I still have 2 big questions about the Shohei Ohtani case

For instance, did Ippei Mizuhara lose $41 million or $16 million?

In certain ways, the 37-page criminal complaint filed by federal prosecutors last week against Ippei Mizuhara, Shohei Ohtani’s former interpreter, is a best-case scenario for Major League Baseball.

Ohtani, who is identified as “Victim A” throughout the complaint, isn’t accused of having any knowledge of Mizuhara’s activities, which involved making more than $300 million worth of sports bets through an illegal bookmaker. Those bets were bankrolled by $16 million that Mizuhara allegedly stole from Ohtani by essentially hijacking access to one of his bank accounts and even impersonating Ohtani, the complaint says. 

Meanwhile, MLB’s partners in the legal betting industry didn’t really play any role in the scandal. That doesn't mean people won’t try to make the story about DraftKings and FanDuel, which are in the midst of something of a backlash. Mizuhara did have accounts with BetMGM, DraftKings and FanDuel, the complaint says. But the wagers the government is concerned about were placed with an illegal bookmaker that was already under investigation by the Department of Homeland Security. (Sports betting is illegal in California.) 

And Mizuhara isn’t accused of betting on baseball, which would be a black eye for the league given that he was formerly employed by the Dodgers and Angels.

I assume that MLB’s worst-case scenario — that Ohtani himself was betting — is pretty much off the table. However, I’m not quite ready to take a victory lap around Dodger Stadium. In reading through the government’s report, I have two big questions:

• First, now that the amount allegedly stolen is $16 million and not $4.5 million as originally reported, is it really plausible that Ohtani wasn’t aware of this? Ohtani makes a lot of money, but this reflects a sizable share of his after-tax income in the years that Mizuhara was betting with Ohtani’s paychecks.

• And second, what explains the gap between the $16 million that Mizuhara allegedly stole from Ohtani and a much larger number — $41 million in net losses — that the government reports he lost to the bookmaker?

How could Ohtani not notice $16 million go missing?

If you take the government’s claims at face value, then Ohtani is a victim, betrayed by his business partner and best friend. But the case also reflects an incredible lack of judgment by Ohtani and others in his orbit. In particular, it reflects placing too much trust in a single individual, Mizuhara — a level of trust that I’m not sure if it’s healthy to have in anyone except perhaps spouses and other immediate family members (and maybe not even them).

When I last wrote about Ohtani, I encouraged people to keep an open mind about the case. There were basically three explanations: 1) That Mizuhara stole from Ohtani, as the government is now alleging; 2) That Ohtani felt bad for Mizuhara and loaned him the money to cover his debts, as Mizuhara originally claimed; 3) That Ohtani himself was betting and Mizuhara was just a conduit.

The conventional wisdom had initially settled on 2) being the most likely explanation. I pointed out that people were probably underrating the chance that a busy rich young guy like Ohtani could be sloppy with his financial affairs, while overrating how difficult it is to make wire transfers or otherwise move large sums of money if you have access to someone else’s bank account. Thus, Possibility 1 was more plausible than many people were assuming. (To be fair, I also thought Possibility 3 — Ohtani betting himself — was more likely than people assumed. If you’re allowed three guesses, it’s not that hard to get one of them right.)

However, when I wrote that, I was going off of initial reports that $4.5 million had been stolen from Ohtani. To someone as rich as Ohtani, $4.5 million is something of a rounding error. You might not notice it, especially if it goes missing in chunks of say $50K at a time and Mizuhara has some good excuses to explain what it’s paying for.

But now the complaint alleges that Mizuhara stole $16 million from Ohtani between November 2021 and January 2024. And that is definitely not a rounding error.

