In January 1987, Schlichter was arrested in New York City for his involvement in a multimillion-dollar sports betting operation. He pleaded guilty to illegal gambling in April, and was sentenced to probation. That arrest came back to haunt him that summer. The Cincinnati Bengals saw enough promise in him that they were willing to bring him on as Boomer Esiason's backup. However, Commissioner Pete Rozelle would not approve the deal, citing the January arrest. He let it be known that he would not approve any NFL contract for Schlichter, costing him valuable work when the NFL players' union went on strike that year. He made another bid for reinstatement in 1988, but was turned down. That same year, he filed for bankruptcy to shield himself from creditors.