Throwing The Game

By Donald L. Barlett and James B. Steele

Is it possible that an industry in one state can stymie legislation sought by community leaders in the other 49?

You bet.

Not only is it possible. That's the way it works in the world of campaign contributions. Gambling on college sports is a case study of how Big Money runs Washington.

Eight years ago, at the urging of worried coaches and university presidents, Congress outlawed betting on collegiate sports in every state except Nevada.

Since then, the big money at stake has become a bad influence on campus, riddling college sports with such corruption as game rigging and point shaving. Dozens of athletes have been convicted or suspended. When you follow the money in these cases, it leads to one place: Nevada. That's because student athletes profit from legal bets placed in Las Vegas and Reno casinos, and, far more significantly, bookies in the other 49 states funnel illegal bets into those casinos to protect themselves from having to pay out on unlikely winners at high odds.

There has been an outcry from universities and even some alarmed members of Congress. But the 1992 law still holds, and gambling on college games is thriving as never before in Nevada. Legislation meant to deal with that problem, favored by a congressional majority, remains buried on Capitol Hill.

What gives?

Nevada gives, that's what. In particular, the gaming industry gives to Congress--and gives and gives, in the form of contributions to both political parties totaling more than $16 million over the past six years. That's four times as much money as the gaming industry sent to Washington in the previous six years. And it's enough, apparently, to persuade congressional leaders to band together to stop (so far) a proposed bill that would end the Nevada exemption from even reaching the floor of either the House or the Senate. If there is an object lesson here, it is this: Money talks in Washington, and it talks loud enough to drown out supporters of the most well-meaning legislation, no matter how large their numbers, no matter how influential they might seem to be. It's almost as if the gamblers are keeping prominent lawmakers of both parties on retainer.

And a lucrative retainer it is. In November 1997, Trent Lott, the Mississippi Republican and Senate majority leader, and Mitch McConnell, the Republican Senator from Kentucky who believes unlimited campaign cash is a free-speech right, flew to Las Vegas aboard the jet of casino impresario Steve Wynn to attend a gaming industry G.O.P. fund raiser. The Republicans left with $100,000--the start of something big. Within a year, additional casino contributions would boost that sum to nearly $1 million.

In May 1999, Richard Gephardt, the Democratic Congressman from Missouri and House minority leader, and his colleague Charles Rangel, New York Democrat, flew to Las Vegas to pick up a check from Wynn in the amount of $250,000. The money went to the Democratic Congressional Campaign Committee. And this week Gephardt and Rangel plan to return for yet another fund raiser, where they hope to raise $500,000.

For America's $30 billion-a-year gambling industry, the system has worked nicely. When some members of Congress tried to end the individual income tax deduction for gambling losses, key Republicans and Democrats buried the measure. Twice. Now casinos want to kill the legislation outlawing betting everywhere on collegiate and all amateur sports that would close the Nevada loophole. The legislation has the support of coaches and university administrators from Florida to Oregon. But it has been bottled up by the congressional leadership since April, despite growing pressure from reformers like Arizona Republican Senator John McCain.

In the 1990s, when gambling on college sports became a major attraction at Las Vegas casinos--the betting action topped $2 billion a year, and the NCAA basketball championship rivaled the Super Bowl as the single largest gambling event--more college athletes were involved in fixing games or wagering on college teams than in any of the decades before legalized gaming became popular. Some of that action flowed into Nevada from illegal gambling networks across the country. Among the college gambling cases since 1992:

The University of Maine suspended 19 members of its football and basketball teams for their roles in a $10,000-a-week gambling operation; the University of Rhode Island and Bryant College uncovered a gambling ring involving student athletes; a Northwestern University running back who became the school's career rushing leader fumbled the football on the goal line to ensure that his team would not beat the point spread and that he would win his $400 wager; a Central Florida student team manager was convicted in federal court of offering $15,000 in bribes to players to hold down scoring and cover the point spread in a basketball game with Stanford; Boston College suspended 13 members of its football team for betting on college sports, including three who reportedly bet against their own team; two Arizona State players were convicted and sent to prison for shaving points; two former Northwestern University basketball players were convicted of rigging games against Penn State, Wisconsin and Michigan, a scam organized by a former Notre Dame place kicker turned bookie; four former Northwestern football players pleaded guilty to perjury charges after lying to grand juries investigating sports betting at the school; and last year the University of Michigan released a study saying that nearly half of the male athletes in the survey acknowledged wagering on college sports. The study indicated that 1 of every 20 players shaved points, bet on his own games or leaked insider information about players to gamblers.