Ohtani only began making a large (by MLB standards) annual salary in 2023, when his pay shot up from $5.5 million to $30 million. Now, he was also making significant money from endorsements: $6 million in 2021, $20 million in 2022, and a reported $35 million in 2023. However, Ohtani works in California, an extremely high-tax jurisdiction. He is also losing some of his income — I’m just going to assume 10 percent — to agent fees. So take his gross pay, deduct 10 percent for agent and legal fees, and then assume a 50 percent effective tax rate on the income he retains. So Ohtani’s take-home pay is something like this:

That’s a lot of money for a normal person. But if Ohtani’s take-home earnings were around $45 million for these three years combined — before any other expenses —having $16 million stolen is obviously going to make a real dent. That was particularly true before Ohtani’s income shot up in 2023 — although to be fair, Mizuhara’s level of gambling degeneracy gradually ramped up in the government’s report in somewhat tragicomic form¹, matching the increase in Ohtani’s income. 

Is it believable that much money went missing without Ohtani realizing it? I ... guess so? It doesn’t seem very believable from first principles. However, the government has a lot of receipts: Mizuhara’s phone records, Ohtani’s phone records, the bookie’s phone records, bank records, and so on. The complaint says that Ohtani never accessed the relevant bank account from his mobile phone. It also says Ohtani was extremely willing to take Mizuhara at his word:

Because Victim A received income from a range of both foreign and domestic sources, Victim A generally would not ask MIZUHARA to inquire about specific accounts, and instead, would ask MIZUHARA to inquire with the above-identified financial professionals for an overall picture of his income or investment profile. 

So when Ohtani wanted a financial debrief, he asked Mizuhara to check in with his financial advisors. But meanwhile, Mizuhara was telling the advisors not to ask too many questions — that “[Ohtani] wanted the x5848 Account kept private from everyone”. This scheme is potentially foiled if the advisors and Ohtani have a direct conversation without Mizuhara’s presence at any point. But Mizuhara accompanied Ohtani to all of his meetings, citing his need for a translator:  

MIZUHARA always accompanied Victim A to meetings with Agent 1. MIZUHARA also accompanied Victim A to meetings with Victim A’s accountants and financial advisors, but Victim A recalled that there were only one or two such meetings. None of Victim A’s agents, accountants, or financial advisors spoke Japanese and Victim A relied on MIZUHARA to translate the conversations with those individuals. 

If the case went down as the government alleges, then this was a clever, insidious con. Mizuhara, who is also accused of embellishing his resume — not as important as stealing $16 million, but it speaks to his character — was quite devious in taking advantage of his BFF’s unending reservoir of trust. Ohtani, at the same time, was incredibly naive not to have more checks and balances when it came to handling his finances and personal affairs. It’s one thing if you give a personal assistant access to your bank account to pay bills — but another if you never even bother to log into the account yourself to check the balances.

Although I don’t doubt that the government’s claims are mostly correct given the quality of the evidence — they even have a record of a text where Mizuhara admits that “technically I did steal from him” — I wonder if Ohtani at least had some vague sense of unease about the situation. If not, I wonder just how far Mizuhara went in gaslighting him.

Frankly, none of the other parties involved here — like Ohtani’s agents and advisors — come across looking good. They fell for the con too. At the very least, Major League Baseball ought to provide more protections to its foreign-speaking players, making sure they aren’t overly dependent on any one person for navigating the English-speaking world.

And I’m going to tread lightly on this last part because I’m a dumb white guy, but I wonder if there was an extent to which Mizuhara was able to exploit cultural stereotypes that Americans have of the Japanese, such as that they’re very private. To be fair, Ohtani does seem to be very private. But between the language barrier, Mizuhara’s manipulativeness and the fear of causing offense, I can imagine the other people in Ohtani’s life asking fewer questions than they would have of an American player.

Is there any reason not to believe the government’s case? Well, one problem is that the numbers literally don’t add up.

Did Mizuhara lose $16 million — or $41 million?

No, seriously.

Here’s what the government says Mizuhara’s betting record was, based on a spreadsheet it obtained from the bookmaker:

So, Mizuhara loses $41 million on a betting volume of $325 million. That is incredibly bad, a return on investment of -12.6 percent. By comparison, if you just bet literally at random on point spreads, your ROI is -4.55 percent.²

How does Mizuhara wind up with such a bad record on such a large volume of bets? Some bettors are literally worse than random — at least according to some industry sources that I spoke with for my book — and it’s often advisable to “fade the public”. But nobody is so bad as to lose at -12.6 percent on point spread or moneyline bets over a large sample. (Ironically, if you really were that bad, you’d be extremely valuable to a sharp who could just take the opposite side of your action.)

