The Donaghy scandal "has harmed the NBA and caused it to spend vast sums to undo that harm," league lawyers wrote.
In an earlier filing, defense attorney John Lauro accused the NBA of trying to extract the money to punish Donaghy for embarrassing the league with allegations of widespread misconduct by executives and employees - including claims that referees rigged games by making bad calls. The league has denied the accusations.
The NBA "provides no support whatsoever for the demand, which appears to be a transparent effort to intimidate Mr. Donaghy," Lauro wrote.
Both sides are expected to argue the issue next week in court in Brooklyn.
Donaghy, 41, pleaded guilty last year to felony charges of taking cash payoffs from gamblers and betting on games himself. He faces up to 33 months in prison at sentencing, set for July 14.
Donaghy has admitted betting on about half the games he officiated for three seasons, beginning in 2003. The NBA argues that he consequently owes the league roughly half his wages for that period: $504,719. The league also claims he should pay back an additional $72,593 for the 16 games on which he provided tips to gamblers during the 2006-2007 season.
Finally, Donaghy should foot the bill for the legal fees and other expenses related to an internal "risk review" prompted by the case, the NBA said.
The expenses include pay for two league employees who spent 125 hours - at $270 per hour and $100 per hour - reviewing videotapes of games Donaghy refereed. The NBA also wants Donaghy to pick up the $516,971 tab for a law firm that interviewed 57 NBA referees as part of the internal investigation.
