Better Betting - by Dan Liebman

cdawahare — Wed, 27 May 2009 15:41:00 GMT

In light of two recent episodes of wagering integrity—or lack of same—it appears the industry has done little since being warned a decade ago that its infrastructure was woefully inadequate.

This month, two past-posting incidents, where wagers are placed after a race has begun, have occurred. On May 16, wagering through Scientific Games on the Los Angeles Handicap (gr. III) at Hollywood Park did not close at 33 simulcast sites until after the race was run. All wagers (totaling less than $100,000) on the race at those locations were refunded.

Four days later, Hollywood Casino at Penn National Race Course refunded more than $150,000 after a router failed at its main wagering hub in Oregon operated by United Tote. The result was that bets were processed after the start of the race.

In both instances, even those who wagered properly had their tickets canceled.

At The Jockey Club Round Table in 1999, Mark Elliott, manager of IBM Global Services, the world’s leading provider of information technology, discussed ways his company could assist Thoroughbred racing. IBM Global Services had been hired by the National Thoroughbred Racing Association to examine the industry’s wagering technology, and Elliott found much that could be improved upon.

However, Elliott saw nothing that could not be fixed, and IBM Global Services offered to invest, through loans to the industry, $100-$200 million that would have been repaid with interest, a percentage of handle from an industry-owned tote system, and bonuses based on both reductions in cost and increases in handle.

Less than a year later Elliott was quoted as saying, “I don’t want to be overly abusive, but as an industry, you are as far behind in the use of technology to improve your business as any I have ever seen.”

Though Elliott was correct, the NTRA/IBM Global Services partnership was “retooled,” then NTRA chief executive officer Tim Smith said in October 2000. The industry could not afford, as Elliott recommended, a broadband network, Smith said, and the notion of an industry-controlled tote system was shelved, presumably because it would have placed the NTRA in competition with its members that operate and/or own various wagering systems.

Two years later (2002) the industry looked foolish when the Breeders’ Cup Ultra Pick 6 was manipulated by an employee of Autotote Corp. Few knew that Pick Six wagers were not transmitted to host sites immediately by wagering hubs, but rather after the fifth leg. In essence, only live tickets were scanned by the host track. Without the broadband system Elliott suggested, submitting the tickets otherwise would crush the tote system’s outdated transmission lines.

Following the Pick Six scandal, Giuliani Partners, headed by former New York City Mayor Rudy Giuliani, was hired to review the industry’s wagering protocols and tote systems as part of the NTRA’s new Wagering Integrity Alliance. Reportedly paid seven figures, Giuliani spoke at the 2003 Jockey Club Round Table, calling for the formation of a National Office of Wagering Security and a set of uniform standards for pari-mutuel facilities.

A permanent wagering security chief, Sharon O’Bryan, was hired, then resigned; Isidore Sobkoski served as interim director and wagering integrity consultant for a short time.

It was revealed following last year’s Kentucky Derby Presented by Yum! Brands (gr. I) that quick pick bets for the race’s superfecta purchased at Bay Meadows in Northern California did not include the number 20, which happened to be the saddlecloth number worn by winner Big Brown. A spokesman for tote company Scientific Games said a “computer glitch” caused the error.

Today, as reports by IBM Global Services and Giuliani Partners sit on bookcase shelves, large and small bettors alike continue to complain about late-changing odds and examples of past-posting.

The integrity of wagering on Thoroughbred racing in North America continues to come under scrutiny. Judging by our past performances, little has improved in the past decade.

Breach City - by Dan Liebman

Blood-Horse Staff — Tue, 27 May 2008 15:53:00 GMT

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?

What's Going On Here : wagering integrity

Better Betting - by Dan Liebman

Breach City - by Dan Liebman