A more likely explanation is that Mizuhara was betting a lot of parlays. You’ll sometimes hear it said that parlays have a larger house edge. This is somewhat misleading, as this is mostly a matter of the way parlays are accounted for. If I make a $100 two-leg parlay — say I need both the Knicks and Celtics to beat the point spread — essentially what I’m doing is betting one of the games first, and then if that leg hits, taking the winnings plus my original stake (a total of about $191 assuming the bets are placed at -110 odds) and wagering it on the second one. In other words, I’m making more than $100 worth of bets on average when I make a $100 parlay and my expected value will reflect that. Nonetheless, when you’re looking at betting records, parlay wins and losses are usually tallied based solely on the original stake. That’s why the state of Colorado, for instance, which publishes extensive public data, reports a 15 percent profit margin on its parlay wagers versus 5 percent on the other bets it takes. Degenerate gamblers love parlays and Mizuhara is as degenerate as they come.

It’s also possible that the bookies were charging Mizuhara a higher vig (e.g. -120 instead of -110) or offering him worse lines (maybe if he really loves the Lakers, they offer him the Lakers at -5.5 when the consensus line is -5) than they were to other customers. From the government’s complaint, it doesn’t sound like the bookmaker was doing that level of customization, but it isn’t unheard of.

However, there’s something more important: There’s a big discrepancy between the $41 million the bookmaker’s records say Mizuhara lost and the $16 million he allegedly stole from Ohtani. What could explain this?

• Maybe Mizuhara has some other source of income apart from Ohtani’s bank account and his own relatively modest salary. Maybe it’s a legitimate source of income (he bought Bitcoin early?) or maybe there’s some other illegitimate source.

• Maybe the records the government has are incomplete. Maybe there were some bets — including bets on baseball? — that aren’t listed in the Excel spreadsheet. Or maybe the bookmaker was willing to extend credit or freeplay to Mizuhara in exchange for inside tips on baseball.³

• Maybe more than one person was betting from Mizuhara’s account.

• Maybe the bookmaker was willing to let Mizuhara bet on credit. Indeed, the government’s complaint details multiple instances of this.⁴ But this is a $25 million (!) gap, not a $1 million gap, which I doubt the bookmaker would tolerate.

• Maybe Mizuhara stole even more money from Ohtani than the government is now alleging, although $41 million would be essentially all of Ohtani’s income after taxes and agent fees.

• Or maybe the government doesn’t understand sports betting all that well and is getting something about the accounting wrong. For what it’s worth, if Mizuhara had losses of $16 million (the amount he allegedly stole from Ohtani) rather than $41 million, that would make his ROI -5 percent, which is a more typical house edge.

My money is on one of the more pedestrian explanations, like the government not quite understanding what they’re looking at in the spreadsheet, but the gap between $16 million in losses and $41 million is something that you’d think would have warranted more precise attention.

Look, I’m not a legal reporter, but I am aware that the government presenting its case is not the same thing as, say, a newspaper reporter covering all possible theories or angles. Mizuhara is the only person accused of a crime in the complaint, and it’s not surprising that the details are unflattering to him while portraying sources that were cooperative to the government in a more positive light. I assume that he’s guilty more or less as charged. But these are questions that deserve further reporting, and everyone seems a bit too eager to move on from what at the very least are a strange and tragic set of circumstances.

1. “I’m terrible at this sport betting thing huh? Lol”, Mizuhara texted at one point.

2. Assuming placing bets at -110 odds and winning half of them.

3. Would Mizuhara and the bookie have scrupulously avoided talking about this over text (or deleted any such exchanges) while otherwise being pretty sloppy with their communications? It doesn’t seem likely. But then again, Mizuhara is a weird figure as presented in the government’s case — incredibly cunning when it comes to manipulating Ohtani but a bumbling idiot when it comes to sports betting.

4. “Despite owing BOOKMAKER over one million dollars in losses, BOOKMAKER 1 continually increased MIZUHARA’s betting limits,” the report says.