None of that's surprising, given the mixed message that Congress sends to student athletes; gambling on college sports is a federal crime in 49 states, but it's legal in Nevada. "People in general, college students in particular, have the belief that betting on college athletics is O.K. because it's legal in Nevada," said Lou Holtz, the former Notre Dame football coach now at the University of South Carolina, when he testified before the House Judiciary Committee in June. "We will do a great disservice to the youth of this country if we do not take action now...It's illegal to bet on college athletics in 49 states. Why isn't it in the 50th state as well?"

Think what would happen if Congress legalized the sale and use of marijuana in one state only. That's what lawmakers have done with sports gambling.

For a little more than two decades now, the sports books, as they are called in Nevada, have been an integral part of casinos large and small. Walk into any casino and you will see an area carved out for sports gamblers. There the legal gambler may spread his sports pages and tip sheets across one of the rows of desks usually found in college libraries, each individually lighted, or sit back in one of the dozens of plush chairs and, while being served drinks by a cocktail waitress, study the giant electronic board that covers the wall in front, offering information on the sporting events of the day, from the latest odds to reports on player injuries.

You can bet not only on who wins a game but also on the total points scored by individual players, most points scored by a player, total three-point field goals by one basketball team or both teams combined, total team points and rebounds combined, total points scored in the game, the half-time score--even the free-throw shooting percentage of individual players.

The most insidious aspect of legalized betting on college teams is the point spread. It raises dark questions where there should be none. For someone betting the spread, it matters not whether your favorite team wins, but rather by how much they win or lose. Las Vegas casinos set a point spread for each game. It's published in newspapers across the U.S. and used by illegal bookmakers. Over the years, college coaches have taken the news media to task for providing this bookmaking service. Only a handful of large publications have refused to print the collegiate betting lines, among them the New York Times, the Washington Post, the Christian Science Monitor and the Sporting News.

Here's how the betting lines work: say a casino's sports book favors the Duke basketball team to beat Florida State by 11 points. If you bet on Duke, but Duke wins by only 8 points, you lose. If you bet on Florida State, you win.

And that's the source of a nagging question--not just for gamblers but for fans, coaches and university administrators. If a team beats its opponents but not by the official Vegas spread, were the games fixed? Did players deliberately miss shots? Did they intentionally foul? Did they purposely fail to block shots?

Therein lies the sinister beauty of rigging a game by shaving points: It's nearly impossible to detect, as long as the players do some serious acting. In one fixed game, the gambler who engineered the point shaving complimented the players involved saying he "liked the way [they] made it appear that they were playing hard."

The perverse influence of the point spread is that it pressures teams to rack up enough points to beat the line. Says coach Holtz: "I have witnessed our football players be idolized, praised and cheered after a win. I've also witnessed them being ridiculed, demonized and ostracized after a win. The only difference was in one case we covered the point spread. In the other we didn't."

Thinking about such pressure can conceivably have a distorting influence on a coach's game strategy. Says Orlando ("Tubby") Smith, the men's basketball coach at the University of Kentucky: "What am I to do if I know that my team is favored by 17 points, and our outmanned opponent is trailing by 20 late?...Do I clear out my bench and play all my reserves or leave the regulars in a little longer? Just knowing the line as I make my decisions courtside could determine winners and losers across the country. It's a very disturbing situation...No longer is it a simple matter of winning or losing. The question begs, Did your respective team cover?"

And the questions don't go away. Such was the case with the California State University, Fresno, basketball team during the 1996-97 season, when it failed to beat the point spread in a number of games. The questions eventually led to a federal-grand-jury investigation in which witnesses and game films were subpoenaed. Three years later, the probe continues.

How did it get this way? With a lot of help from Congress. Until the mid-1970s, legalized sports betting in Nevada was confined to dimly lit, smoke-filled rooms in tiny turf clubs where the floor was the ashtray. Recalls Richard Davies, a history professor at the University of Nevada at Reno: "The aroma of stale cigar smoke, day-old spilled beer and greasy hot dogs generated an ambiance only a dedicated horse player could appreciate," which was appropriate, since most of the betting action was on horses, not sports. The casinos had no sports books.

The main reason: no money to be made. From 1951 to '74, the Federal Government levied a 10% excise tax on the amount of sports wagers. Since the profit margin before the tax was generally 5% or less, the tax made the business unprofitable. But in 1974, the Nevada congressional delegation helped persuade Congress to slash the tax from 10% to 2%. The rush was on. By 1988, wagers on all sports--professional and college--totaled $1.3 billion.

