Simulcasters Warned: Bad Guys Aren't Giving Up

Speakers on the opening day of the International Simulcast Conference near San Francisco Sept. 29 had a powerful warning for host tracks: Know who you are doing business with or risk more wagering scandals.

Nearly a year after the Breeders' Cup Pick Six scandal, initial improvements have so far been effective at stopping the sort of insider cheating uncovered in that case, but that doesn't mean the bad guys are giving up, said Paul Berube, president of the Thoroughbred Racing Protective Bureau. He was one of three national racing officials sounding similar alarms before more than 300 simulcasting and racetrack executives gathered for the 11th annual simulcast conference at the Hyatt Regency-San Francisco Airport in Burlingame.

"There is too much secrecy and not enough transparency," Berube said. "Secondary pari-mutuel organizations may be operating outside of the regulatory standards. How their wagering activity is being conducted is not always well known."

In particular, Berube noted that bookmakers may be "laying off" bets with Internet gaming sites and other betting operations that offer rebates on large wagers. He said computer betting is "a security nightmare."

"(Bookmakers are) guaranteed a profit without a risk," he said. "Bookmakers can be on an Internet site or can be working with an individual with ties into a tote system. In my opinion, they are likely to draw law enforcement interest if they haven't already."

Berube called on the industry to stay on top of system log-ons, passwords, hub and remote system access, documenting procedures, reporting suspicious incidents and drug screening of their employees. He said hosts need to know the identities of outside operators and the types of pari-mutuel devices that are in use to transfer wagers into larger hubs, as well as conduct unannounced inspections of sites.

"It's human nature that people, especially smart people, will take advantage of loopholes in tote system security," he said.

The TRPB announced the appointment Thursday of J. Curtis Linnell to the new post of "wagering analyst."

Berube said Linnell, who has served in supervisory roles at a variety of mutuel and simulcasting operations including Hastings Park, will provide expertise on wagering systems new technology. He has been a paid consultant on several TRPB matters for the past year.

Greg Avioli, deputy commissioner for the National Thoroughbred Racing Association, called on the industry to follow up on the organization's recommendations from the Wagering Technology Working Group's report of Aug. 17. He applauded the decision to hire a national chief of security to oversee the efforts of tracks and tote companies to ensure the system's integrity. He said the new official could be in place by Jan. 1.

Racing needs to establish minimum security standards, he said, adding that the system is only as strong as the weakest link.

"If you can't have the same standards set up and performing for everyone, it's not going to work," Avioli said.

The underlying tote system must also continue to change with improving technology, he said, one that provides a national database for transactions and can flag suspicious betting activity.

"The present system functions very well," Avioli noted. "It runs $15 billion to destinations throughout the world. But it is not state of the art. You are never going to have perfect security. It could take one year, it could take three. But it will probably be an ongoing process."

Lonny Powell, president of Association Racing Commissioners International, said there will be "periodic failures and frustrations" as the industry undertakes the wagering technology recommendations, but that is a necessary step to maintain the trust of the public.

"Each and every morning, the bad guys will be waking up, thinking of ways to try and beat our systems," Powell said.

"Two phrases -- trusted user and weakest link -- will be branded into our foreheads," he added. "If one of these links needs to be repaired and isn't able to respond ... it must be put aside. That's tough, but we need to be tough."