Plan for Security Office Stirs 'Alphabet Soup'

Just days after the National Thoroughbred Racing Association said it would make the creation of an Office of Wagering Security a priority, officials indicated there could be conflict over who would run the office, as well as questions about its autonomy.

The NTRA, which is serving only as a facilitator, made its announcement April 18. Many industry officials said they recognize the need for the proposed office, but the question as to who ultimately would call the shots remains unanswered.

The issue was addressed April 22 during a panel discussion on account wagering at the Association of Racing Commissioners International convention in Lexington. A steering committee formed to explore the Office of Wagering Security is scheduled to meet for the first time the week of May 9.

The office was deemed necessary in the wake of the 2002 Breeders' Cup Ultra Pick 6 fraud. The NTRA subsequently moved integrity-related matters to the top of its list of priorities and was widely lauded for doing so.

"You're looking at offices of integrity right here," new RCI president Ed Martin told the panel. "One thing that troubles me is this industry always tries to create its own police force. When we hear this, we always wonder why you don't count on us."

Martin and California Horse Racing Board member Richard Shapiro acknowledged the need for the new office but said regulators naturally should be involved. Shapiro said the office should be put together by RCI in the same way the organization works on model medication rules.

The Thoroughbred Racing Protective Bureau, which falls under the Thoroughbred Racing Associations, is the pari-mutuel industry's security arm. It recently hired Frank Fabian, a former FBI agent, as president. Chris Scherf, executive vice president of the TRA, serves on the Office of Wagering Security steering committee.

Keeneland president Nick Nicholson, a member of the NTRA board of directors and a panelist at the RCI meeting, said the proposed office is a must because the "United States common pool is perhaps our most valuable economic asset. The integrity of that common pool holds this industry together."

Nicholson also said one segment of the pari-mutuel industry couldn't competently operate the security office. He said it's imperative all parties--regulators included--be involved in the process.

"At the end of the day, it might be better served by the industry having it in the hands of regulators," Martin said. "We both want to get the job done."

John Roark, president of the National Horsemen's Benevolent and Protective Association and a member of the NTRA board and steering committee, said he sees regulators in the role of forcing the issue to get the office up and running.

"The Office of Wagering Security should not be run by somebody in the industry that has other things in mind," Roark said. "The office has to be autonomous. It can't be owned by anybody. It has to be funded by the people being policed by it."

Comments made during the panel discussion indicated there already is some friction within the industry, a sort of "alphabet soup" of organizations with responsibilities that sometimes overlap.

"I make one more pitch on the (Office of Wagering Security)," Nicholson said. "Now is no time for us to be parochial. We all need to be involved in this."

Along with Roark and Scherf, other members of the steering committee are Drew Couto, executive director of the Thoroughbred Owners of California; Alan Marzelli, president of The Jockey Club; and David Willmot, president of Woodbine Entertainment Group.

Bruce Garland, an NTRA board member and former senior vice president of racing for the New Jersey Sports and Exposition Authority, chairs the committee.

On the topic of account wagering, officials called for tighter regulation of wagering pools and admitted account wagering providers take bets from residents in states in which the practice isn't legal. Two of the states mentioned were Illinois and Texas.

Illinois Racing Board chairwoman Lorna Propes said an account-wagering bill was defeated recently in Illinois because stakeholders resisted. Meanwhile, she said, out-of-state companies are taking bets from Illinois residents.

"My question is, what do we do in the short term to stop the bleeding?" Propes said. "It's assumed that in Illinois, a major part of our problem is advance deposit wagering is taking money out of our state."

Oregon Racing Commission chairman Steve Walters told Propes if a betting hub takes bets on the Arlington Park signal, for instance, the track receives host fees. (Oregon, which has seven multi-jurisdictional hubs, has fee requirements.)

"Then Houston, we have a problem," Propes said.

Martin noted the power of states' rights in terms of account wagering. He indicated an attempt by the pari-mutuel industry to get an interstate commerce exemption for such wagering would fly in the face of state regulation, which the industry claims it supports.