The Week in Review: In Light of Saturday’s Tote Failure, the Industry Must Search for Answers

It's still not clear exactly what went wrong Saturday when a tote failure impacted several tracks, including Tampa Bay Downs. The Oldsmar, Florida track took a huge hit when it was forced to run the GIII Lambholm South Tampa Bay Derby as a non-wagering event and to also cancel the last race of the day. Tampa Bay Downs Vice President and General Manager Pete Berube estimates that the track lost as much as $4.5 million in handle because betting wasn't available.

There was a massive telecommunications network failure Saturday afternoon that affected much more than just the horse racing industry. Regardless of where wagers are placed, the transmission from the Amtote totalizator system to the host track's pools are redistributed via Roberts Communications Network. There was a telecommunications failure of several network carriers in the mid-Atlantic region, therefore Amtote and Roberts had no connectivity with the racetracks and therefore it was technically impossible to transmit bets. That it happened prior to Tampa Bay Downs' biggest race of the year and not the third race on a Tuesday was nothing more than an unfortunate coincidence.

Other tracks, among them Santa Anita, Oaklawn, Laurel, Aqueduct, Fonner Park and the Meadowlands experienced similar problems, but none of them were forced to run races as non-betting events.

On Sunday, Amtote and Roberts issued a joint statement, which read in part:

“The issues were not the result of a tote system failure. Rather, the communications network (both primary and backup) that connects the Amtote Mid-Atlantic hub to other wagering hubs failed. Roberts Communications Network (“RCN”) provides the communications network that connects Amtote's Mid-Atlantic hub to all other tote company wagering hubs worldwide. RCN designs and installs the communications network in a manner designed to prevent outages of this type. However, the unprecedented nature of the connectivity outage yesterday, which impacted the third-party providers from which RCN provisions bandwidth, took down both the primary and back-up networks.”

“Everyone needs to stop blaming Amtote,” said Todd Roberts, President and CEO of RCN. “This was an unprecedented failure in the primary and back-up connectivity provided to RCN by our third-party suppliers.

“When the communications links at Amtote's hub were disrupted, it caused a breakdown in the flow of wagering data between Amtote's Mid-Atlantic hub and all other wagering locations. The communications disruption was not caused by any failure in RCN equipment or operations. Rather, both the primary and back-up bandwidth providers to the RCN network failed. RCN has not yet received an official reason-for-outage report from its third-party providers specifying a reason for this failure. However, it is believed that the outage, which was much broader than just the racing industry, affected at least three major telecom/internet bandwidth providers in the geographic region that services the Amtote hub.”

The loss of the estimated $4.5 million in betting handle was a huge blow to Tampa Bay Downs, a racetrack that does not receive any revenue from casinos or slot machines and, therefore, can't afford a hit like it took Saturday. Berube says he wants some answers and has called for an investigation.

“Only bits and pieces are coming in and that's why I have asked for an independent investigation,” he said. “You have a couple different vendors involved, the tote company and RCN communications. I'm not getting a clear story as to what happened at this point and that's why I've asked for an independent investigation. This is unprecedented. I've been in this business for over 30 years and I've never experienced or seen anything like what happened yesterday.”

So who's to blame? That's the tricky part. Neither AmTote, which is owned by 1/ST Racing, nor Roberts nor Tampa Bay Downs apparently did anything wrong. This issue was caused by a utility company that provides network connectivity that carries the transmission of betting data. When that went down betting data could not be transmitted.

And Tampa did what it had to do.

“We waited as long as we could,” Berube said. “It wasn't fair to the horses, so we made the decision to go ahead and run the Tampa Bay Derby, even though it was not a profitable decision. But we needed to run the race and we were glad to run the race.”

Yet both Berube and 1/ST President Aidan Butler, expressed similar sentiments, that no matter how complicated this issue might have been and no matter who was at fault, these sort of things can't keep happening. Remember, it was only a few months ago that FanDuel experienced a situation where bettors were able to make huge wagers on a race and only the base price of their tickets was deducted from their accounts. There still hasn't be a credible explanation as to how that occurred.

