Wagering Integrity Issue May Be Coming to a Head

Just two days before the National Thoroughbred Racing Association board of directors meets to perhaps finalize plans for a national Office of Wagering Integrity, the National HBPA gave its support for a wagering security program offered by the Association of Racing Commissioners International and urged racetracks and other wagering services to do the same.

RCI Integrity Services is a for-profit arm of RCI that will maintain a wagering database and charge "a very small slice of handle" to users, RCI president Ed Martin said. The program, which already has commitments from Scientific Games and Youbet.com, was formed late last year as industry factions continued to fight among themselves over the issue of who should be in charge of pari-mutuel wagering security.

The concept of the Office of Wagering Integrity has been more than three years in the making. It came about after the Breeders' Cup Ultra Pick 6 fraud of October 2002.

"At the end of the day, we hope the industry will embrace what we're doing," Martin said Jan. 24. "This industry, in my humble opinion, has been paralyzed by its own internal politics."

The board of directors of the National HBPA, which has about 30 affiliates around the country, supported the RCI plan Jan. 25 and suggested tracks, account wagering services, and other secondary pari-mutuel operations do the same. National HBPA president John Roark, who also sits on the NTRA board, said horsemen's groups must take the lead.

"We're sending a message to these folks in the industry that are trying to control (this process)," Roark said.

Martin suggested, and horsemen agreed, that RCI Security Services could serve another important function when it comes to contracts between horsemen's groups and wagering providers such as tracks and account wagering systems.

"When you negotiate contracts, you have the ability to tell them, 'We want you to hire an independent monitor for our wagering system, and we want in our contract the right to receive that information from the monitor.' The pari-mutuel industry is the only one I know of that doesn't require an independent monitor," Martin said.

Martin and NTRA officials have discussed wagering security issues, but apparently they haven't come to an agreement on how an office should be structured. Martin said RCI has neither embraced nor opposed the NTRA proposal to be discussed Jan. 27 by the NTRA board.

An Office of Wagering Integrity proposal being circulated calls for a seven-member board of directors, three of which would be appointed by the NTRA, three appointed by RCI, and one, a chairman, appointed by the other six directors. The plan calls the office an independent agency that would merge the interests of NTRA members and regulators around the country.

Total cost for the first phase of the project (July 2006-December 2007) would be $4.84 million, according to the proposal.

Greg Avioli, executive vice president of corporate and legislative planning for the NTRA, couldn't be immediately reached to comment on the ramifications of the National HBPA endorsement of RCI Integrity Services. In a recent interview, however, he said the NTRA hoped to have industry unity in regard to the Office of Wagering Integrity.

"We're hoping to bring all the elements together," Avioli said. "Our goal is to have one concerted effort instead of multiple ones. Any plan will overlay (the RCI efforts), and we would like to tie it together. RCI needs the participation of the industry, and if we reach agreement, what NTRA can do is bring everyone to the table."

In other business at its Jan. 25 winter convention board meeting in Tampa, Fla., the National HBPA announced plans for an April 11 horsemen's summit to discuss pari-mutuel wagering and alternative gaming. Roark said it would only be for HBPA affiliates, but in time he hopes to have a meeting of as many horsemen's groups as possible, regardless of affiliation.

Among the topics to be discussed are the current 3% standard host fee for signals, the alleged lack of effort on the part of racinos to accent the horse racing product, and horsemen's growing concern over "sublicenses" and "marketing deals" in account wagering contracts. Roark and other horsemen's representatives claim tracks are getting 3% to 5% of handle on the "back end," which means horsemen don't share in the revenue.

"We've got to do something about this," Roark said during the meeting. "They owe some of you guys millions of dollars. It's time to draw a line in the sand."

The National HBPA board of directors also adopted an "agreed disposition of protest" in regard to the Alabama HBPA. According to the document, the Alabama HBPA must provide the National HBPA with a letter detailing procedures for a local election of officers and directors that must be concluded on or before the date of the National HBPA 2007 winter convention in Hot Springs, Ark., in late January.

The agreement says the Alabama HBPA acknowledged if it fails to comply, its membership in the National HBPA would be suspended. The Alabama HBPA acknowledged it's not in compliance with National HBPA bylaws governing when elections must be held, but said the issue "has arisen due to protracted litigation."

Live horse racing hasn't been held in Alabama since the late 1990s at Birmingham Race Course.