This story was first published by The Assembly, a statewide digital magazine in North Carolina.

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UNC System President Bill Friday scaled back basketball after players shaved points. Now a gambling executive sits on UNC Chapel Hill’s board and the state is all in on sports betting.

By Steve Riley and John Drescher

March 25, 2024 – Dozens of fans sat in oversized brick-red chairs, as if relaxing were an option considering the money riding on the college basketball games playing on the 90-foot LED screen.

On the massive central screen, Jamal Shead, a guard for No. 2-ranked Houston, rose to fire a winning three-pointer at the buzzer, enough to cover the 2.5-point spread against No. 11 Baylor. The bettors roared, at least three of them leaving their seats to cheer. Or was the shot late?

It was. But Houston won by six in overtime. If the fans bet on Houston, they covered the spread and won.

The Caesars Sportsbook at Harrah’s Cherokee Casino on this late-February Saturday was one of just three places in North Carolina where fans could legally place sports bets. The action was just getting started that day, with Duke-Wake Forest and UNC-Virginia to come, along with dozens of others.

And gamblers could bet on more than just the outcome of the games: What’s the method of the first basket? How many points for Wake’s Hunter Sallis or Duke’s Kyle Filipowski? How many rebounds for UNC’s Armando Bacot? Who’ll lead at halftime? Will there be overtime? (The rules for the casino’s sportsbook sprawl across more than 100 pages.)

At the time, those types of bets—and more—could be made much more easily in scores of other states, using the apps of major gambling houses. No need to find a casino. Just fire up your smartphone, tablet, or computer.

This convenience, part of a national explosion of online sports betting, came to North Carolina on March 11, just in time for the men’s Atlantic Coast Conference Tournament.

Legislation approved last year and signed by Gov. Roy Cooper allows people 21 or older to bet on professional, college, and amateur sports, with the state taking a share of the proceeds—projected to be as much as $100 million a year once things get fully cranked up.

Betting is now available by digital device or in person near the arenas of professional teams.

That development has been cheered by sports fans who like a little action on the side, but it causes deep worry for some in a state that played host to a prominent scandal when gamblers got to N.C. State and UNC basketball players during the 1960-’61 season. The point-shaving scandal marked the sport’s darkest moment in this hoops-crazy state, where college basketball has been a passion since the 1950s.

The outlook is now far different in the halls of power. The betting legislation was pushed by Republicans but approved in bipartisan votes. And it has a Democratic cheerleader at the Executive Mansion.

Late last year, worried that the state Lottery Commission was moving too slowly to implement the new gambling law, Cooper called a meeting to crack the whip. He wanted it done in time for March Madness, he told the Ovies & Giglio podcast.

“You’ve gotta make sure the rules are right,” Cooper said. “I had them all in the room over there the other day, pushing them, saying we’ve got to get this done as quickly as we can.”

Cooper, a big sports fan, said this month that he’d already placed a bet on the Carolina Hurricanes to win the Stanley Cup. He said legalized sports gambling would boost the state’s sports industry and economy.

So far, the lottery commission has approved licenses for eight gaming companies, including the Tribal Casino Gaming Enterprise, which means the Cherokee’s gaming operations will expand beyond its two North Carolina casinos.

State Rep. Pricey Harrison, a Greensboro Democrat, fought the legislation and unsuccessfully tried to get college and amateur sports excluded. Virginia, for example, doesn’t allow bets on games involving in-state college teams.

“We thought we might end up with some scandals,” Harrison told The Assembly. “There was pretty good evidence that this was a horrible idea.”

An Early Scandal

On a Saturday morning in May 1961, Bill Friday, president of what’s now called the UNC System, received a call at home from Lester Chalmers, the Wake County prosecutor. “I need to talk with you,” Chalmers said. They agreed to meet that day at Friday’s office on Franklin Street in Chapel Hill.

Chalmers told Friday that gamblers paid N.C. State players to shave points at a Dixie Classic game the prior December against Georgia Tech. Historian William Link recounted the meeting between Friday and Chalmers in his book, William Friday: Power, Purpose, and American Higher Education.