“There needs to be a change and this should be a wake-up call for the industry,” Berube said. “I plan on being totally transparent once I get the information and the sequence of events, what happened and who was responsible. The customers need to have confidence in the system.”

“This truly was not an AmTote issue,” Butler said. “But that doesn't really matter. I am looking at it through a gambling lens, and it is really unacceptable. Going forward, it doesn't matter whose fault it was. It's the year 2024 and there's no reason something like this can go on. This can never happen again and can't happen again and that will take a lot of work.”

He's right. As with so many aspects of the game, racing can't afford these stumbles. They alienate the customers and make the sport look amateurish. It must do better.

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Little Named VP of Racing Services at Equibase

Scott Little has been appointed vice president of racing services at Equibase. Little, who has served as the company's director of track services since 2021, will directly oversee setup, operation, and maintenance of the E-GPS technology systems being utilized at 28 racetracks and coordinate chart-calling staff at more than 125 tracks across the country.

A graduate of the Racetrack Industry Program at the University of Arizona, Little served as a product manager for AmTote prior to joining Equibase. Before transitioning to horse racing, Little spent his career in the hospitality and customer service industry, managing four-star resorts and serving as a vice president of a leading hospitality software company.

“In a short amount of time, Scott has proven to be an invaluable asset in leading our data collection efforts, both in working with racetracks and our team,” said Kelley Kraeszig, Equibase's senior vice president for business operations and administration. “His strong background with technology and skills in project management will serve him well in this expanded role.”

Equibase Company is a partnership between The Jockey Club and the Thoroughbred Racing Associations of North America and serves as the Thoroughbred industry's official database.

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AmTote, PariMAX Sign Multi-Year Agreement With Red Mile

PariMAX Holdings and AmTote International, key divisions of leading North American technology provider 1/ST TECHNOLOGY, have entered into a multi-year agreement with KRM Wagering, LLC (“Red Mile”), a gaming joint venture between Keeneland and The Red Mile racing associations.

This strategic partnership sees both parties put their combined shoulders to the wheel around KRM Wagering's progressive historical horse racing (HHR) wagering terminals at its Red Mile Gaming & Racing facility in Lexington, Kentucky. The new agreement continues a longstanding relationship with KRM that started with its successful launch of HHR operations back in 2015 to improve fan engagement and return value to horse racing stakeholders in an increasingly competitive wagering and entertainment market.

Since then, the Red Mile facility has become popular with racegoers for both its historical racing terminals, as well as traditional live and simulcast wagering solutions. Customers can choose to play on terminals which draw from a deep well of historical racing data, statistics and archive video footage to produce pre-recorded races in a format appealing to gaming-oriented consumers while corresponding with the fair and familiar pari-mutuel betting model.

Before and during the pandemic, by delivering these quick-fire on-demand betting opportunities, HHR proved pivotal to maintaining local employment and sustaining revenues for increased purse levels to help keep Kentucky horse racing competitive with other major racing states. Red Mile remains the iconic home of the Kentucky Futurity, one of the three jewels in Trotting's Triple Crown, fusing a proud racing heritage with state-of-the-art simulcasting and pari-mutuel HHR gaming terminals which have bolstered this venue as a premier retail and entertainment destination throughout the year.

PariMAX and AmTote are market-leading products from 1/ST TECHNOLOGY, racing's largest and most innovative gaming technology company, and the leading wagering technology force in North America.

Keith Johnson, Chief Revenue Officer at 1/ST TECHNOLOGY – PariMAX & AmTote, said: “1/ST TECHNOLOGY, with its PariMAX and AmTote business units, is thrilled to extend its relationship with Red Mile. This new agreement allows PariMAX to provide its continuing evolution of HHR products, delivering even more appealing and fully pari-mutuel innovative wagering experiences on HHR content, for the benefit of Red Mile, the Kentucky horse racing industry, and the US horse racing industry as a whole.”

