'Integrity Void' Strikes Nerve -- Again

Wagering integrity is not up to speed in the pari-mutuel industry, officials said.

Simmering concerns over wagering security in the pari-mutuel industry flared up again April 21 with a strong call for independent monitoring and an end to the practice of “past-posting” — making bets after races begin.

The issues, which have lingered for years, were addressed during the Association of Racing Commissioners International annual convention, held this year in Lexington. RCI officials have been pushing a comprehensive, independent real-time monitoring system since the spring of 2005.

Officials with RCI and the Thoroughbred Racing Associations, a racetrack trade organization, have gone back and forth over the merits of such a system. Racetracks, through the TRA, use the Thoroughbred Racing Protective Bureau for pari-mutuel monitoring and investigations; RCI officials have contended it should be done independently.

Thus far, New York has adopted a rule mandating independent, real-time monitoring of wagering pools. The two racetracks in Indiana are moving forward with such a test; the Minnesota Racing Commission is considering a program; and legislation introduced in California would provide funding for monitoring.

RCI president Ed Martin cited the progress but said more must be accomplished.

“Ideally, the ultimate goal is a ubiquitous monitoring system,” Martin said. “We as regulators have a responsibility to this industry. At the end of the day, regulators represent the fans, owners, and the public. We haven’t gotten a whole lot of cooperation from the tracks.”

Martin, as he has in the past, said the industry failed to take the necessary steps after the Breeders’ Cup Ultra Pick 6 fraud in 2002 and subsequent recommendations for a national Office of Wagering Security. He questioned why the industry spends $30 million a year “chasing overages on legal drugs that may not impact performance” but can’t find $4 million to pay for a nationwide wagering monitoring system.

Martin said most individuals who cheat do so not for purse money, but to make a score at the betting windows.

“An integrity void still exists in most jurisdictions,” Martin said. “We are not following the money. We are following the drugs — which we need to do — but we’re not following the money.”

The comments were made during the RCI Wagering Systems and Tote Standards Committee meeting, which also featured presentations by companies that provide monitoring services or focus on wagering integrity: Advanced Monitoring Systems, Gaming Laboratories, and Racebookagent.com. Isidore “Izzy” Sobkowski, president and chief executive officer of AMS and formerly a wagering integrity consultant for the National Thoroughbred Racing Association, called the pari-mutuel wagering system a “$16-billion unregulated bank” in need of real-time monitoring.

“The bad guy is smart,” Sobkowski said. “If you are going to regulate wagering, you need to do it on a system-wide basis.”

Mike Maloney, a high-volume bettor from Lexington who has been invited to speak at various industry meetings, said the Horseplayers’ Association of North America has four primary requests: that all signals be available to all advance deposit wagering providers; that pari-mutuel takeout rates be lower; that medication rules be uniform and enforced; and that wagering integrity be paramount. He said “not a great deal has changed” in regard to wagering integrity, but “understanding in the industry” has grown in recent years.

Maloney, during the 2007 University of Arizona Symposium on Racing & Gaming, brought to light an incident whereby the pools remained opened well into a two-turn race at Fair Grounds Races & Slots in Louisiana. Officials knew about the situation but never made it public.

Maloney said 16 months later, he still doesn’t know how much of the race’s $250,000 handle came from past-posting. He said racetracks make commissions on such wagers as they would with any other bets and may not be anxious to report past-posting when it occurs.

“There are good people at the tracks, but tracks want to make money, and if it’s after the bell, so be it,” Maloney said. “Please don’t think the racetracks are going to regulate this. You guys sitting in front of me are the guys that have to pull the plug on this.”

Maloney’s comments drew a response from Jeff True, president of United Tote, who asked Maloney if he was saying racetracks promote such a practice.

“No racetrack is saying past-posting is OK,” True said. “They would welcome the opportunity to give that commission back.”

RCI executive vice president Paul Bowlinger then said Maloney was merely stating fact —that racetracks get commissions from handle. Bowlinger then said he planned to survey all racetracks to see if any incidents of past-posting have been reported to various racing commissions. Indications in the industry are they have not been reported.

Martin also said RCI may consider a model rule that would mandate a change in the way betting outlets make settlements because more than 85% of money is wagered off track. Bettors are promptly paid winnings, but the outlets — racetracks, off-track betting parlors, and ADWs, for instance — may settle with each other once a month.

Wagering security issues are part of the agenda of the NTRA Security and Integrity Alliance, but the organization, which is now accrediting racetracks, placed its initial focus on the health and welfare of equine and human participants in the sport based on customer feedback, NTRA president and CEO Alex Waldrop said.

Alliance officials have said integrity of pari-mutuel pools is of importance and would be addressed as the accreditation process move forward.