Last week, federal prosecutors in the Eastern District of New York unsealed two indictments against an NBA head coach, an NBA star, gambling insiders, and individuals allegedly involved in organized crime. The indictments allege two distinct “cheating scandals” involving sports betting and high-stakes poker games.
One of the indictments alleges an insider sports-betting scheme in which the defendants, including Miami Heat guard Terry Rozier and former Cleveland Cavaliers player Damon Jones, used confidential NBA information to win bets. The second indictment charges other NBA-related defendants, including Portland Trail Blazers coach and Hall of Famer Chauncey Billups, with a rigged-poker scheme that allegedly defrauded players in high-stakes poker games tied to La Cosa Nostra, the Sicilian Mafia.
At the core of both indictments is the federal government’s theory that cheating is the same as fraud, thus allowing them to use the federal wire-fraud statute, 18 U.S.C. § 1343, to prosecute cheating at poker and sports betting as a federal crime. In doing so, the federal government can police private organizations and matters where they otherwise would not have jurisdiction, often to the benefit of those organizations who don’t have to fund their own internal investigations.
While there is certainly dishonesty involved in both cheating and fraud, they are not the same. The defendants in this case should push back against the government’s theory of wire fraud, which represents a significant overreach beyond the statute’s traditional application.
The NBA Insider Sports-Betting Indictment
The first indictment, United States v. Earnest et al. (No. 25-CR-323), charges six defendants with conspiracy to commit wire fraud under 18 U.S.C. § 1349 and conspiracy to commit money laundering under 18 U.S.C. § 1956(h). Each charge carries potential penalties of up to twenty years’ imprisonment.
The indictment describes an alleged “widespread sports-betting and money-laundering conspiracy” centered on exploiting non-public, insider information about player injuries, team lineups, and other information to place and direct “prop bets” worth hundreds of thousands of dollars. The government alleges that the sportsbooks that took these bets were defrauded based on the materially false and misleading statements the defendants made relating to the rules and the terms of their bets.
The indictment highlights a March 2023 Charlotte Hornets game, for example, where Rozier allegedly told a friend before the game that he planned to leave the game early due to an injury. That friend and others allegedly wagered more than $200,000 betting that Rozier would underperform that game. Rozier exited after nine minutes, and the bets paid off. The government alleges that Rozier’s friend later drove to Rozier’s home to split the proceeds with him.
The indictment alleges similar conduct involving insider information relating to the Portland Trail Blazers, Orlando Magic, Los Angeles Lakers (including undisclosed medical information relating to LeBron James), and Toronto Raptors. Prosecutors allege that there was a network of bettors who concealed their use of insider information and straw accounts from the sportsbooks that took the bets.
The Rigged Poker Indictment
The government’s second indictment, United States v. Aiello et al. (No. 25-CR-314), charges Chauncey Billups, Damon Jones, and others with operating a rigged-poker enterprise. Prosecutors allege that the “cheating teams” used wireless technology embedded in shuffling machines to read players’ cards and share them among conspirators, ensuring that the other players lost the game, and their money. The indictment details how these shuffling machines were allegedly modified or paired with concealed readers, how signals were relayed to players, and how debts and protection were handled.
These high-stakes poker games were allegedly “on record” with organized-crime families, including the Bonanno, Gambino, and Genovese families. The government claims that these criminal organizations provided protection and collected proceeds from the rigged poker games. The indictment charges –fraud conspiracy, operation of an illegal gambling business, money-laundering conspiracy, and related offenses.
Does the federal wire-fraud statute under 18 U.S.C. § 1343 really apply to rigging poker games and insider sports betting?
Maybe, but the defendants in these cases should still push back on these charges. A recent Supreme Court case suggests that courts may be ready to reconsider the broad scope of the wire-fraud statute.
Over the years, with little pushback from courts, prosecutors have been using federal wire-fraud charges to prosecute individuals for conduct that is well outside the traditional concept of fraud, which covers conduct like making false statements on a loan application, online scams, and other schemes involving false statements used to induce another to pay.
At its core, a wire-fraud conspiracy conviction requires that the government prove that there was an agreement to commit wire fraud, meaning a plan to obtain money or property through materially false or deceptive means, and knowing and intentional participation by the defendant. The government does not need to show that a defendant committed an overt act in furtherance of the scheme. It only needs to show the existence of an unlawful agreement and that the defendant acted with an “intent to defraud.”