Shannon Cobb, Chief Financial & Operating Officer at Red Mile Gaming & Racing, added: “The Red Mile is happy to enter into the next phase of its relationship with PariMAX and AmTote with this latest agreement. PariMAX continues to deliver unique and innovative HHR products and features that our patrons demonstrably enjoy, and this agreement will just expand upon that for the years to come.”

1/ST TECHNOLOGY's world-class products, led by AmTote and PariMAX, rank among the most trusted names across gaming, technology, horse and greyhound racing. AmTote's technology and services already play host to the majority of racetrack operators in North America – and are currently in operation at Santa Anita Park, Gulfstream Park, Saratoga Race Course, Belmont Park, Aqueduct and Woodbine, alongside many others, processing more than $18 billion in pari-mutuel and fixed-odds wagering around the world each year.

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Wagering Insecurity: Tote Monitoring In Racing Falling Behind To Bingo

This is Part 5 of the Thoroughbred Idea Foundation's (TIF) series “Wagering Insecurity.”

Faced with remarkable competitive pressure from the rise of legal sports betting, horse racing is at a crossroads.

Confidence amongst horseplayers and horse owners is essential to the future sustainability of the sport. Efforts to improve the greater North American Thoroughbred industry will fall flat if its stakeholders fail to secure a foundation of integrity, along with increased transparency of the wagering business and its participants over time. Achieving this is growing increasingly difficult after the sport has neglected its core base – horseplayers – for decades.

“Wagering Insecurity” details some of that neglect, and the need to embrace serious reform. Fortunately, there are examples across the racing world to follow.

PART 5 – BINGO

The NTRA-led initiative to bring wagering integrity to North American racing had failed. Independent oversight was falling apart. The frustration was palpable in December 2008. The University of Arizona Racing Symposium (click here to read the full transcript) convened a panel to discuss the state of these initiatives.

Paul Bowlinger, a long-time horseplayer, attorney, former regulator and then the executive vice president for the Association of Racing Commissioners International (ARCI) found it Shakespearian.

“…The real genius of that soliloquy of Hamlet is not 'to be or not to be,' whether that is the question. He goes on to say, 'To die, to sleep, perchance to dream, aye, there is the rub, for in that sleep what dreams may come?'

“Because what Hamlet is really quite simply saying is, what we may discover is scarier than what we already know.”

Later in the session, Bowlinger highlighted that the complexities of the industry, compounded by other issues, distracted the evolution of integrity measures.

“…We no longer have to dream about what's on the other side of an unmonitored pari-mutuel pool…

“The second part in that soliloquy is, 'Whether tis nobler in mind to suffer the slings and arrows of outrageous fortune,' and what has bothered me is that since 2002, the Pick-6 scandal, it was the topic du jour, it was the topic du everything.

“Now granted, there have been other issues that have taken our time, medication issues, the tragic Eight Belles, Barbaro, the steroid issuesthey've all come into place and they've diverted our attention and rightfully so in many ways.

“But I think our betting public is fed up with taking the slings and arrows of outrageous fortune.”

When TIF reached him in February 2021, Bowlinger's recollection of the time was unchanged.

“The industry's complete lack of interest was so frustrating.

“We met with everyone, tried to make it work and we had all the numbers in place for it to work. All of the executives started out by saying 'yes, yes, yes,' and when it came down to executing, they ended up saying 'no, no, no.'

“I owned a nightclub for a long time and I would not possibly think of ignoring my actual customers. Racing is run as if its betting customers don't exist. I would not walk into my club and not notice my customers.

“Instead, racing goes to its distributors and asks them how they are doing. It's a remarkable way of doing business.”

Bowlinger left ARCI in 2010, returned to private law practice and has been out of the racing business ever since.

