Defense attorney John Lauro confirmed Donaghy is under investigation but refused to comment on the allegations or the case.
According to a law enforcement official, authorities are examining whether the referee made calls to affect the point spread in games on which he or associates had wagered.
The law enforcement official, who spoke to the AP on Friday on condition of anonymity, said the referee was aware of the investigation and had made arrangements to surrender as early as next week to face charges. The official, who did not identify the referee, is familiar with the investigation but was not authorized to speak publicly about the ongoing investigation.
The law enforcement official said the bets involved thousands of dollars and were made on games during the 2005-2006 and 2006-2007 seasons.
Over the years it has been a mortal fear of all leagues that the guardians of their game would be somehow touched by scandal, reports CBS News chief investigative correspondent Armen Keteyian.
"If these allegations are true, it just cuts to the heart of the integrity of the sport," says basketball analyst Len Elmore.
In all, Donaghy has officiated 704 regular season games and 15 playoff games, CBS News reports. He has seven years of CBA officiating experience including the 1993 CBA All-Star Game and five years of high school officiating experience in Pennsylvania. Before becoming a referee, Donaghy played varsity basketball at Villanova University.
According to the Elias Sports Bureau, Donaghy officiated 68 games in the 2005-06 season and 63 games in 2006-07. He also worked 20 playoff games, including five last season.
"As we previously stated, we have been cooperating with the FBI in their investigation of allegations that a single NBA referee bet on NBA games that he officiated," commissioner David Stern said in a statement Friday afternoon.
Although asked by the government not to comment, Stern said the naming of Donaghy prompted a fuller statement.
"We would like to assure our fans that no amount of effort, time or personnel is being spared to assist in this investigation, to bring to justice an individual who has betrayed the most sacred trust in professional sports, and to take the necessary steps to protect against this ever happening again."
The FBI probe, which began recently, also involves allegations that the referee had connections to organized crime associates. Other arrests are expected, the official said.
The referee had a gambling problem, according to the official, and was approached by low-level mob associates through an acquaintance.
The investigation first was reported Friday by the New York Post.
"I'm shocked, terribly shocked," said Gary Benson, an NBA official for 17 years who retired two years ago because of knee problems. "Those are people that you work with and that you literally — you spend more time with those people than you do with your family."
Benson said he didn't work with Donaghy much.
"You have a lot of acquaintances and very few friends. ... I probably worked a handful of games with him overall, just a handful."