The deal is that the NCAA's rules are clear, and he chose to disobey them. I suspect he assumed he'd get away with it.
As far as the rationale behind the rule, my assumption is that the organization believes its integrity would be tainted if coaches were to routinely gamble on NCAA athletic events. Perhaps the belief is that they're in a position to exert their influence toward affecting the outcome.
You're right. They knew UW was going to lead the Pac 10 this Summer and Fall and the NCAA hates the UW and has for years.
The NCAA needs reformation. (Considering your handle, I assume you have some first hand experience with the NCAA's warped dictates.) Otherwise we are destined to see more LeBron James' and 13 year old soccer players inking big contracts and by-passing college all together. Think we pay high taxes now, just wait when the public schools lose the sports revenue. UW and WAZZU's Presidents have been lobbying the legislators and business leaders for more dough for their schools, look out.
NCAA might give Hedges (Atheletic Director) no option but to fire Neuheisel
Neuheisel has been a good, not great coach at Univ. of WA. However, from the moment he arrived in Seattle, he been having trouble with recruiting violations, engaging in Clinton-speak when he interviewed with the San Francisco 49'ers and denied it. Even if his behavior was clean up to this point, it sound like the NCAA regulations are explicit about betting on NCAA games. With all the questionable lapses in judgement, no one will be sorry to see him go.
Besides, Univ. of WA can hire the other exemplary collegiate coach from the Northwest, Mike Price. I heard Alabama let him out of his contract.