Breach City - by Dan Liebman

At the 1999 Jockey Club Round Table, participants heard an interesting presentation from IBM Global Services manager Mark Elliott, who discussed areas in which his company believed it could partner with the fledgling National Thoroughbred Racing Association. Foremost among them was the creation of a “broadband national network,” with Elliott saying what many knew but were unwilling to accept: the industry’s wagering system was technologically outdated.

Elliott led a large team of engineers, analysts, and consultants who examined the industry’s pari-mutuel system. Being experts in the field, they were shocked at what they found. In fact, Elliott stated racing was lagging far behind any industry he had ever seen.

Unfortunately, like many things in racing, politics reared its ugly head, and the partnership never happened. The suggestion of a centralized, national sytem to handle wagers caused concern for some, and several organizations then battling with the NTRA were able to derail any relationship between IBM and the Thoroughbred organization.

Elliott spoke of such things as software updates and research and development in tote technology. All the while, even casual players were able to notice significant odds changes during the running of a race. It wasn’t long after Elliott’s speech that the proverbial “accident waiting to happen” did indeed occur.

In the fall of 2002, there were six winning tickets in the Breeders’ Cup Ultra Pick 6, which had a pool of $4,646,289. But soon afterward, an investigation was launched when individuals pointed out all six tickets had one horse singled in the first four legs and all horses used in the last two legs, which was highly suspicious.

It did not take long to track the culprits, the mastermind being Chris Harn, a senior software engineer employed by tote company Autotote. Harn was able to alter the wagers made by accomplice Derrick Davis after the fourth race of the Pick 6, bringing to light a practice unknown to most, that while the money wagered on multiple race exotics is submitted prior to the first race of the bet, the selections are not.

It also came to light that Harn, Davis, and Chris DaSilva had cashed fake tickets of winning bets from uncashed wagers at various tracks in the Northeast.

The NTRA moved quickly to address the tote security issue, hiring Giuliani Partners, headed by former New York City mayor Rudy Giuliani, to make recommendations. A report was issued at the 2003 Round Table, among its main points being the creation of a National Office of Wagering Security, technology upgrades, and model rules for tote systems.

Just two months later, the NTRA board approved the position of chief security officer. Sharon O’Bryan was hired but backed out before ever working a day. No one else was ever hired, and no Office of Wagering Security was ever created.

Last November, Mike Maloney, a large bettor based in Lexington, brought to the industry’s attention how he was able to past-post a race at Fair Grounds. That no one picked up on the past-posting, or if they did, kept quiet on the matter, was alarming.

Now comes word that a California bettor who made 1,300 quick-pick superfecta wagers on this year’s Kentucky Derby Presented by Yum! Brands (gr. I) did not receive the No. 20 on any of the tickets. Of course, No. 20 was winner Big Brown.

Even more astounding than this “glitch” is that officials with Scientific Games, which holds the contract for all California outlets, may have had prior knowledge of the problem.

“…we have it from a source—a very good source in another state—that Scientific Games knew about this (bug) prior to our discovery of it in California,” California Horse Racing Board executive director Kirk Breed said.

A decade ago, the industry had a chance to partner with IBM, and just five years ago spoke of a National Office of ­Wagering Security.

How many more missed opportunities can we afford?

4 Comments

Leave a Comment:

Marty Miller

Having worked in the Tote business for almost 50 years I resent the implication that the tote companies are at fault for the current lack of integrity in the racing industry.  The lack of integrity comes from the race tracks themselves and their never ending cost cutting.  The three tote companies are barely surviving financially because tracks play them against each other for lower rates.  For lower rates certain things have to be eliminated or cut back.  The tote companies give the tracks what they want.  So when you start talking about integrity at the track look for the real reasons.

Anytime you are dealing with money a certain bad element arises but there are to many tote employees in this country who work long hours for little money to try and make sure everything is on the up and up.  If you really want to know what's happening in the tote business talk to people in the trenches doing all they can....

28 May 2008 9:17 PM
Michael E.Moneta

This is just another example of why horse racing lags behind in attracting and keeping bettors.Every state is only concerned about their own track without any regard for what is good for the game let alone the players.The bettors are the last people thought of and that is why we leave and find other avenues for our wagering.The state of IL even uses 2 different tote systems and you cannot cross cash from  tote to the other.Screw the bettor was always the old way and it has not changed only the bettors are leaving and not coming back.

29 May 2008 12:13 AM
Caleb B

It seems to me that the Tote COMPANIES are not to blame for the integrity issues you've high-lighted, just one Tote Company, Scientific Games. The pick-six scandal, AutoTote/Scientific Games, the past-posting incident at Fair Grounds, Scientific Games. Now the known software bug, defrauding the wagering public of any legitimate chance of purchasing winning wagers, Scientific Games. Could it be that Scientific Games lack of focus or concern for the pari-mutuel (Horse-racing specifically) industry allows for problem after problem in their racing division?

At this point it leaves one to wonder how any Racing Executive who gives or renews a contract with Scientific Games isn't fired on the spot!!

31 May 2008 6:02 PM
Anthony Kelzenberg

I was planning to play $20,000 in quick-pick superfecta wagers over the next 6 months, but after reading this article and consulting with Chris Harn I'll have to go into a different direction.

01 Jun 2008 12:52 AM

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