State was favored by five points and won by six. The gamblers, who had paid the State players to win by less than five points, wanted their money back. As the State players left Reynolds Coliseum, the gamblers pressed their guns into the players’ midsections. They were demanding, not asking. The players were uninjured, but a message had been sent.

Three State players—two starters, including the team captain—were implicated. Friday later learned that the two starters also had been paid to shave points against Duke and UNC. Their erratic play made their coach, Everett Case, suspicious; he asked the State Bureau of Investigation to warn his players of the dangers of sports gambling, but it was too late.

During that same 1960-’61 season, two UNC players were suspected of ties to gamblers. Across the country, as many as 50 players were implicated. For Friday, who was already wary of sports having too much influence on college campuses, the incident outside Reynolds Coliseum was the last straw. The nation, he said, was waiting to see how North Carolina’s leaders responded.

Friday moved decisively. He limited N.C. State and UNC to two out-of-state basketball scholarships for two years. The Wolfpack and the Tar Heels had been playing 25 regular-season games as permitted by the Atlantic Coast Conference, but Friday scaled that back to 17 games in 1961-’62 (including the ACC tournament) and 21 games the following season.

His boldest move was to kill the 12-year-old Dixie Classic, in which North Carolina’s Big Four teams played four out-of-state teams in Raleigh. The annual three-day tournament after Christmas was the most popular holiday tournament in the country. N.C. State hosted it and derived nearly half of its annual basketball budget from the proceeds. But Friday ended it—permanently.

“It was a skillful performance by Friday,” Link wrote. “He had struck a strong blow for academic integrity and prodded along efforts at both State and Carolina to clean up their athletic programs.”

Friday’s decisions were unpopular with fans and politicians; some state lawmakers unsuccessfully tried to pass a law restarting the Dixie Classic. His decision to end the tournament “nearly came to ending me, too,” he once said.

Friday, who died in 2012, was a sports fan and former baseball catcher who helped create the ACC as a university administrator in the 1950s. But he never doubted the aggressive steps he took to rein in gambling on college sports.

In a 2001 interview, Friday said he had a “moral duty” to protect the athletes at North Carolina’s state universities from the influence of gamblers. “You never turn your back on the threat of gambling,” he said.

Gambling’s Massive Growth

The sports gambling industry has expanded rapidly since the U.S. Supreme Court in 2018 struck down the federal law that prohibited states from allowing gambling on games. State after state, hungry for revenue that didn’t come from new taxes, signed on to invite the gambling companies to operate online inside their borders.

Sports gambling is now legal in 38 states plus the District of Columbia, according to the American Gaming Association, reflecting a broad acceptance of gambling across the country. Professional sports have embraced the link; the National Football League, which for decades barred players from participating in events at casinos, now has a franchise in Las Vegas and staged the Super Bowl there in February.

Where gambling comes, money follows. Gamblers in the U.S. placed $120 billion in bets on sporting events in 2023, according to the AGA, with the gambling companies retaining nearly $11 billion of that in gross revenue. That’s essentially their profit before other expenses, such as advertising and taxes.

Most states tax a share of that gross revenue. In North Carolina, for example, the General Assembly’s staff estimates that by the third year of operation, sports wagers in the state would total $6.6 billion. The companies would pay out 91 percent of that in winnings, leaving around $600 million subject to the state’s tax of 18 percent. That would generate state revenue of around $100 million for the fiscal year that starts in 2027.

“There was pretty good evidence that this was a horrible idea.”

State Rep. Pricey Harrison

Chris McLaughlin, who teaches local government tax and finance at the UNC-Chapel Hill School of Government, says the numbers look reasonable. But he cautions that as more states approve sports gambling, the numbers could flatten out as fewer people have to travel to neighboring states to place bets.

“Viewing this as the never-ending golden goose is fanciful,” McLaughlin said. “We’re in competition with neighboring states. Does the market flatten out or decrease?”

North Carolina’s tax is similar to how its neighbors in Tennessee and Virginia started out, although Tennessee last year moved to tax the total amount bet at nearly 2 percent, according to the Tennessee Sports Wagering Council.

