Market Power

Musings by an academic economist on the power of markets and the power over markets.

Wednesday, March 30, 2005

Gambling on College Basketball

I posted thoughts on this subject over at The Sports Economist, but I wanted to go into more detail. From the Washington Post:

Betting on college sports threatens the integrity of the games, in the view of Bill Saum, the NCAA's director of agent, gambling and amateurism activities. At worst, it exposes college athletes to pressure from criminal elements conspiring to fix the outcome of games. At its most benign, it sends mixed signals about the propriety of gambling, whether on sports, slots, poker or pool.

What drives this fear is the lack of salaries paid to players commensurate with the revenues generated by their games. To see how football programs recruit players when they can't compensate them with income, see this post below. Nice digs.

Every player is a candidate to be a point shaver and there are some penalties that hit all players in the same manner (jail time, expulsion from school). The star players on the big-name programs are the least-likely to fix games. These players have relatively good opportunities to play professionally and to earn lucrative salaries. If they get caught fixing games, their professional careers will likely be ruined. So they have to get at least as much to shave points as they expect to lose in their basketball career.

The good players on the not-so-big-name programs and the guys off the bench on both types of programs are more likely to fix games. They don't have professional opportunities and therefore have less to lose. They are also the ones that point shavers are going to go after because they will be the ones who have lowest reservation price of price shaving.