Sports betting scandals: What The UFC can teach MLB and the NBA

Ari Emanuel and Mark Shapiro saved UFC from permanent damage over James Krause.

It’s Opening Day & Weekend in Major League Baseball. The NBA Playoffs are soon upon us. What used to be as American as apple pie now looks more like the kind of scandals I used to cover in Japanese fight sports.

Shohei Ohtani and his mystery interpreter. Jontay Porter and curious prop bets.

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The harsh truth about sports gambling scandals in 2024 is that the public largely doesn’t care. They only care if it means the athlete isn’t active, thus hurting their fantasy team.

As someone who intensely watched Barry Bonds in the Bay Area during his decade-long run of batting excellence, the disconnect between the media and government versus fans over performance-enhancing drugs was as wide as the Pacific Ocean. The non-stop hectoring and lecturing about why Bonds should never be in the Hall of Fame was as bad as the pearl-clutching about Pete Rose. At least you could argue that taking PEDs was an attempt to help your team win.

Fast-forward to 2024. We have a whole new generation of sports fans wondering why the hell Pete Rose and Barry Bonds aren’t in the Hall of Fame. The idea of gambling or steroids in sports is largely irrelevant to most fans. Put on a show and entertain me. Make me money and I don’t care what you are ingesting or gambling on.

That’s the attitude that major sports leagues in America are struggling to navigate. It couldn’t come at a worse time for Major League Baseball or the National Basketball Association, both stuck with offices and leaders who are perceived to be tone-deaf as to what their customers want.

Compare and contrast Rob Manfred & Adam Silver to Ari Emanuel & Mark Shapiro.

As we watch different factions in government, the press, and sports leagues try to digest various gambling scandals, this is the perfect time to illustrate how UFC deftly squashed allegations of a potentially huge gambling scandal that could have severely damaged Endeavor. The coast is not totally clear… yet.

How is it that Ari Emanuel was able to put out a fire that could have cost investors at Silver Lake billions of dollars?

The lessons other sports offices can learn from UFC’s handling of the James Krause scandal are extremely timely and applicable in today’s new world of gambling.

Lesson one - Sports gambling requires ruthless, aggressive, and decisive political leadership.

Ari Emanuel’s cell phone is the political equivalent of the Chief-of-Staff’s phone in The White House. He can call whomever he wants to answer questions and fix problems.

Observe how UFC navigated the initial aftermath of the James Krause gambling scandal. After announcing his retirement from MMA as an active fighter, Mr. Krause went on Ariel Helwani’s interview show in August of 2022 to explain how he was making more money on his Discord with gambling picks than he ever made in other aspects of his fighting career.

It was an incredibly brazen admission. In any other sporting venue, this would have sounded alarm bells. In combat sports, gambling is so interwoven in the DNA of daily business that people initially slept on it.

In response to obvious conflicts of interest, UFC management amended contracts to include a clause stating that participants could not bet on UFC fights.

This timeline from MMA Junkie is incredibly helpful.

A couple of weeks after that contractual amendment, Mr. Krause was in the corner of fighter Darrick Minner for a Fight Night match-up. Mr. Minner lost the contest. Suspicious movement in the betting lines on the fight led to investigations.

When the scandal hit, it was Dana White who publicly — and foolishly — commented that he didn’t think the James Krause situation was a major UFC scandal.

"There's absolutely zero proof that anybody that was involved bet on it. There was some, you know, there were some signs out there that something was going... There's absolutely no proof that anybody did anything wrong. Hopefully by seeing this again and this investigation, it deters people from doing it, from betting on it.

“The bottom line is this - you're never going to be able to bet enough money to win. It's not worth the risk. The risk is not worth the reward.“

White was asked why he thought the betting line moved so much in the fight.

"Stuff happens all the time. It happens all the time. I think it was being made a bigger deal than it actually was."

It was the wrong response at the wrong time. New Jersey took notice. Then Ontario province. Then Alberta. Suddenly, bets on UFC fights were being suspended from North American locations. 18 months after UFC signed a substantial deal with DraftKings, things went south in a hurry.

David Purdum at ESPN reported on accusations that Mr. Krause was working as an “agent” for an offshore gambling sportsbook:

It didn’t take long for UFC to cut ties with James Krause and fighters associated with him. Dissolution was swift. A week after ties were severed, Dana White completely changed his public tone on the situation and ESPN claimed the FBI was investigating.

Mr. White’s initial instincts were terrible. The subsequent reaction from UFC higher-ups was not. They lanced the boil, signed an agreement with US Integrity, and got reinstated in Ontario within 60 days. The Nevada Athletic Commission put top James Krause fighter Jeff Molina on ice.

There were no fighter associations or unions to deal with. Ari Emanuel’s organization wasted no time in making decisions to save their bottom line. It’s a similar kind of swiftness we saw when Vince McMahon resigned as Chairman of WWE a couple of months ago. Things happen slowly and then they happen very, very fast.

The combination of a swift clean-up operation paired with strong media relations enabled UFC to take control of a story that would have enveloped a sport like Major League Baseball. Nobody fears Rob Manfred, the man who can’t even put a positive spin on an Oakland A’s relocation to Las Vegas. The reverse applies to Ari Emanuel.

Look at how small the damage was to UFC’s brand after the James Krause gambling scandal hit the public. They’re generating over a billion dollars a year. The ultimate chef’s kiss: guess who is now an integral part of UFC’s televised fight team?

Hint: her name is the first thing that pops up on Youtube when you type in the name “James Krause.”

Lesson two: It’s easier to put out a fire when the State is your co-promoter and business partner.

One major component to UFC’s success in the Zuffa era was the marriage of “the State” and the promotion. UFC is Las Vegas. UFC is gambling. UFC is in the world of casinos, of sports books. It’s plugged into the Nevada Gaming Commission. It’s plugged into the State Athletic Commission and the Attorney General’s office.

The Athletic Commission serves to protect the interests of the promoters and the casinos. If there is anything unhelpful, you can believe that it will be smothered... with a pillow.