Other states joined in, after a fashion. Oregon passed a law permitting a state lottery keyed to professional football, while Montana approved betting on fantasy sports leagues. Professional sports teams and the NCAA grew alarmed and pressured Congress for a law banning all sports wagering. One of the more vocal supporters was Bill Bradley, the former basketball star and Democratic Senator from New Jersey: "State-sponsored sports betting could change forever the relationship between the players and the game, and the game and the fans. Sports would become the gamblers' game and not the fans' game, and athletes would become roulette chips," he said in 1992. Congress agreed and enacted the Professional and Amateur Sports Protection Act, the law prohibiting gambling on amateur sporting events in all states except Nevada.

The popular movement to make the ban universal gathered force last year when the National Gambling Impact Study Commission, which had been appointed by President Bill Clinton and congressional leaders, called for closing the Nevada loophole. Armed with the report, the NCAA went on the offensive, and sympathetic lawmakers in the House and Senate introduced bills to make it official. Coaches and university heads testified, including Graham Spanier, president of Penn State: "There has been a blurring of the line between legal and illegal sports gambling in this country. Sports gambling has become such a part of the glamour of Las Vegas that it is fairly safe to conclude that many do not know that gambling on college sports is an illegal activity in virtually every state in the United States." Dozens of other organizations outside the athletic community also urged Congress to act. They represented Republicans and Democrats; church, family and education groups, from the American Council on Education to a commission of the Southern Baptist Convention.

But they were fighting a formidable opponent. Over the past several years, the gambling industry and its trade association, the American Gaming Association, have emerged as a major influence group in Washington, doling out large campaign contributions and wining and dining lawmakers. Like many other special interests, they are equal-opportunity givers, as attested to by a sampling of contributions reported to the Federal Election Commission. In 1996, Sheldon Adelson, whose Las Vegas Sands Inc. owns the new Venetian Resort-Hotel-Casino on the Las Vegas Strip, contributed $100,000 to the Republican National State Election Committee and $105,000 to the Democratic National Committee. Steve Wynn's Mirage Resorts donated $226,500 to the Republican National Committee that same year. Wynn, who came late to bipartisan giving, would discover the Democrats a little later.

In both 1997 and '98, Adelson again gave $100,000 to the Republican National State Election Committee. In 1998, Mirage Resorts kicked in $300,000 to the National Republican Senatorial Committee, followed with $300,000 to the Republicans and $250,000 to the Democrats in 1999. In 1998, Circus Circus gave $285,000 to the same G.O.P. committee. The following year, Park Place Entertainment, the former gaming division of the Hilton Hotels, gave $100,000 to the Democrats and $75,000 to the Republicans, and MGM Grand gave $150,000 each to the Democrats and Republicans.

Sometimes all this money was delivered privately. Sometimes it was delivered at public fund raisers held along the Strip. In that November 1997 fund raiser, gaming executives paid at least $1,000 a person to rub shoulders with Republican leaders Trent Lott and Mitch McConnell, in an event that gaming officials characterized as a "tremendous success." Democrats received similar treatment in July 1999 when House minority leader Richard Gephardt of Missouri, Democratic Congressional Campaign Committee chairman Patrick Kennedy of Rhode Island and Ways and Means ranking member Charles Rangel of New York attended a Las Vegas luncheon.

With all that money flowing to lawmakers, you might guess what happened next. The NCAA-backed bills are stalled. But not because they lack the votes. "I would allege there would be a vote of 98 to 2 in this Senate, if it came to a vote," ventured the bill's key supporter, McCain of Arizona, in a July 18 speech on the Senate floor. Even critics of the legislation acknowledge it would pass if brought to a vote. But leaders of both parties have resisted bringing the legislation to the floor because of fear that the gaming industry will cut off its campaign contributions. Here's how that fear works:

Last year, when the NCAA first took its case to the Senate Judiciary Committee, the college-sports officials got a favorable reception. Committee staff members were confident their boss, Utah Republican Orrin Hatch, the committee chairman, would embrace the issue. After all, years earlier the Senator had made his feelings clear: "Sports gambling is bad for the country. It is bad for our young people. It is bad for everybody," he said in the Senate on June 2, 1992. Hatch said that perhaps the exemption for Nevada "will have to be revisited at some future time."

