Concerns of insider trading at prediction markets are growing after former NBA players Malik Beasley and Ed Davis were indicted for a supposed nefarious sports gambling scheme.
The players are believed to have conspired and decided to have Beasley manipulate his performances in games on at least four occasions. The indictment also stated that Beasley lost millions of dollars gambling during his nine-year NBA career, during which he made $59.9 million in earnings just from contracts.
More NBA players indicted for gambling violations
Beasley, Davis, and four other individuals are accused of conspiracy to commit wire fraud, bribery in sporting contests, conspiracy to commit honest services fraud, and conspiracy to commit money laundering, a press release from the Justice Department read.
An exchange of messages included in the indictment showed that Davis — who teamed up with Beasley on the Minnesota Timberwolves during the 2020-21 season — asked Beasley if he had the mobile app Snapchat. When Beasley asked why, Davis told him it was “Better to talk on there. We can make some good money.”
The press release detailed at least three instances in which Beasley shared confidential information with Davis and the other co-conspirators, identified as William Brown, Robert Gorodetsky, Ernesto Plascencia and current NBA player agent Paolo Zamorano. Beasley would also share if he intended to go over or under his prop line.
What happened?
The first documented instance of Beasley’s manipulation came against the Cleveland Cavaliers on Jan. 26, 2024. His rebounding line was set at 3.5, and despite grabbing three boards in the first half, he finished the game with only three.
The next event came against the Charlotte Hornets on Feb. 27, 2024. Beasley told bettors that he was going to go under in points and over in rebounds, and he ultimately finished with six points and four rebounds.
Beasley allegedly struck for a third time against the Los Angeles Clippers on March 10, 2024. He allegedly said that he would go over on his rebounding total before he finished the game with four boards.
Investigators included in the indictment examples of bettors risking more than $75,000 in total wagers and winning at least $121,000 on the back of Beasley’s supposed involvement. Beasley was also said to have received bribes that he used to pay off debts he owed to Davis.
“Only way you can beat Vegas is sports betting,” Davis texted Beasley in December 2023, according to the indictment.
How are prediction markets involved?
All of the incidents described are said to have occurred only at sportsbooks, not at prediction markets offered by platforms such as Kalshi, Robinhood, and others.
Despite that, Polymarket posted on its Polymarket Hoops X (Twitter) page that one of the co-defendants, Plascencia, was a close friend of Golden State Warriors star Jimmy Butler. The post also claimed that Butler posted "information" on X last season, “hinting at his whereabouts, which could have affected prediction markets.”
Butler never took the court as a teammate of Beasley or Davis. Both arrived in Minnesota ahead of the 2019-20 season, while Butler was traded to the Philadelphia 76ers in the middle of the campaign immediately before.
It is unclear what information Polymarket Hoops was referencing in its post about potential movement in prediction markets.
The Trade Handle Prediction Markets Take
Butler’s X profile did not contain anything that would have obviously affected prediction markets within the last year. However, the concerns about insider trading are well-based, given the growing number of scandals around the world of sports. Fortunately, Polymarket and other top prediction market operators have beefed up their internal security to help identify and prevent attempts at suspicious or insider trading.