At the time of the 2008 Arizona Symposium, Bowlinger's fellow panelist Isidore Sobkowski had been out of the NTRA's Office of Racing Integrity for several years and was running his own company, Advanced Monitoring Systems (AMS), described by Bowlinger in the session as “specifically created to meet the pari-mutuel industry's need for cyber security of wagering pools and wagering accounts.”

Sobkowski lamented the lack of accomplishments to that point.

“There's a lot of talk about wagering integrity but so far I think precious little has been done.”

WITHOUT CONTROVERSY

Kevin Mullally provided an external perspective. After 12 years with the Missouri Gaming Commission, Mullally was early in his career with Gaming Laboratories International (GLI) as Director of Government Relations and General Counsel. He had recently served as Vice President of the North American Gaming Regulators Association (NAGRA). Given his broad experience in gaming regulation, he used his time at the 2008 panel to express his bewilderment at how racing could be such an outlier regarding its regulation of technology.

“This is my third consecutive conference.

“I came here two years ago to learn a little bit more about why the racing industry had managed to be the only component of the gaming industry that had not implemented any serious oversight to its technology.”

TIF contacted Mullally in March 2021 and his views were unchanged and now augmented by the new forms of gaming technology which have entered the market, each aligned to a set of technical standards that are independently tested under the authority of their regulators. Racing's controls fall farther behind.

“If you were to put me on a panel today, 13 years later, I'd say the exact same thing.

“The only difference is that the tote systems stand out even more given how technology in the rest of the gaming industry has evolved. Testing is not only ubiquitous in every other sector of gaming but is also without controversy. 

“The only aspect about testing of gaming equipment that is controversial is if someone suggests that it is not needed…

“Automated bingo card devices in church basements have more independent monitoring than the tote systems.”

Ironically, Mullally added, the primary source of new money to the racing business – subsidies via slot machines, video lottery terminals and historical horse racing (HHR) machines (slot machine-like devices driven internally by race results) – are all substantially more controlled than the billions going through the tote system.

“Historical horse racing machines have similar levels of controls and oversight as any casino or lottery-style machines. Tote systems that have been used in America lack the clear lines of accountability and defined processes to independently validate the technology. Moreover, they lack proper safeguards to independently investigate a malfunction, or investigate attempts to compromise the system. The message has always been, 'we can do better.'”

Tote operators, not so much.

Mullally's position from outside racing was affirmed by one active racing executive whose role includes managing wagering, but asked not to be named because of ongoing relationships with tote companies. That executive told TIF in early 2021 that AmTote, which was reported to process about 80% of North America's pari-mutuel bets, has consistently disappointed his track:

“They have not met our expectations on tote processing innovations and it has long seemed like they are not receiving the cash needed to evolve or innovate in racing. If anything, they have given the impression most of their team was working on their historical horse racing technology.”

That technology powers the slot-like devices used to subsidize racing in states including Arkansas, Kentucky and Virginia.

MONITORING

Back in the 2008 panel, Bowlinger, Sobkowski and Mullally were all bearish on the state of wagering integrity and did not hold back.

In the session's Q&A period, Chris Scherf, long-time Executive Director of the Thoroughbred Racing Associations of North America, the owner of the TRPB, publicly contested Sobkowski's monitoring business, challenging the underlying technology and claiming it insufficient to meet industry needs.

“I think it vastly overpromises.”

By this point, Scherf had almost two decades of experience working with the tote companies and noted that the technological infrastructure that was required to institute independent monitoring was not possible given the rather sorry state of technology on the part of the tote companies.

Reached in March 2021, Scherf made it clearer.

“You haven't had an adventure in life until you've tried to get tote companies to do something in concert. I found quickly that when you get them all into a room, everyone was in favor of uniformity and the definition of uniformity was everyone doing it 'my' way.”

The Scherf challenge in 2008 was an engagement familiar to Sobkowski, who had heard the hemming and hawing before.

“We are a vendor. We compete in a free market and we've got a good system. I understand TRA [Scherf's employer, funded by the consortium of track owners] has a system as well, we'd love to go ahead and compete against you, love to go ahead and partner with you.