The money-laundering conspiracy counts under § 1956(h) require proof that the defendants conducted financial transactions involving proceeds of unlawful activity and that those transactions were intended to conceal or disguise the source of the funds—in this case, the alleged wire fraud. On this count, prosecutors will rely on cash movement, electronic transfers, and alleged profit-sharing between NBA insiders and bettors, but the government ultimately has to prove that there was wire fraud to succeed on the money laundering charges.
In the rigged-poker case, the charges include a wire-fraud conspiracy similar in structure to the insider betting case, as well as charges for running an illegal gambling business, money laundering, and other counts based on the use of technology to cheat at the poker games. The prosecution theory relies on allegations that the defendants illegally used technology to read cards, coordinate among the cheating players, and obtain money from the losing players.
None of this conduct resembles the conduct that is usually involved in a federal wire-fraud case, but, as we have seen in similar cases involving racehorse doping and even other instances of betting with NBA insider information, the government applies wire-fraud charges broadly.
Recently, the Supreme Court has pulled back at least a little bit from the government’s broad reading of the wire-fraud statute. In Ciminelli v. United States, a 2023 case, the Supreme Court rejected the government’s theory that a company is “defrauded” of its intangible “right to control” its assets simply because it was deprived of important information, not tangible property, that was necessary to make a business decision.
Other decisions among the circuit courts have clarified that deception and dishonesty within a transaction, alone, do not make that transaction fraudulent. Courts have drawn a line between deceit and fraud: the deceit has to go to the core of the transaction to constitute fraud.
What defenses are available to Chauncey Billups, Terry Rozier, and the other defendants in these cases?
While the federal government will likely argue in court that there is overwhelming evidence of guilt, wire-fraud prosecutions are complex, and the defendants may have strong defenses in these cases based on the factual evidence and the government’s flawed interpretation of federal fraud laws.
Some of the potential legal defenses are centered around a basic principle that “cheating” is not the same as “fraud.” To convict the defendants in this case, the government will have to identify the specific lies or omissions the defendants made, prove that they had a specific duty relating to those lies or omissions and breached that duty, and show how the alleged deception led to specific payouts.
In the case involving NBA insider information, the defense should focus on the defendants’ lack of fraudulent intent or the public nature of some of the alleged “insider information.” Just because the government or NBA say the information was confidential doesn’t mean that it was. And even if a player or team staff violate league policy or contractual obligations involving confidentiality, that alone does not necessarily mean they engaged in wire fraud.
For example, the defendants could argue that certain injury or lineup information was already publicly observable or that decisions made by players were based on legitimate considerations, not pre-arranged for betting advantage. The defense may also question whether the alleged insider information was truly material to the wagers, or whether the government is stretching routine player communications into evidence of a conspiracy.
On the “rigged poker” charges, the defense should press whether the machines were actually “rigged,” whether any given defendant knew the technology was actively being used during the game, and whether the government can link a specific person to specific cheating sessions and tie their allegedly unlawful winnings to those sessions, rather than simply try to accuse that person of cheating based on mere association with others who were cheating.
An experienced federal defense attorney should also challenge the government’s legal theory underlying the fraud charges.
The wire-fraud statute reaches only schemes to obtain money or property by material misrepresentations or omissions. It does not criminalize generalized “integrity” harms or the mere withholding of information. Likewise, insider information or straw betting is not necessarily wire fraud unless the bettor made a material misrepresentation or breached a duty to disclose that induced a payout.
In the sports-betting case, that means the government must identify a concrete lie (or a duty-based omission that rendered a statement misleading) to the sportsbooks that induced a payout—not just rule-breaking—“insider” access, or house-rule violations.
For the rigged-poker indictment, the government’s theory is closer to traditional property fraud, but only if it proves that the technology actually provided a real-time, outcome-determinative edge during specific games. The defense should demand game-by-game proof tying each defendant to particular sessions, establish that the devices functioned as claimed at those times, and show causation between the alleged rigging and the losses.
What do these indictments mean for others involved in sports betting, card games, and other gambling activities going forward?
These indictments demonstrate the federal government’s expanding use of wire-fraud statutes to police sports betting and other forms of gambling, legal or otherwise. Not content to leave leagues to police and regulate themselves, the government is treating the alleged misuse of confidential team and player information similarly to insider-trading or market-manipulation schemes, with the taxpayer paying for these complex, multi-year investigations and prosecutions.
If you are under investigation or facing federal charges for sports betting, wire fraud, or money-laundering, The Church Law Firm represents individuals in complex federal prosecutions nationwide. Our attorneys have the experience and judgment required to fight for you in high-profile cases.
