Note: I’ve had this post in drafts for almost a year now. It’s not super interesting. But I feel it does close a loop regarding the DelCo stuff. So let’s push it out there and move on.
In September 2022 Bill Simmons did a podcast segment with Sean Patrick Griffin where they expressed some frustration with recent Donaghy-centered journalism, including the Whistleblower podcast. Since I’ve recommended Whistleblower here I was intrigued. My sense of Whistleblower is that it is not overly Donaghy-friendly. Whistleblower doesn’t accept his whole story. Where Whistleblower is very important is drawing attention to the central mystery of who leaked the report to the New York Post in July 2007. (Occam’s Razor and all the circumstantial evidence say very clearly it was Stern.) Simmons and Griffin did at least give them credit for that. But I figured I should read Griffin’s book about the case, Gaming the Game (2011). I will take their word that the recent Netflix Donaghy-cooperating documentary is terrible.
Recap of the central issue: Tim Donaghy continues to claim that he never fixed games, he only used his inside information to successfully bet on games, including ones he was reffing! And that he only did it for a limited time in the 2006-07 season after being “threatened by the mob.” This is all nonsense. Donaghy has lots of good, selfish reasons to die on this hill but we don’t have any need to believe him. All available evidence suggests the fix scheme started in 2003 and picked up steam until it exploded in early 2007. He was making picks against the spread ahead of time, his co-conspirators got money down and he went out and delivered.
I was reluctant to drag myself back to DelCo but as it happens the book is excellent. Griffin got full cooperation from Jimmy “Baa Baa” Battista, the gambler who was ultimately jailed in the affair. He makes the narrative a detailed look at suburban big money gambling in the 1990s and 2000s. It takes its place among the best of a genre that always plays for me: “We kicked so much ass at work despite being drunk/high/idiots; you would never believe how much fun we had getting paid; we were the best but it could never last…”
Emergency by Denis Johnson comes to mind. The Barracks Thief by Tobias Wolff. Goodfellas is a classic of the form. I’ll throw in Another Day in Paradise by Eddie Little. The story can only be told much later from the jail cell, rehab center, deathbed, or straight life. When you’re in it, it just sounds like bragging.
That world! These days it’s all been erased and they’ve rolled it up like a scroll and put it away somewhere. Yes, I can touch it with my fingers. But where is it?
Emergency, by Denis Johnson
It’s a great book but for the purposes of our ongoing multiyear trial for the soul of David Stern there’s not much “meat.” A lot of what makes the book great is the enthusiastic hyper-specific attention to the street-level world and schemes of Baa-baa Battista. The author is a criminologist who had the full cooperation of a criminal in unraveling a career in crime so he understandably focuses entirely on that. Since he doesn’t have ironclad facts about the upper level NBA stuff he just doesn’t touch it. That makes for a very tight nonfiction book but does not obviate a more thorough-going narrative like Whistleblower.
What was Battista’s job?
He was a gambler for all of his adult life but he didn’t have a system for placing bets. And he wasn’t a bookie either, exactly. His main function was to serve as a human market-maker, someone who knew at any time how and where he could move money on the number that his patron wanted. He cultivated sources who could move information up the chain to sharps and he cultivated “outs” where he could bet sharp money down into the market.
At first he was just running to Vegas with excess Philly cash. Then he was sitting in a boiler room office with phones, pencil and paper. He did a stay or two in Caribbean books when that scene exploded. By the end he was working with internet access to inject cash into the Asian market in order to move the rest of the globe to give him his number.
What is a sports bet?
Every bet is a bet against somebody else. When you play roulette you are betting against a big liquid counterparty called the “house.” The odds are so strongly in the house’s favor that they can afford to fade any player bets and just assume they’ll make it up on volume.
Sports betting doesn’t quite work that way. Every bet requires a counterparty because there’s no iron law of the universe that the casino can stand in front of. In its simplest form, a bookmaker can make guaranteed money if he’s handling equal bets on both sides of a game. In other words the bookie is just facilitating evenly-matched counterparties. In reality it’s a little more complicated and books cannot guarantee every position is evenly matched since each bet comes in on one side or another. Even in a perfect world, where bets are roughly even, each new bet can unbalance your book if only for a little while. That’s why books need constant contact with each other to “lay off” some of the public bets they’ve accepted. One “lays off” action by placing the opposite bet with a peer. (Sometimes a book is also a sharp or employs sharps and is willing to take an unbalanced position against the public.)
For any market maker (which is what a bookmaker is) the ideal situation to be in is handling a constant noisy stream of uncorrelated small “dumb money” bets. This is why Payment For Order Flow is such a hot topic in stock market finance: uncoordinated small low-information trades from retail RobinHood customers are so valuable that major players will actually pay RobinHood to get sent the orders. Similarly, modern gambling apps are desperate to attract low-information drunkards betting under $100 on a random flurry of uncorrelated propositions. (Hence all the ads you see everywhere in our glorious new legal gambling era.)