Some states have chosen to be more aggressive at taxing gross revenue, with New York imposing a 51 percent tax. Last year, New York state took in $862 million, according to the office of Gov. Kathy Hochul.

The gaming companies have a strategy for growing revenue: advertising. It’s rare to watch a sporting event without seeing ads for DraftKings or FanDuel, both multibillion-dollar operators of online sports gambling. And the ads have started to flow on TV, newspaper websites, and social media featuring offers of hundreds of dollars in free bets from the gambling companies.

A FanDuel ad that aired during ACC basketball games in February featured former UNC and NBA star Kenny Smith and former NFL star Rob Gronkowski.

“FanDuel in North Carolina?” Smith says. “The fun is about to begin, everybody.”

Gambling won’t be fun for all bettors. Some will get addicted.

The state Lottery Commission, which is responsible for licensing the gaming operators and for regulating sports betting, recently adopted a self-exclusion policy for would-be gamblers, as the law requires. That means that people who want to take a break from gambling but who may not trust themselves to stop can register to be prohibited from the sites.

Van Denton, communications director for the commission, said in a statement that the program “is an important part of any gaming operator’s responsible gaming program. It is one way to minimize the risk of harm that could come from sports betting or any other type of gaming.”

‘We Know It’s Happening’

When state Rep. Jason Saine gathered with his buddies near Lake Norman to watch sports, he noticed several of them paying unusual attention to their phones. They were placing bets with offshore gambling sites.

He figured there was a way to capture revenue legally, and he was in a position to try to get it done. Saine, a Republican who represents Lincoln County, serves as senior chair of the House Appropriations Committee. He sponsored a bill to legalize sports gambling, knowing he was in for a fight.

He got one. The first year, 2022, a move to exclude college sports succeeded in the House, which then passed the bill 51-50 on its first test. But before a final vote, House leaders sent the bill to the Rules Committee, where it was left to die.

“Viewing this as the never-ending golden goose is fanciful. We’re in competition with neighboring states.”

Chris McLaughlin, UNC-Chapel Hill School of Government

That bill had promised money to athletic departments at UNC’s six historically minority universities plus UNC-Asheville: $300,000 each, plus 10 percent of what was left after other required payments.

In 2023, proponents upped the ante: $300,000 plus 20 percent to each of 13 athletics departments—all UNC System schools that play sports except N.C. State and UNC-Chapel Hill. Payments could reach $1.7 million a year per school.

This time, attempts to exclude betting on college sports failed and the bill passed by margins of more than 20 votes in both chambers.

In North Carolina, “college basketball is one of the driving obsessions from school kids from kindergarten on,” Saine said. “We’ve got a lot of sports fans, and these are the sports they’re interested in.”

He says legalized betting will make it possible to track who’s betting and to detect any unusual patterns.

“This makes [a scandal] less likely,” Saine told The Assembly. “There’s too much at risk to do so. I think it brings integrity to the sport rather than the counter to that.”

Still, as betting has expanded, troubles have started to surface.

Former Louisiana State University wide receiver Kayshon Boutte was charged in January with making 8,900 illegal bets (he was under 21), including six wagers on LSU football games, the Associated Press reported. On one of the bets, he wagered that he would score a touchdown. (He didn’t.) College athletes are forbidden from betting on most sports, amateur or professional.

Earlier this month, a gambling watchdog company alerted casinos about unusual wagering on a Temple men’s basketball game, Sports Illustrated reported. Temple lost by 28 points, the second straight game when the Owls did not come close to covering the spread.

The company, U.S. Integrity, is employed by conferences to monitor gambling activity. U.S. Integrity last year detected a baseball betting scandal involving Alabama baseball coach Brad Bohannon, who was fired after providing inside information to a gambler that one of his pitchers would not make a scheduled start, AP reported.

The NCAA, in announcing sanctions against Bohannon and Alabama, released a redacted text message from Bohannon to the gambler: “[Student-athlete] is out for sure.”

The NCAA said the gambler attempted to place a $100,000 bet, but was limited to $15,000 by a sportsbook because of suspicious activity.

