This is Part 6 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 6 – PROOF
Past-posting is the act of placing a bet after a race has started because the wagering pools were not properly closed. Professional horseplayer Mike Maloney had suspected past-posting was happening with regularity and pleaded with a variety of officials for years to clamp down, but to no avail.
Paul Bowlinger, then Vice-President at the Association of Racing Commissioners International (ARCI), a trade group of racing commissions, recounted his 2007 observations of Maloney in a 2008 conference at the University of Arizona.
“He basically came and told this audience [one year earlier]…I past-posted and I did it to show the industry how easily and how frequently it can be done.' “
Mike Maloney is a member of the Thoroughbred Idea Foundation's Wagering and Integrity Issues Steering Committee and documented his experience uncovering past-posting opportunities in the 2000s at the end of his 2017 book “Betting With An Edge.” After engaging, or attempting to engage, with a plethora of track executives and even the NTRA, Maloney realized there was almost no traction to securing wagering systems.
He wrote:
“To make people in racing realize what's going on here, I don't just need proof…I need to drop a bomb. At Fair Grounds in 2007, I found one.”
After months of trying to understand the issue while betting the races, Maloney explained how he identified that betting pools were not closing appropriately. Tracks maintained little to no record of when races actually started and a series of issues with time syncs between tote betting machines and the host track made it increasingly challenging to prove when there was an actual problem.
What Maloney knew, for certain, is that if the mechanism to stop betting at the host track and all other simulcast and online sites was being used, it was not always functioning correctly.
Stewards at tracks are provided a mechanism to close the betting pools for a race under their supervision.
This mechanism, known as a “stop wagering device,” is supposed to lock all wagering on that race from on-site and at all other locations off-site, and online, where bets are accepted. Maloney noticed that the act of closing the pools was replicated in individual betting terminals with an audible notification to live tellers.
THE BEEP
With an established “office” for wagering at Keeneland, and with a semi-private teller to enter Maloney's bets, he began to notice the “beep.”
“The beep is just an alert to the teller. I began to listen for the beep. In the vast majority of races, it came at the proper time. The gates would open, within two seconds I would hear the beep, and I knew the race was properly closed.
“If I was betting that track, my tickets would stop coming out. But that's not how it was all the time, and I noticed that certain tracks were a lot worse than others.
“Fair Grounds was really bad about it. Golden Gate was really bad about it. Aqueduct was really bad about it. The Florida tracks had issues. As I watched this, I no longer suspected that past-posting was possible, I knew with certainty it could happen.”
To prove the point, Maloney bet on a race at Fair Grounds where wagering remained open during the race, well after the start.
“We were over 50 seconds into the race when I heard the beep and wagering finally closed.”
Following these startling revelations, Maloney thought an investigation would be forthcoming and wagering security bolstered.
“I got a visit from the TRPB…I was hoping I'd be able to help them investigate the incident, but that was naïve. They were more interested in investigating me.”
While Bowlinger simplified Maloney's actions in his 2008 remarks, Maloney clarified his intent in a 2021 interview for TIF.
“I certainly wasn't doing it for fun. Despite regular pleading with some officials, very few believed it was happening and said they did not have actual proof.
“So, I showed them the proof from my bets and all of the other legwork I did to expose this for them. I thought that would be enough for those in charge to realize that there was a real problem with the tote systems and that now it could get fixed.
“Instead, I was called before two Commission meetings to show cause as to why my racing license shouldn't be revoked.
“It seemed that more than anything, they wanted to intimidate me and interrogate me, almost like I was a criminal for revealing to them their own systems' failings.”
A June 2008 past-posting incident came to public attention after it was learned customers at Tampa Bay Downs were able to bet on a race at Philadelphia Park (now Parx) after the race was over, clearing more than $13,000 from $2,000 in bets made after the race.
The TRPB's Curtis Linnell told the Paulick Report at the time “it didn't look like it was widespread.”
Paulick wrote:
“This issue begs the question of who is minding the tote, a patchwork, less-than-state-of-the-art wagering network that handles the approximate $15-billion in bets each year and flows through racetracks, hubs, guest hubs, off-track betting sites, account wagering systems, and off-shore rebate shops?”
WHISTLEBLOWING
More than 18 months after Maloney's first proof and exposure of past-posting, and seven years since the Breeders' Cup Fix Six, Maloney was contacted by a tote employee “who didn't trust his company to report” such an incident properly.
The race in question was the Grade 3 Los Angeles Handicap at Hollywood Park on May 16, 2009.
“Rather than immediately report it myself and initiate the usual industry cover-up, I decided to wait and watch what the tracks and regulators would do…
“I was hoping the higher-ups at Hollywood Park would inform the betting public of the failure of the tote system. Then I hoped to see the California Horse Racing Board, since it regulates all wagering and racing in the state, issue a press release regarding a potential investigation.”
But there was no immediate reaction.
Maloney blogged about the incident, which was then picked-up by Paulick Report. Wagering on the race at 33 locations had not been closed properly, enabling patrons there to continue betting on the race even after the results were known.
Tote officials recognized the issue and did not honor winning bets placed at the 33 locations for the race, though they never raised the issue to the public, until Maloney blew the whistle.
“The Hollywood incident summed up the industry response to all of the tote problems.
“First, the industry doesn't want anyone to know about the issue, because it makes them look bad. Then, when they're called on it, they deal with it in a way where they don't even acknowledge the systematic failure that led to the people who fund the game being cheated out of their money.”
