Sports betting is a booming business. The FBI's NBA probe is putting it in the spotlight

Fans can place wagers from their stadium seats, while “Bet” tickers scroll on TV sports broadcasts. Star athletes are frequently at the center of ads promoting it all.

In Thursday’s indictment, federal investigators accused Rozier and other defendants of breaking the law by exploiting private information about players to win bets on NBA games. Rozier’s lawyer, Jim Trusty, said in a statement that his client is “not a gambler” and “looks forward to winning this fight.”

A separate indictment alleges Portland Trail Blazers coach Chauncey Billups and others participated in a conspiracy to fix high-stakes card games. Billups' attorney declined to comment Thursday.

Regulating sports wagering has proven to be a challenge — and experts warn about the ramifications for gamblers who typically lose money. Professional leagues' own role in promoting gambling has raised eyebrows.

Here's what we know.

Explosion of legalized sports betting

Sports betting is probably as old as sports itself. But in the U.S., legal gambling really took off in 2018.

That's when the Supreme Court struck down the Professional Amateur Sports Protection Act, which barred sports betting in most states. Once allowed only in Nevada, sports betting is now permitted online or in retail locations in 38 states and Washington, D.C. Missouri will become the 39th state on Dec. 1.

Experts say the biggest jump has been online, through smartphone apps and platforms like DraftKings and FanDuel. Through the third quarter of this year, legal sports betting generated $10 billion in revenue, up about 19% from the same period a year ago, according to the American Gaming Association.

The industry argues that legal wagering generates money for states and can deter illegal betting. Major operators point to technology they use to monitor suspicious activity. FanDuel said Thursday's news illustrates “the stark contrast between legal and illegal betting markets.”

Who benefits?

There is plenty of money on the table both for those who place winning bets and the platforms that make it possible. The NBA and other pro sports leagues have also created revenue streams by partnering with sportsbooks and reaping advertising dollars.

Live game stats provided by leagues are key to the sports world’s relationship with the gambling industry. When you're able to bet what the next pitch in a baseball game is going to be, that's because Major League Baseball is selling data to platforms “for a pretty high price," according to Isaac Rose-Berman, whose research focuses on sports betting as a fellow at the American Institute for Boys and Men.

The NBA has a partnership with Sportradar for its data rights. Sportradar, in turn, provides FanDuel Sportsbook official NBA statistics. When the deal was announced in 2022, Sportradar touted it as a way “to monetize our long-term partnership with the NBA."

How is sports betting regulated?

Each state has its own regulations and tax rates for sports betting. A handful restrict where you can place bets — allowing users to use mobile apps, but only while they're physically inside a casino or within a certain radius of a stadium, for example. Others limit which betting platforms you can use or what you can bet on.

“States sort of opened up a can of worms, and now some of them are starting to realize just how crazy this sports betting world sort is,” said Wayne Taylor, a professor of marketing at Southern Methodist University.

An even stickier factor is when players and other team or league personnel are involved. The NFL, NBA, MLB and NHL all prohibit employees and players from betting on their own league games, although some gambling in separate areas is allowed.

Legalized betting has certain security advantages in that unusual betting patterns — such as large bets being placed on a random player’s performance — can be immediately flagged. In some cases, sportsbooks have taken down odds on certain events to protect against manipulation.

Still, experts like Taylor note that companies’ own financial interests may bring some of that into question. And across the sports market, he says the large number of players and scope of micro bet possibilities makes potential manipulation “easier to hide.”

What is prop betting?

A prop is a type of wager that allows gamblers to bet on whether a player will exceed a certain statistical number, such as whether a basketball player will finish over or under a certain total of points, rebounds, assists and more.

This kind of bet is key to the sports betting probe announced Thursday. Investigators pointed to a March 23, 2023, game involving Rozier, then playing for the Charlotte Hornets.

Rozier played the first 9 minutes and 36 seconds of that game — and not only did he not return that night, citing a foot issue, but he did not play again that season. He finished with five points, four rebounds and two assists — a productive opening quarter, but well below his usual total output for a full game. At the time, many bettors turned to social media to say that something shady occurred regarding prop bets involving his stats for that night.

More broadly, the NBA has expressed concern about prop bets, while other sports leagues have worried about the potential for manipulation.

Earlier this year, Ohio Gov. Mike DeWine urged his state’s gambling commission to ban prop bets after Major League Baseball placed two Cleveland Guardians pitchers on leave during a sports betting investigation.

What are other pitfalls and social implications?

Sports betting also faces criticism for opening the door to addictive gambling.

“The fact that it’s normalized, the advertising is aggressive, it’s available 24/7, the micro bets — all of this is adding up to tremendous increase in usage across individuals," said Taylor, citing algorithms and other incentives betting platforms use to increase engagement.

Rose-Berman notes that platforms make the most off of returning “biggest losers.” Recent research suggests that young men in low-income communities are particularly affected by financial consequences tied to sports gambling.

“Upwards of 90% of sports bettors are not really going to experience significant negative impacts — but it’s really concentrated among those big losers and it’s going to be devastating for them,” he said.

Associated Press reporters Tim Reynolds in Miami, David Lieb in Jefferson City, Missouri, and Alan Suderman in Richmond, Virginia, contributed to this report.