Ads for BetMGM and Caesars Sportsbook accompanied an article about Bohannon’s case in the Tuscaloosa News, read in late February on a cell phone. Gannett, which owns the Tuscaloosa paper, has a promotional deal with BetMGM, which sponsors sports agate pages in Gannett’s newspapers.

Gannett owns six newspapers in North Carolina. Company officials did not respond to requests for comment.

University athletic departments say they have educated their athletes for years about the perils of sports gambling. Robbi Pickeral Evans, senior associate athletic director at UNC-Chapel Hill, said the school stepped that up earlier this year, hiring EPIC Global Solutions to provide in-person education to players and staff. The company was suggested by the NCAA for its work guarding against problems with sports wagering.

Denton, the lottery spokesman, said that legalizing and regulating sports betting will provide far greater monitoring of the wagers than before.

“The Commission’s goal is to create an environment where corruption of events is both less likely to happen and more likely to be discovered in the unlikely event that it does happen,” he wrote in a statement.

The NCAA, which regulates college sports, has asked states to block betting on specific players, but is likely fighting a losing battle.

“You literally could have certain situations where somebody just says: ‘Look, you’re my friend. We’ve been friends for a long time. I lost $500 last week because you didn’t play well,’” NCAA President Charlie Baker told The Washington Post. “‘And I still love you, but I got to make rent next week, and all I need you to do is miss your first two free throws…

“I just think that is happening right now, and it’s just going to happen a lot more.”

A DraftKing on UNC’s Board

Friday was 40 years old when he abolished the Dixie Classic. That decision helped establish him as one of the country’s leading voices against the dangers of big-time college sports, a role he played until he retired from the UNC System presidency in 1986 and for years after that.

He and the Rev. Theodore Hesburgh, former Notre Dame president, were the first co-chairmen of the Knight Foundation Commission on Intercollegiate Athletics in 1988. The commission pushed for rigorous academic standards for athletes and urged university presidents to get control of their sports programs. Friday served in that post till 2005.

Now gambling proponents are insiders at UNC-Chapel Hill. Malcolm Turner, vice chair of the campus Board of Trustees, is head of strategy and corporate development for DraftKings, which operates in North Carolina. Turner was a Morehead-Cain scholar at UNC and a former director of athletics at Vanderbilt.

His appointment drew criticism from Art Pope, a member of the UNC System Board of Governors, the Raleigh News & Observer reported at the time.

“The fact of the matter is that DraftKings is promoting sports betting on college sports, and I just do not think that’s appropriate,” Pope said in April 2021. He advocated for keeping “an absolute arms-length’s distance between online gambling in college sports and our college sports.”

Pope recently told The Assembly he wasn’t questioning Turner’s qualifications or ethics. “I just thought, knowing that legislation was pending, and knowing it would involve betting on UNC games, it would be better not to have that conflict,” he said.

The Board of Governors approved Turner’s appointment, although Pope and five others voted “no.” Turner did not respond to requests to discuss his work for DraftKings, the new law, and his board post.

Link, the historian, told The Assembly that Friday “would be appalled” that a gambling executive sits on UNC-Chapel Hill’s board and “even more appalled” that gambling on college sports is legal in North Carolina.

“His greatest fear was about where the commercialization of college athletics would lead, perhaps in the hands of gamblers,” he said.

Art Padilla, a former UNC System administrator, worked for Friday in the 1970s and ‘80s. Padilla, whose office was directly above Friday’s, talked with him often about the growing influence of college sports. “There’s just too much money. It will blow up,” Friday used to tell him.

Just as one U.S. Supreme Court decision opened the way for legalized nationwide sports gambling, another in 2021 allowed college athletes to be paid for endorsements and signing autographs.

“Everything that used to be illegal is now permissible,” Padilla mused.

He said Friday wanted to preserve the universities’ independence and protect them from outside interference; to do that, he believed the universities needed to police themselves, as Friday did after the betting scandal.

“He saw [gambling] as a corrupting influence on the university,” Padilla said. With billions of dollars being spent on college sports today, including through legal gambling, Padilla said, “I’m glad he’s not around to see this.”

Correction: This article originally said the UNC System has six HBCUs. It has six historically minority universities: five HBCUs and UNC-Pembroke, which was founded to educate Native Americans.