NCAA officials worked with Hatch's staff on drafting legislation and were told that Hatch would be a co-sponsor. The proposal also secured the support of two other key Senators, the ranking Democrat on the Judiciary Committee, Patrick Leahy of Vermont, and Kansas Republican Sam Brownback.

Then, all of a sudden, NCAA officials saw their calls go unreturned. Hatch, who had made suggestions during the drafting, suddenly let it be known he would not be a co-sponsor, and has since said the proposed bill does not go far enough to stop the problem. Kentucky's McConnell, a major recipient of gaming-industry contributions, had met with Hatch and other Republican Senators on the Judiciary Committee and asked them not to support the bill. "He told them it would impact his ability to raise money for [the G.O.P.'s Senate fund-raising committee] from the gambling industry," said a Capitol Hill observer familiar with the negotiations.

Eventually, the NCAA found in McCain a powerful advocate--but not powerful enough. The Senate Commerce Committee, over which he presides, held hearings, approved a bill and sent it to the Senate floor recommending passage. There it has languished, a victim of parliamentary maneuvering by the leadership. A similar bill was approved by the House Judiciary Committee last week, but its fate before the full House remains unclear.

Surely one reason is that the NCAA, which is a tax-exempt organization, cannot make campaign contributions. Even its lobbying budget is minimal by Washington standards, less than $200,000 a year. The American Gaming Association alone, on the other hand, spent $1.6 million last year.

As part of the lobbying campaign, Las Vegas casinos mounted a p.r. blitz to enlist the support of their customers. They distributed literature warning that "politicians want to snatch away your rights!...They want to take away your rights as an adult to come to Nevada and place a legal wager." The industry has also fought the bill on grounds that it would wipe out thousands of jobs in Nevada. (In fact, wagering on college sports amounts to less than 1% of casino business in that state.) But mainly the gaming industry has rested its case against the legislation on this:

It makes no sense to eliminate legalized sports gambling in Nevada because the amount wagered is dwarfed by illegal gaming in the other 49 states. Indeed, goes the argument, without a legal way to bet on college games, gamblers would wager illegally and contribute further to the growth in illegal gambling. To promote this view, the industry bought ads in newspapers warning of the consequences if Congress eliminates legal sports betting in Nevada. Under a headline declaring s. 2340: A "FIX" ONLY A BOOKIE COULD LOVE in the Washington Post on June 22, Harrah's Entertainment Inc. admonished, "If Congress bans legalized betting on college sports, it will make a lot of illegal bookies very happy. Because eliminating the only regulated, legitimate way to gamble on college games in the U.S. will do nothing but create new business for illegal bookmakers."

Law-enforcement officials typically offer a different view: that legal sports betting actually fuels illegal gambling and provides two services for bookies everywhere. It gives them a reliable source for quoting the odds on a game and, more important, provides a convenient place to spread the risk on their bets. Says Wayne A. Johnson, chief investigator of the Chicago Crime Commission, the citizens watchdog committee that has been fighting organized crime since the days of Al Capone: "Legalized gambling only perpetuates illegal gambling. It does not displace it, as many people believe. That's a false assumption." Even Nevada's regulatory officials have acknowledged this connection. The chairman of the Nevada State Gaming Control Board, Steve DuCharme, said in a 1999 interview, "A lot of money made through illegal gambling is laid off in Las Vegas. If a bookie has a lot of money on one side of a bet, they bet the other one in Las Vegas to try and even the bet."

Years of wiretaps by federal and state law-enforcement authorities have repeatedly documented the links between legal and illegal gambling. Typical of this arrangement was a Schenectady, N.Y., gambling ring uncovered in 1997 by the New York State Organized Crime Task Force. In raids in July that year in Las Vegas and Schenectady, authorities arrested 15 bookmakers, confiscated $436,000 in cash and uncovered evidence of a multimillion-dollar betting ring. The Schenectady bookies ran a full-scale operation complete with computers and multiple phone lines. In one eight-week period, police wiretaps turned up 5,800 calls to their "wire room" near downtown Schenectady from gamblers placing bets on college and professional basketball games.

When the need arose, the Schenectady gamblers had their very own contact in Las Vegas. He was Thomas DiNola, a former Schenectady resident who fled New York State in 1989 to avoid a $250,000 civil judgment arising from another gambling case. He relocated to Las Vegas but kept up ties to the hometown bookies. As a local bookie told a potential customer, in a conversation picked up on wiretaps, "We're a pretty big operation. We're based in Las Vegas, and I work this local branch. We're a full-tilt operation."