Maloney's quest continued for several years, with more incidents identified. Many horseplayers recall the incidents and remain concerned about past-posting, though tote experts, who wished to remain unnamed, told TIF that the specific issues Maloney identified about past-posting were rectified.
While he backed away from the fight in 2012, as Maloney explains in the book, he remains steadfast to this day that the wagering systems for American racing still lack some of the basic security provisions they need.
A STEP BACK FOR INTEGRITY IN 2020
In December 2020, ARCI adopted an update to its Totalisator Technical Standards (TTS) document. This document contains the requirements for North American pari-mutuel wagering operators and bet-takers, and is supposed to be adhered-to by members.
In its most recent update, the document included an adjustment to the requirements of the stop wagering device. As it describes, tote vendors “shall install two separate devices that activate the stop wagering function.”
The device closes wagering on a race and provided all downstream receivers of the signal from the device are calibrated, it stops the occurrence of past-posting as painstakingly identified by Mike Maloney over years.
According to the TTS document:
“The stop wagering device shall be the judge's console and a tote system backup located at the racing association.”
That is, the host track where the race is taking place.
The primary device is in the possession of the stewards overseeing the race itself. But the 2020 update amends the backup device's requirements.
“Said tote system backup may be operated by local racing personnel and/or racing stewards, and also remotely operated by tote personnel not physically located at the racing association.
“If the tote system backup is operated remotely, a protocol for the remote operation shall be submitted to the racing commission for approval.”
In other words, the main device is still with the stewards, but the backup device can be operated remotely, out of control of the track and stewards. This has flabbergasted Maloney, who offered the following comments in 2021:
“I can't imagine a system where an update of these protocols would bring us to, hypothetically, a less secure operation of the stop wagering function in 2021, but that is what seems to have happened.
“The same general lack of concern I felt the industry showed horseplayers in 2007, seems to still be in place now. The betting infrastructure is ancient. How can a reasonable observer look at what we have in place and not think it is in need of monumental upgrades to protect honest customers?”
If technology had evolved across the American pari-mutuel wagering landscape and centralized backup remotes were implemented with transparent oversight, then confidence might be warranted.
But that does not seem to be the case.
Instead, while other gambling technologies continue improving over time, tote technology seems to remain much the same.
“TRUST US” ISN'T ENOUGH
Alarmingly, some of the same “late scan” functions which Chris Harn and his conspirators exposed in the Breeders' Cup Fix Six remain in place.
Maloney documented in 2017 that the method by which tracks identify winning superfecta bets across all North American races still uses the “late scan” approach for verifying winning tickets.
Instead of submitting the full details of every superfecta bet to the host track as it is placed, the remote bet taker only communicates to the host track the dollar amount of superfecta bets they have taken before the race begins. Once the race is run and order of finish confirmed, then the host track requests that the remote betting sites provide detail on how many winning superfecta tickets should be paid to them.
Defined as a process “used after the winners are known” by the Inter Tote System Protocol (ITSP), a shared resource used by tote companies, tracks and remote betting sites, every superfecta bet on North American racing is processed as a late scan.
Maloney said:
“The 2002 pick-six scandal happened for a variety of reasons, all well-documented. To the best of my understanding, the only update that has been made to the ITSP is for the pick six, or any multi-race bet like it, which the industry calls 'Pick-N' bets. They've moved from late scans to early scans.”
The ITSP identifies an early scan is “used after the winners are known from leg to leg of Pick-N pool types.”
The total Pick-N play, with combinations and wager amounts, is still not secured and transmitted to the host track before the betting sequence begins. In 2017, Maloney called these situations “vulnerabilities without reasonable oversight.”
These processes still exist today.
TIF questioned the TRPB about the unusually low superfecta result of the 2019 Kentucky Derby in the weeks following the race. That year's race was unofficial for more than 20 minutes before stewards demoted Maximum Security and promoted Country House, at 65-1, to the win. The longest-priced winner of the race in modern times, which holds America's largest field and largest superfecta pool, produced a superfecta return which was surprisingly low in comparison to other combinations in the past, at just $51,400.
There may be a plethora of reasonable explanations, but none have ever been provided.
“Trust us” isn't enough.
The 2005 remarks of then Del Mar Thoroughbred Club President Craig Fravel, now the Chief Executive Officer for 1/ST Racing (formerly The Stronach Group), questioned the ability of the tracks themselves to properly ensure the security of wagering. Keep in mind that the one entity which exists in this capacity, the TRPB, is a wholly owned subsidiary of a consortium of racetracks.
“We [track operators] are a little suspect simply because we are maybe overly confident at times.
“I think to allow customers to have sufficient levels of confidence in us, we have to demonstrate that not only are we capable of reviewing things, but that there is a sufficiently independent and authoritative organization out there that can be the ultimate arbiter of those kind of decisions.”
North American racing is still waiting for one, some 16 years after Fravel's remarks, and 19 years since the Breeders' Cup Fix Six.
The lack of oversight is a flashing red light to both existing and new racing fans. In our next installment, we will look at other racing jurisdictions which are tackling these topics and seeking to keep pace with the ever-changing world.
Coming Tuesday, May 4: Part 7 – Z
Miss a previous installment? Click on the links to read more.
Part 1 – Expectations
Part 2 – Intertwined
Part 3 – Volponi
Part 4 – Confidence
Part 5 – Bingo
Want to share your insights with TIF? Email us here.
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