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The Grays were involved in Major League Baseball 's first Gambling scandal. The team was in first place in August 1877, then suddenly lost 7 games against the Boston Red Stockings and Hartford Dark Blues . Boston ended up winning the Pennant ; the Grays took 2nd place.

Team president Charles E. Chase received two anonymous Telegram s. One noted that gamblers were favoring the less talented Hartford team in an upcoming series. The second telegram predicted Louisville would Throw the next game versus Hartford on August 21 . The Grays committed a number of suspicious errors and lost that game 7–0. League president William Hulbert investigated and ordered players to authorize Western Union to release all Telegram s sent or received during the 1877 season. All players complied except Shortstop Bill Craver , the team's captain.

The telegrams indicated Pitcher Jim Devlin , Center Fielder George Hall , and utility player Al Nichols intentionally lost games in exchange for money. No direct evidence was found implicating Craver. All four were banned from baseball for life, Craver for refusing to comply with the investigation.

The Grays disbanded after the 1877 season.