A fascinating piece (subscription required) in The Wall Street Journal looks at the ways that Las Vegas bookmakers are teaming up regulators to catch cheating in collegiate sports. And with the Tim Donaghy scandal, there may be more of a need for vigilance in professional sports than we would like to think.

Las Vegas bookies have a terrific incentive to uncover game-fixing schemes: If gamblers manage to place a large bet based on illicit information before the bookie has a chance to move the betting line, they can be left holding the bag. Because they have relationships with gamblers and will be the first to notice signs of unusual gambling activity (much like a market maker might be able to detect suspicious trading activity in the stock market), they can be a valuable source of intelligence for the leagues and regulators.

In the book Freakonomics, Steven Levitt looks at the ways that the economist's toolkit can also be used to detect signs of cheating -- whether that be elementary school teachers' changing students' answers on standardized tests, or sumo wrestlers throwing matches.

While relying on input from members of the underworld might seem distasteful, bookies and even criminals often have valuable real world experience and connections that can help regulators. Ex-cons like Barry Minkow and Sam Antar have helped the FBI and SEC crackdown on numerous cases of securities fraud, and bookies can help the NCAA fight cheating. It's good to see that they are taking advantage of the opportunity.

On the other hand, Major League Baseball has been reluctant to take help from the underworld. Former Commissioner Fay Vincent explained to The Journal that he hadn't used Las Vegas as a source of information because he "can't quite imagine what they would've been telling us that we would've been interested in."

Perhaps that is part of the reason baseball has suffered from so many scandals over the years, including a whole decade of statistics that are in doubt because of steroids.

TheStreet.com (NASDAQ: TSCM) has announced that its trading contest shared something with CNBC's Million Dollar Portfolio Challenge -- they both featured cheating contestants.

In case you did not participate, On April 2, TSCM launched a stock market trading game, "Beat the Street," which ran until May 31. The game had a cash prize of $100,000. But TSCM does not plan to award that $100,000.

Why not? "The final results of the game indicate that players employed trading strategies to achieve returns that could not be duplicated in the real world, thereby depriving other contestants of an equal chance to win." And the $100,000 will be added to the $50,000 that TSCM originally planned to award the winner of the next contest iteration: "Beat the Street 2.0."

I'd love to know more about the strategies employed and why they couldn't be duplicated in "the real world." Ironically, I doubt this "news" site will be breaking any news on that front. If you can shed any light on what happened here, please share.

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned in this post.

In case you haven't heard, there is a full-blown controversy surrounding CNBC's recent "Million Dollar Portfolio Challenge," with the network posting a message on its website saying that the "CNBC Million Dollar Portfolio Challenge ended May 25th. CNBC has been contacted by several contestants alleging unusual trading in violation of contest rules among some of the 20 finalists. Once these questions were raised, CNBC immediately launched a thorough investigation to determine who may have violated the rules."

Apparently, some contestants may have found ways to go in and change their orders after the market had closed, kind of like placing late bets at the track. While cheating is certainly bad, I had a hard time taking the contest seriously from day one. As the Motley Fool's Bill Barker wrote back in February, "this contest has stunningly little to do with 'investment strategy' and everything to do with maximum risk taking."

With the many thousands of people competing for the best portfolio performance over such a short period of time, I would argue that the portfolio was about little other than luck. I certainly wouldn't call the winner a "trading genius" or anything.

This brings me back to the cheating issue. In a contest that was essentially little more than a glorified lottery, who really cares if the winner didn't play by the rules? In fact, finding some strategy for beating CNBC's security system is probably more of an accomplishment than winning this crap shoot of a stock-picking contest.

Of course, I don't really think the prize should be given to a cheater, just as someone who cheated at bingo shouldn't get the prize. But it's hard to muster up a lot of righteous indignation for someone who found a way to outsmart an investing and trading contest that had little to do with investing or trading.

Today's funeral of Ken Lay puts to rest his physical presence. Where his soul will end up has been commented on many times and there does not seem to be any controversy. The fact that his family wanted to cremate his body (beating Satan to the punch or hiding the evidence?) is ironic in the sense that when he was alive his company (and my company too), crashed and burned from a financial height that I do not believe has been achieved before in such a short period of time.

The pain of his (and Fastow's, Skilling's and others) financially and morally corrupt adventures spread far and wide affecting a very broad swath of the nation and will be reviewed for decades in business schools, board rooms, Federal Commissions and more.

I crashed with the rest of the shareholders, workers, lenders and affiliated companies. To me the amazing thing is that in one day I made the best sell decision of my investing career and the worst buy. When Cisco Systems hit an all time high of $82 and was the highest "valued" company in the world at a capitalization of $450 billion, some idiot analyst prognosticated that it would be the first trillion dollar company. At the time Cisco was touting 50% annual growth for years out and my alarm bells began flashing. I decided it was time to abandon ship. I sold.

So what did I do with the money from the sale? I decided it would be a good idea to diversify more and moved the money from Internet/tech to energy. The sector was lagging at the time and I thought it might be ready for a rebound.