smith fiasco.

18:07because that, to my knowledge, is the last time we had salary cap circumvention. And the penalty, if I remember, on the Timberwolves was absolutely massive. I mean, I think they took four or five first rounders. If they do that in today's day and age, which I'm not suggesting they would, but there is precedent there. I mean, that could just pummel the team for a decade. As the David Stern era. Yeah. So, I mean, like, so is that really what's at risk here? I mean, that is a mess. I mean, Clippers are one of the most, forgive me if I'm wrong. I don't know the number, but valuable franchises in the NBA, right?

18:40I mean, top 10 for sure. So, I mean, what would that do to that? I mean, it's got to be not a good thing. Yeah, I mean, Silver has broad liberty to penalize the Clippers. And there is a set of penalties outlined in the bylaws in the collective bargaining agreement that includes stripping draft picks. And Joe Smith, you're right. They took away five first-rounders. Timberwolves got some of those back later. But, yeah, they can do a lot. And also Silver has liberty under the NBA rules to punish owners just for doing things that act contrary to the interests of the league. So it really depends what this investigation discovers.

19:18So right now they've got Wachtell looking into it. If they come back and they show very strong evidence that Ballmer was aware of this, that the Clippers somehow directed this, and this is a side contract or an endorsement contract with Kawhi Leonard that's under question, that if the Clippers were involved, then, yeah, I think the punishment could be pretty severe because you have to disincentivize this behavior. So you could be talking about lost draft picks. You could be talking about millions of dollars in fines. And you could be talking about voided contracts. So there's a lot of ways that they can go.

19:52It could really damage the Clippers. So let me ask you this. Back in 1999, did David Stern consult with other owners about that penalty? I mean, I don't know the answer, right? And because my question is, Silver works for the 30 NBA teams, not just the Clippers, right? So there are 29 other owners out there, all of whom might want to see Bomber get the max penalty, while others might not because it might have an impact on their own franchise valuation. So my question is, do you think that Silver would at least take counsel from some of the other team owners with whom he works for? Yeah, you know, it's a very tricky question.

20:29I think right now he's probably saying let's let this investigation play out. He needs that to say we paid for this independent investigation. We want to see what it says. What is the evidence beyond what's been publicly presented by Pablo Torre in his podcast? And can we corroborate that? And can we figure out what's really going on here? But, yeah, what's interesting is the other owners are also torn, I think, right? Because on the one hand, they are Balmer's competitors. They are his rivals. They want to beat him. Cap circumvention is a form of cheating. They would be pissed about that in theory.

21:05On the other hand, they are Balmer's partners. They all share one 30th of an interest in this league. And they don't necessarily want the league to be damaged. And they also don't want a precedent where the commissioner has a free hand to punish owners because they're an owner too. Right. And so as his partners in the business, they might like to see this go away with a slap on the wrist. As his rivals on the court, they might like to see the full weight of the law brought down on Ballmer. So that is, I think, exactly the dynamic that Silver's going to have to navigate in this moment. I had forgotten until you had written it that the NBA salary cap has been in place since 1984.

21:48Now, today, it is at$155 million per franchise. Quite frankly, Ira, that's not much in today's league. Yeah, I mean, I think if you look at how much money some of these owners have, right? Balmer, an estimated net worth$175 billion. So for him, you could look at the salary cap as a nuisance, right? He really wants the Clippers to win. He can only spend$155 million. And you can go over that through various exceptions. You can pay the luxury tax and so on. But you're really limited in what you can spend. And that is why the NBA has salary cap circumvention rules because they know that these incentives are in place, that Balmer and other owners might really want to spend more than they're allowed to win, right?

22:34And so, yeah, that is the trick here is can you enforce your salary cap, which is there for competitive balance and to control costs for the league and for owners. Ira, I'm curious, like, if this is really, what are they looking for? What is harsh evidence here? Can they actually find it? Do they want to find it? Or is this going to be something like we've seen before that makes huge headlines, but nothing really comes of it like when the Astros got caught sign stealing and they kind of just skated over it? Yeah, I mean, it's really interesting. I do think the league wants to get to the bottom of it.

23:10What's at stake here is there's this company Aspiration. It's now bankrupt. Its leader was brought up on federal charges for fraud. One of its co-founders, he's agreed to plead guilty. But this company Aspiration that did like climate finance, they did a deal with the Clippers to be a partner in the Intuit Dome. And Ballmer invested$50 million in them back in September of 2021. And then after that aspiration, did a deal with Kawhi Leonard, an endorsement deal for four years,$28 million. What's fishy about that deal is Leonard never really did anything in public to endorse aspiration. Right. And so it looks like pay to play potentially.

23:54And it said he had to stay a clipper. Yeah. According to Pablo Torre, who broke the story on his podcast, the contract allows him to not do anything. As long as he's on the clippers, he gets paid. um and so what walktell is going to have to figure out here is why did aspiration do that that's the central mystery well wasn't kawaii leonard a supermax to begin with so he was on a four-year 176 million dollar contract extension with the clippers which was an interesting choice he signed that in 2021 he could have done a shorter deal he could have to get to a bigger contract sooner he could have done a bigger deal at that moment so it was sort of a middle path um but yeah so he this side deal, if it is in fact a side deal, and that's what we need to figure out.

24:42Is Aspiration doing this on behalf of the Clippers? Is it a way to pay Kawhi off the books? Or were they just doing what looks like a really stupid endorsement deal? Or a smart endorsement deal from the perspective of Kawhi Leonard. Right. Kawhi Leonard, yeah, why not take it? It's$28 million for what looks like a no-show kind of arrangement over four years. But I think that's what you got to solve here is there another explanation for why aspiration is doing this deal now this is a company that did do a lot of fraudulent stuff including some some funny dealings with influencers and other celebrities so maybe there are other explanations here it's also possible and this is just me speculating like that aspiration wanted to do this for the clippers without the clippers knowing it right that they were like oh they would love it if we did a deal with kawaii and we paid him more than he's worth because that would, you know, but the Clippers never asked for any of this.

25:39What Ballmer has said is, I made the introduction, right? I was an investor in aspiration. Kawhi Leonard's my player. I put the two together and they went off and made a deal that I didn't know about, that had no control over and I didn't know the terms. So that's what we got to sort through. Now, I should add, first of all, that Mr. Ballmer said that, look, I didn't do anything wrong right clippers are saying we didn't do anything wrong and kawai leonard saying saying the same thing i didn't do anything right and even adam silver when it came out in the press conference afterwards said look the burden of proof that something went wrong is on the league yes i mean i don't forgive me for using a it's like a perry mason case you know it's like okay You've got to prove that this actually happened, the bad dealings.