On October 23rd, 2025, the US Attorney's Office for the Eastern District of New York indicted five people as part of a sports gambling conspiracy. From the indictment:
As alleged, Rozier, then an active player for the Hornets, tipped off longtime friend Laster that Rozier planned to leave the game early due to a purported injury. Rozier provided this information to Laster for the purpose of enabling Laster to place wagers based on this information. Laster, Fairley, and Hennen, among others, used that confidential information to place and direct more than $200,000 in wagers predicting Rozier’s “under” statistics (i.e., that Rozier would underperform). Rozier exited the game after nine minutes, and many of the bets paid off, generating tens of thousands of dollars in profits. Laster collected the cash and drove through the night to Rozier’s house, where together they counted the profits together [sic].
Sports commentator Bill Simmons, whose podcast is sponsored by the FanDuel sportsbook, had the following to say in an emergency show about the scandal:
They always sniff it out anytime there's irregular stuff. So in a weird way, it's being policed I think better than it's ever been...I wonder, do you think all of these things still happen if gambling hadn't been more legalized across the states in the last 10 years? I would argue the illegal poker games, we've been hearing about those for 30 years.
His guest, Joe House, added the following:
...all established books can detect irregularities very rapidly. I mean, even the Rozier game, didn't they shut that down?
Most of the public debate about vice issues goes something like this: those who want more permissive rules argue that it is easier for the state to monitor activity and regulate abuses when everything is above-the-table. Those who want less permissive rules on vice argue that legalisation lowers the barrier to entry to start a self-destructive drug or gambling problem, harming more of society in the process. This can end in both sides talking past each other, because liberalisers talk about harm per transaction while restrictionists stress the volume of transactions. What really matters is the product of harm per transaction and transaction volume, but too few debates get to that point.
But sports gambling is different from other vices as the Terry Rozier episode shows. Simmons is probably correct that it is easier to detect suspicious gambling activity now that sportsbooks are legal in most of the country, but the sports gambling legalisation boom is what makes it possible to bet $200,000 on an NBA player's single-game statistics. A simplified but mostly correct way to understand how a sportsbook offers bets is that they want to balance the amount of money wagered on either side of an outcome. If the Seattle Seahawks are 6-point favourites over the Patriots, the house wants just as much money wagered on Seattle to win by more than 6 points as they do for the Seahawks to either win by less than 6 or not win at all.1 If too many bettors are betting on the Seahawks, they will move up the point spread to encourage more people to take the other side of the bet. No matter the outcome, sportsbooks pay out winners with money from losing bets, but not before the house takes a cut.
The reason this matters in the Terry Rozier case is that it is easier for sportsbooks to take large bets if there are already a lot of wagers at play. Even if there is no malfeasance, it is difficult for sportsbooks to accommodate large bets on low-volume contests. But between 2017 and 2025, the amount of money legally bet on sports increased from $4.8 billion to over $160 billion.2 This increase in volume makes it possible for sportsbooks to accept larger wagers, because they will be able to find enough people to take the other side of large bets. This isn't a new argument; just about any market can facilitate larger transactions with higher liquidity.
Sports betting proponents argue that illegal sportsbooks allowed for match fixing and insider betting before legalisation. But what do you think would happen if you tried to place a six-figure under bet on a player with an illegal bookie in 2017? Anyone running such an operation would have the street smarts to know that you'd only make a bet like that if you had an unfair advantage. Even if they took the bet, the bookie would have a lot of options if someone beat the house this way. Not only would they likely not pay out bets like these, but the parties involved won't hesitate to retaliate in extralegal ways. Even if a bettor pulls it off, they then have to get their ill-gotten gains into the regulated financial system. All in all it is much harder for the math on the Terry Rozier operation to pencil out without legal sports gambling.
Admittedly, there is a kernel of truth to what Simmons and his fellow sports gambling boosters say. While it would be very difficult to do at six-figure volumes, it was theoretically possible to pull a Terry Rozier in 2017. Very few athletes would risk their careers for this sum, but in the mid-2010s you probably could find someone to take the other side of a $1,000 bet on how well the 6th-best guy on an NBA roster would play in an individual game.
This, unfortunately, takes us to prediction markets.
From a July 2026 article in the New York Times:
A White House teleprompter operator used his position to win around $100,000 by placing bets on the prediction market Kalshi about what President Trump would say in his speeches, the company said on Thursday...Kalshi said Gabriel Perez, a technical assistant to Mr. Trump, had placed wagers on common words that would appear in the president’s speeches, such as country names and economic terms.
Kalshi was not around in 2017. Back then it wasn't possible to bet on specific words the president would use in a speech, at least not at any real volume. While legal sports betting makes match-fixing easier, prediction markets are making entirely new forms of insider betting viable. This is a meaningfully different problem than insider sports betting, and much more could be on the line if policymakers put a thumb on the scale to cash out on Kalshi.
This is frustrating to admit, because prediction markets can be societally useful: it is important to have good forecasts on federal government shutdowns, landfall of hurricanes in the Southeast, and traffic through the Strait of Hormuz because all of those outcomes tangibly impact millions of lives; no contest in sports will ever be as important as oil tanker traffic out of the Persian Gulf. Unfortunately for Kalshi, the public doesn't draw much of a distinction between sportsbooks and prediction markets, and it is hard to blame them given that sports are a rising share of prediction market volume. While Kalshi is certainly more responsible than Polymarket, the public is losing patience.
If prediction markets do not get their house in order, they will be unsympathetic collateral damage in the coming sports gambling backlash.
This was a point-spread example. Fractional or American moneyline odds are slightly more complicated but follow the same idea. Sportsbooks want the amount of money they owe if the favourite wins to equal what they owe if the underdog wins, but this requires less money bet on the underdog and more money bet on the favourite.↩︎
The 2018 Supreme Court case Murphy v. National Collegiate Athletic Association struck down federal laws banning sports gambling in most states as unconstitutional.↩︎