DiNola gave the Schenectady bookies a commission for layoff bets they sent his way, and business was good. In one 19-day period during college basketball's March Madness in 1997, DiNola and his associates accepted 336 sports bets over the phone totaling $312,620. At his trial, DiNola testified that on one day he handled $80,000 in bets on 65 games. "I took all the bets and placed them with sports books in Las Vegas," he said. After deducting a commission, he wired any winnings to New York. When authorities raided his business and home in Nevada, they confiscated $286,000 in cash. DiNola eventually pleaded guilty and was sentenced to 1 1/2 to three years in prison and fined $15,000. A dozen others also pleaded guilty and were given sentences ranging from probation to jail time.

No one believes closing the Nevada loophole would end gambling on college campuses. But should you have any doubt about the connection between the fixing of college games and the legal sports books of Nevada, consider the Northwestern University men's basketball scandal.

Two Northwestern players ultimately pleaded guilty to gambling charges growing out of a point-shaving scheme to fix three basketball games in 1995. In return for payoffs from gamblers, the players agreed to hold down the score so that Northwestern would lose by more than the oddsmakers' point spread.

At the center of the scandal was Kevin Pendergast, a former Notre Dame football star who had gained fame in 1992 when he was hurriedly pressed into action during the Sugar Bowl game after the team's place kicker was injured. He kicked one field goal and an extra point at a critical time, helping the Irish to a dramatic 39-28 come-from-behind upset victory over favored Florida. Two years later, he kicked the winning field goal for Notre Dame in the Cotton Bowl in a stirring 24-21 victory over Texas A&M. He had arrived at Notre Dame on an athletic scholarship and was, in the words of a Notre Dame official, "a man of good character and strong values."

After he graduated, Pendergast's life took a different turn. Determined to become an entertainer, he formed a band. Nightlife brought him into contact with gamblers, and before long he was nearly $20,000 in debt.

To help pay his bookies, Pendergast orchestrated the Northwestern point-shaving scheme. In February 1995 he made contact with Kenneth Dion Lee, 21, a starting guard on the Northwestern men's basketball squad. A three-point specialist who was one of the team's leading scorers, Lee had his own gambling problems. At one point Northwestern had suspended him for it. He had run up big debts too.

Pendergast promised to pay Lee thousands of dollars if he could hold down the score of certain Northwestern games. Lee agreed and later recruited starting center Dewey Williams and a third player. A college friend put Pendergast in touch with an acquaintance, Brian Irving, who lived in Reno and agreed to place the bets. Over the next few weeks, Pendergast and Irving put the plan into gear. Three Northwestern games were selected: against Wisconsin on Feb. 15, Penn State on Feb. 22 and Michigan on March 1. Once the Nevada sports books set the line, Pendergast would telephone Lee with that number. Northwestern, the underdog in all three games, had to lose each by more than the spread.

While the spread varied with each game, one factor was constant--the pivotal role Nevada played in executing the scheme. After Pendergast raised money in Chicago, he wired it to Irving in Reno. For the Penn State game, Irving bet $4,400 with the sports book at the Reno Hilton. When Penn State, a 14-point favorite, won by 30 points, Irving collected the group's winnings and wired an initial $6,000 payment to Pendergast, who gave Lee $4,000 in cash as his share.

For the Michigan game, Pendergast and two friends flew to Las Vegas on March 1 and bet $20,150 with the sports book at Caesars Palace that Northwestern would lose that night by at least 251/2 points. When Pendergast phoned Lee in Ann Arbor and conveyed that number, Lee was reluctant to go ahead because "the spread was too high." But Pendergast, according to court papers, was insistent, and to sweeten the deal offered to double Lee's take to $8,000. Only then did Lee agree.

As it turned out, Lee's misgivings were well placed. Northwestern lost, but by only 17 points, and Pendergast lost all his bets.

Ultimately, Pendergast, Irving, Lee and Williams would lose even more. When the game rigging was uncovered, they were sent to prison.

Since his release, Pendergast has become an advocate for the pending legislation that would end legal betting on college sports in Nevada. He has acknowledged his guilt and cooperated with authorities, but he has also singled out Nevada as the linchpin of the scheme. He told lawmakers and others on Capitol Hill in February, "Without Nevada, without the option of betting money in Nevada, the Northwestern basketball point-shaving scandal would not have occurred."

--With reporting by Laura Karmatz and Daniel S. Levy, and with research by Joan Levinstein

With reporting by Laura Karmatz and Daniel S. Levy, and with research by Joan Levinstein