By Katie Ann McCarver (contact)

Monday, June 5, 2023 | 2 a.m. | Monday, June 5, 2023 | 2 a.m.

Since U.S. Integrity opened its doors about five years ago, the sports-betting compliance and fraud prevention firm has evolved from catching instances of illegal sports wagering after they happen, to catching them in real time, said Matthew Holt, president and co-founder of the Henderson-based company.

Earlier this year, for example, U.S. Integrity received an alert from an Ohio sportsbook operator about suspicious activity related to a University of Alabama baseball game. The company was able to share that information with regulators before the game even started that night, wagering was suspended and officials have since begun investigating the incident, Holt said.

“And that’s the whole point of real-time integrity monitoring, is not to catch or bust people after the fact — but to prevent that malicious, nefarious activity before it even starts,” he said. “Before sportsbooks pay out the bets, let’s stop the bets. Let’s get the bets voided. So now, we’re not chasing down dollars, criminal infractions or all that stuff, later. We’re stopping it at the source.”

The company is essentially an alarm bell for the sports-wagering ecosystem, said Scott Sadin, chief operating officer and co-founder. Alerts can come about in three ways, he said — through algorithms that identify suspicious activity, directly from a concerned operator or directly from a governing body, other associations or a regulator.

“What we do is we ingest a variety of different datasets — both from sportsbook operators, from data providers and from publicly available sources — that will inform our system with a whole host of different information, that we then analyze, synthesize and put into different reporting and insights,” Sadin said.

In the Alabama case, an operator identified abnormal activity and sent the information to U.S. Integrity, Holt said. The company then alerted all other regulated, licensed sportsbook operators in North America, and made a comprehensive report of what jurisdictions may have seen the same suspicious activity.

That report was then sent to investigative agencies, he said.

“So our job is to collect all of the information — what might have happened, who was affected and where — so that they can then go gather evidence, and proceed with any criminal or regulatory violation investigations that they have,” Holt said.

The two most frequent infractions the company has seen recently are the misuse of insider information and prohibited bettor activity — like, for example, a player betting on their own sport or league, Holt said.

The latter is evident in the Alabama case — an ongoing investigation that reportedly led to the firing of the university’s baseball coach — as well as investigations that began last month at the University of Iowa and Iowa State University, where multiple NCAA athletes are suspected of violating gambling rules.

“People recognize that it’s not enough to, necessarily, just say what you can and can’t do anymore,” he said. “There needs to be a nuanced curriculum that outlines case studies, bad actor profiles, what you should be aware of (and) circumstances you should stay away from.”

He noted that some case studies conducted by U.S. Integrity in the past five years show people who fail to comply with regulations as doing so unintentionally, and without malicious intent.

“And that’s an important nuance, because that’s exactly what education is for,” Sadin said. “To show you that, even though you’re acting normally and not doing anything nefarious, necessarily, your decisions do have impacts now in this regulated market.”

When, where and how often noncompliance occurs in sports betting is a “numbers game,” Holt said, and varies depending on a range of factors. He said U.S. Integrity sees the most issues with tennis — where players make little money and betting opportunities abound — and esports — due to the young age of participants and the ease of interference through technology.

In many other sports — like football, basketball, hockey and baseball — about one of every 900 events has an issue, he said. College sports often see more transgressions than their professional counterparts, which Holt attributed to the difference in their sizes. There are dozens more basketball teams in the NCAA than the NBA, he said.

“There’s a different set of markets open on all these events and any of them can have potential problems,” Holt said. “So it really is a 24-hour day, 365 days a year. You never know when they’re going to happen. … I think in February we had three alerts and (we) thought, ‘Wow, what a slow month,’ and then in March there was like 27 — and that’s how it goes sometimes.”

Since it was founded in 2018, U.S. Integrity has grown to work with 90 sportsbook operators and around 60 sports properties across North America, Sadin said. Those partnerships allow the company to understand certain trends, problems that may need solving and so on, he said.

A primary reason there’s never been a practical solution to the problem of prohibited bettor activity is because it requires strong engagement from sportsbook operators, sports properties and regulators, Sadin said. U.S. Integrity has leveraged its access to each stakeholder, however, in order to create a new solution — a beta product called “ProhiBet.”

Monitoring sports betting integrity is extremely complex, Sadin said.

“It’s about setting up a paradigm or some kind of structure whereby you can have an engaged stakeholder base, cooperating and working with one another to define protocols — to define policy, to define best practices — to not just combat match fixing, but to identify circumstances of misuse of insider information, or suspicious wagering, or game manipulation, or illegal wagering, or prohibited wagering or things of that nature,” he said.

Work like that done by U.S. Integrity is important because sports leagues, fans and other stakeholders in the U.S. would never be satisfied if fixed matches and other sports betting issues prevailed, the way they do in other gambling jurisdictions and countries, Holt said.

“We’re holding our professional and collegiate sports in North America to a higher standard,” he said. “We already have an example of what happens in other jurisdictions when they don’t have as stringent integrity protocols, and what happens to the highest level professional sports there.”

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