“We're looking for an industry solution here, we're not looking for any kind of unfair monopoly or any kind of unfair advantage.”

Earlier in his main remarks, Sobkowski struck hard at the racing industry's overwhelming reluctance.

“I just want to say that the industry has had some pretty significant push-back to the things that we're doing as a company.

“I've been told, for example, that our system is too simplistic. I've been told that our system is too sophisticated. I've been told that our system works too well and we don't need it. I've been told that our system doesn't work at all and why bother?

“But what I've really been told over and over is that someone has to pay for this and the industry doesn't want to pay for it.”

A DEAD RAT

In 2009, the Indiana Horse Racing Commission (IHRC) decided to move forward with Sobkowski's firm, AMS, declaring itself the first state in America to institute real-time, independently monitored pari-mutuel wagering.

Joe Gorajec was Executive Director of the IHRC for 25 years, and pulled no punches in 2021 when assessing the state of wagering integrity in America, suggesting little, if anything, has been done in the almost two decades that have gone by since the Fix Six scandal. He told TIF:

“Most racetrack operators would rather have a dead rat in their mouth than expose or take action on any wagering malfeasance that occurred on their races.

“If there is a system in place, today, that is for racetracks to use to monitor live betting, then the tracks should be reporting the results to the public. The reports should indicate exactly the problem that occurred, here's what was done about it and what steps are being taken to ensure it does not happen again.

“You almost never hear that, ever, from anyone.

“Tracks will not take action on their own because tracks are not in the business of integrity. Tracks are in the business of making money conducting horse racing. Some are more integrity and safety minded than others.

“I think most tracks, confronted with a wagering integrity issue, would either bury the information or bury their heads in the sand and it would never see the light of day. That's not every track across America, but the majority would not want to make public any information that would question the integrity of wagering on their product.”

New York adopted a rule requiring independent wagering oversight, and hired Sobkowski's AMS in October 2009 to monitor all betting on tracks in the state. The rule still exists, but one long-time tote executive told TIF the technology is so limited, monitoring to meet the rule can only take place on live, in-person betting at the host track. Thus, actual monitoring only occurs on just a sliver of total betting.

Widespread independent monitoring across the tote landscape never actually materialized in any state, from AMS or another firm. Though formal explanations are impossible to find, TIF learned from multiple individuals that the protocols which govern the tote system are so antiquated that betting details from the tote companies could never get to the monitoring groups in formats that would enable transaction-level oversight. Investment to upgrade systems to enable such transmissions have not been made. These protocols remain in place today.

At present, two of the three main tote companies serving North America are owned by major racing corporations, each of which also own racetracks, ADWs, high volume betting shops, content distribution arms and a host of other service providers. AmTote was bought by Magna Entertainment (later, The Stronach Group and now 1/ST) in 2006 and as was previously cited, controls most of the tote relationships between tracks and betting sites. Churchill Downs Incorporated acquired United Tote in a November 2009 deal as part of its purchase of Youbet. The third, Sportech, sold its global tote business in December 2020 to Australian firm The BetMakers.

TIF asked former TRA boss Chris Scherf in 2021 if consolidating ownership of tote companies with racetracks, as was the case with AmTote and United Tote, made any noticeable difference.

“No. I don't think anyone perceived anything was going to change or be improved, and that's the way it played out.

“It made it easier getting the tote companies to the table a bit more regularly, but that's about it.”

During the period from the Fix Six scandal of 2002 through 2009, horseplayers increasingly questioned the ability of tote firms to secure betting as they witnessed the failings, making it all the more inexplicable that independent monitoring was rebuffed. Tote representatives said there were no such issues.

One professional horseplayer proved, and reported, that he could bet up to 50 seconds into the start of a race.

Coming Thursday, April 29: Part 6 – Proof

Miss a previous installment? Click on the links to read more.

Part 1 – Expectations

Part 2 – Intertwined

Part 3 – Volponi

Part 4 – Confidence

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