Watson said the allegations, made by Pakistani player agent Mazhar Majeed, damaged the integrity of the sport and could lead to fans questioning unexpected events in matches.
Watson said it was "unbelievably disappointing" that players' reputations were being brought into question.
"(It's) been very disappointing and pretty shocking really to see these allegations that have come out from this court case that is going on at the moment," Watson told a media conference in Cape Town ahead of Thursday's first Twenty20 international against South Africa.
"I know from my perspective how damaging they really are to the game of cricket but also to the individuals.
"I know the ICC and Cricket Australia are all over exactly how important match-fixing is and the issues that go around that, so we're all on top of exactly how much it means to the game of cricket.
"More so, it's just very disappointing these things happen because it challenges the integrity of the game ... we all love so much."
The allegations have been widely dismissed by the cricket community, including Cricket Australia chief executive James Sutherland who described them as "baseless and outlandish".
But Watson said unfortunately mud sticks when it comes to corruption in sport.
"We never want anything to happen to the game but with all these allegations flying around people, not just within cricket but outside cricket, start to question exactly certain things that happen in games," he said.
"In sport crazy events sometimes do happen so you never want people questioning what exactly is going on, so it's very disappointing when these things come out."