The worst situation for a market maker to be in is trying to handle the other side of a low-volume high-information whale bettor who makes one huge bet per day. In theory your make money on handle so you want to take the bet, but a giant bet unbalances your own book and the chances of being overexposed to the losing side likely outweigh the potential gain. So you don’t take the bet. If you’re a gambling app you weed out sharps and establish betting limits for squares. If you’re a stock market maker you try to get RobinHood orders and avoid Goldman Sachs orders.
Dealing with these realities was the essence of Jimmy Battista’s job: He was the smooth public face of the sharp whales finding ways to get their bets out into the gambling economy. He was able to work the money into the system so they could keep getting the bets down. If you can predict the future it doesn’t do you any good if everyone else knows that about you. You couldn’t get a bet down with any counterparty in the world. So if you’ve truly got an edge you hide in the shadows and employ a couple of friends that know every bookie and provide a skillful layer of human indirection and market management so your sure-thing bets can get out there against unwitting counterparties. Being friend to the oracle is a full time job.
What are the real world limits of a fix?
The book goes through in extraordinary detail how Jimmy Battista worked daily to get his sure-thing bets into the world. Then it is worked through again with another interview with a professional gambler who independently arrives at some of the same methods for how he would do it.
The reality of any marketplace is that there isn’t infinite liquidity if you want to take one side. Even for fairly popular events like major American sports games you can’t just expect to wager $1 or $2 million with the same ease that you can wager $20 on an offshore app or website. Certainly there are millions out there being wagered but the expectation is that it breaks down roughly even on either side. If you go out and start naively pouring that $2 million on one side your takers are going to dry up. (And yes, Battista was getting 1-2 million 2006 dollars out there for every Donaghy game.)
He would do was a complicated dance of betting very early in the day on influential Asian sports books in the opposite direction of what the Donaghy pick was. This was the “head fake” which caused the line to move in favor of the fix. As soon as the line moved he would then begin to spread the money out across the smaller books who don’t have the time or resources to set their own lines. All the smaller books are looking to a few influential peers to know what the “right” line is. They don’t worry about getting too unbalanced because they can lay off on their peers. Battista’s job was to spend the 10 hours before the game making a series of bets that appear to be going against the way the line is moving and not making any counterparty too alarmed about the balance of their book.
One of the most interesting notes in the book is in footnote 14 of the appendix which I reproduce here at length:
There are very real liquidity caps on certain bets, even in major pro sports. “Totals” AKA “over/under” is orders of magnitude less popular than “sides” AKA “the spread” or just “who will win.” If you invented a machine that could accurately predict the number of points scored in a game without knowing margin of victory you could only make so much money. Your wins would be much much less than someone who could predict actual results, since results are what most people want to bet on. No “sure thing” is infinitely bettable. You need counterparty appetite.
In the book all of this work is in service of demonstrating the falsehood of Donaghy’s claims that he wasn’t directly fixing games. But the actual market mechanics are illustrative of the larger general point.
Betting does not exist in a vacuum
Donaghy’s fix created echoes visible in the point spread moves and the other interlinked indexes of a global betting economy. By 2007 Battista’s job was way beyond Delaware County and Vegas. The Caribbean and Asian internet-connected books let him spread bets all over the world but they also created electronic “receipts” all over the world. Many many people knew something was “up” with NBA games in the mid-2000s.
The NBA’s claim after the Donaghy scandal blew up was that they were blindsided and had been totally ignorant all along of the market signals. Maybe so! Plenty of sports books were still taking NBA bets all along. Although if they could lay it off to greater fools they would have no disincentive to stop. From the book: “I should note that one respected pro gambler not prone to hyperbole believes a colleague of his was somehow privy to Battista’s picks on games Donaghy was officiating as early as 2003, was wagering in the neighborhood of $2 million every game, and earned more than $200 million by the end of the scandal.”
Once the scandal is revealed there’s no difference between blindness and institutional incompetence. Someone should lose their job. Within the NBA there was exactly one firing: Donaghy himself.
Timeline
1980s: Stern inherits a poorly run, underpaid officiating crew with an institutional culture of gambling and nepotism. He takes no steps to correct them or the underlying conditions that create the problems.
1990s: Many NBA refs are caught up in an on-the-job tax fraud scheme that sees them plead guilty in Federal Court to falsifying documents, tax evasion, wire fraud. None of the refs lose their job or miss a game. Stern reinstates the ones who were temporarily fired.
2000s: Nepotism hire and gambling addict Tim Donaghy fixes games for years.
2005: Stern boldly addresses the problem of NBA players dressing too “street” by instituting a comprehensive micromanaged dress code.
April 2007: FBI contacts Jimmy Battista as they begin to figure out there’s a crooked NBA ref fixing games.
July 2007: Someone (most likely Stern) leaks the news of the probe to the NY Post in a cynical bid to undermine the US Attorney’s ongoing investigation into NBA refs and cauterize the wound. It works.
2008+: Stern continues as commish for 6 more years.
How did Stern survive sewing the seeds of an ethical crisis and then blithely sailing through it only to lash out by hamstringing a federal investigation? It’s not just one simple mistake but a compounded pattern of malign neglect, incompetence and malfeasance.
Anyway that’s our story so far. Gaming the Game and Whistleblower are both great documents. Neither of them tell the full story on Stern but nothing in their combined scope in any way exonerates him.