Jontay Porter will never play another game in the NBA. The now former player disclosed information to those looking to gain an unfair advantage in the sports betting world. His actions in many ways resembled insider trading, which consists of using non-public information to distort markets.
In addition to direct bets he made on NBA games—though none that he played in himself—Porter altered his behavior in a game in an effort to help an acquaintance win a bet. For these violations, the now former player received a lifetime ban.
What Did Jontay Porter Do?
For a 24-year old, Jontay Porter had taken a long and winding road to the NBA. The younger brother of Denver Nuggets superstar Michael Porter, Jr., Jontay had a number of knee surgeries and setbacks as he battled to reach the highest basketball league in the world.
Not content with his salary (roughly $400,000 for the current season), it appears as though Porter sought to augment his income by betting on basketball games. In addition to betting on the outcomes of games, those seeking to wager on basketball can also bet what are known as prop bets. Prop bets, also known as proposition bets, are wagers on aspects of the game other than the winner.
These can consist of who will make the first shot of the game, if a certain player will score more or less than a predefined amount, or even the length of the national anthem. In the case of Porter, he shared information with an acquaintance that he would play less than a certain amount of minutes in a particular game. Porter entered the game, and then feigning illness, was taken out. (The large sum of money bet on a fairly marginal player was flagged as suspicious, and the bet was not paid out.)
The integrity of the game is the currency of the NBA and every other professional sporting league, and the multibillion dollar industry sought to send a powerful message that it has zero tolerance for this type of behavior. Jontay Porter paid a heavy price for his indiscretion.
What Is Insider Trading?
Insider trading is the using of private, material information to inform a decision related to the buying or selling of publicly traded securities.
It is usually knowledge gained by those with a connection to a company, and who execute a trade before this information becomes public. The information can be about something positive or negative.
This can consist of a company that is about to make an acquisition, launch a new product, or announce a new drug treatment was cleared by a regulatory body. It could also be negative information, such as a bad quarterly numbers, the failure of a new venture, or a rumored merger not coming to pass.
If an individual becomes aware of this information and then uses it to either increase or decrease their position in a particular company by buying or selling its stock (before this knowledge becomes public), this would be considered insider trading.
Why Is Insider Trading Illegal?
Insider trading can distort the market, plain and simple. The fair and unencumbered exchange of securities relies upon the idea that everyone has an equal chance to profit. Insider trading destroys this belief in the fairness of the markets.
Without this belief, individuals and institutions would cease participating in the market. Eventually, this would decrease liquidity and make the stock markets ineffective suppliers of funds for companies seeking to raise capital.
For this reason, regulators seek to identify and punish instances of insider trading. They are on the lookout for large trades that seem to anticipate major developments, and investigate these instances accordingly to understand if insider trading occured.
Depending on the case, punishment for insider trading can include time in jail and monetary fines, in addition to the loss of professional licenses and reputation.
Conclusion: Keeping a Level Playing Field
The importance of is keeping competition free and fair is pretty straightforward. Faith in the integrity of markets, games, and any other type of multiparty interaction is vital for participants.
On the flip side, if a competition is perceived as rigged, very few will elect to take part in it. The NBA viewed the Jontay Porter saga as a non-negotiable transgression that needed to be punished severely to prevent it from repeating.
In a similar vein, insider trading distorts markets and can destroy faith in the system of buying and selling of securities. A level playing field is critical for the operation of markets.
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