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Wagering Insecurity: When Doping And Gambling Are Intertwined

This is Part 2 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 2 – INTERTWINED

Corruption resides at the intersection of significant financial gain and loose regulation. Purses boosted by subsidies from slots and other non-racing wagering present a robust opportunity for illicit activity but the sport's regulatory structure has not kept pace, either with other racing jurisdictions around the world or modern sports.

Jack Anderson, a leading global expert on sports integrity, was the keynote speaker at the University of Arizona's Global Symposium on Racing in 2018, presenting “Integrity in the World of Commercial Sport.”

Director of Sports Law at the University of Melbourne, he advises the Asian Racing Federation's Council on Anti-Illegal Betting and Related Financial Crime (ARFCAIB), whose work will also be referenced later in this series, and is a current member of both the World Athletics Disciplinary Tribunal and the International Tennis Federation's Ethics Commission, among other roles.

He spoke with TIF about the relationship between doping and other illegal activity to affect the outcomes of sporting events.

“Effective doping control is of course a vital element of the integrity objectives of a sport such as racing but it should not be the sole integrity concern and should not be seen in isolation.

“Doping in a sport such as racing is often intertwined with gambling interests, which in turn may be symptomatic of wider illicit or even criminal involvement in the sport.

“Studies commissioned by racing regulators in Great Britain and Australia noted an immediate concern with levels of criminality in the sport, attracted to the money and image laundering opportunities presented by the sport's long association with gambling.”

Anderson told TIF that doping and gambling often go together, and the presence of doping in a racing culture can be symptomatic of other issues.

“The prevalence of doping in a racing jurisdiction may also be reflective of weaknesses in that racing organization's race day operations such as:

– stewarding and standards of veterinarian oversight,

– lack of capacity in intelligence gathering on and knowledge of industry participants

– vulnerabilities in the licensing and registration of industry participants, and

– the ability of the racing organization or jurisdiction to punish misconduct by industry participants.”

There should be little need to explain the perception of doping in North America's racing culture. While the sport is regulated, public confidence in the ability of regulators and their laboratories to catch cheaters is low.

Have any doubt?

How long did Jorge Navarro and Jason Servis win at unusually high rates never to be discovered by North American racing's laboratory and regulatory structure but instead to be uncovered by a federal investigation?

EXAMPLES OF RACE FIXING, ETC.

Relatively few organized conspiracies have been uncovered in American racing over the past 20 years.

Those that have been uncovered were mostly, though not entirely, the product of state or federal law enforcement work, spurred into probing racing from other investigations rather than industry initiatives. Whether it is trainers and veterinarians illegally doping or jockeys manipulating races, TIF found only occasional instances of individuals identified and punished for attempting to profit via legal wagering channels over this period.

In January 2005, 17 individuals including trainer Gregory Martin were indicted on a host of counts including illegal gambling, conspiracy and money laundering. The plot involved the “milkshaking” of at least one horse at Aqueduct in an attempt to fix the race's outcome.

In October 2005, jockey Roberto Perez was suspended for seven years after placing superfecta bets on a race he rode and where his mount finished out of the first four placings.

Jockey Ricardo Valdes was one of seven jockeys barred by Tampa Bay Downs in December 2006, and was later indicted by the federal government in May 2009. He pleaded guilty to one count of attempt and conspiracy to commit mail fraud, with 18 other counts dropped, and was sentenced to just more than one year in prison, with three years of supervised release, in April 2015. Two co-conspirators served longer jail terms as their criminal activities moved beyond horse racing and into influencing collegiate sport events.

In July 2015, three jockeys were arrested at Evangeline Downs in Louisiana after being accused of manipulating a race at the track a month earlier, and being caught with illegal electrical devices known as “buzzers.”

Texas stewards, and local courts, caught up with jockey Roman Chapa for a well-documented incident at Sam Houston Race Park a few months earlier regarding buzzer use in January 2015, handing the journeyman a five-year suspension and $100,000 fine. He has since returned to riding.

Stewards at Canterbury Park in Minnesota suspended jockey Denny Velazquez for one year after finding a buzzer in his possession in July 2020.

Gulfstream Park has dealt with a few incidents that raised eyebrows, drew bettor complaints, and did yield some suspensions. Ray Paulick outlined those in a January 2020 article which included a series of incidents, strange superfecta payouts and more.

Florida racing is highly de-regulated, with individual tracks often controlling nearly all measures of oversight.

Paulick wrote:

“The track is under no obligation to notify the wagering public who is banned or suspended, for what reason, for how long, or whether or not a suspension (made public or not) has been reduced in time…

“It is not the most transparent way of doing business and does not instill a great deal of confidence in the wagering public.”

The indictments that scooped Jorge Navarro and Jason Servis, among others, were made public thanks to the eventual involvement of the U.S. criminal justice system. Notably, private investigations sponsored by The Jockey Club, among other groups, were seemingly crucial to yielding these indictments, though the majority of the cases have yet to be tried as of April 2021.

Federal involvement also led to the conviction of veterinarian and trainer Alfredo Lichoa when he was sentenced in February 2021 to three months in prison for his role in a money laundering scam that involved a Florida-based horse owner and dirty money from Brazilian politics.

As the site of these more recent incidents, it is notable that Florida no longer has a racing commission. The sport is regulated by an amalgamation of house (racetrack operator) rules and some state oversight on testing and licensing.

The indictments from these cases revealed no details regarding wagering on the horses or races involved. If racetracks or other groups have investigated suspicious wagering, the public is unaware of any outcomes. The lack of transparency, of any public discourse on these matters, is itself disconcerting. An opaque integrity infrastructure is like having no integrity infrastructure.

MASOCHISTIC

Jack Anderson's remarks connecting doping, wagering and other concerns are worthy of reiteration:

“Doping in a sport such as racing is often intertwined with gambling interests, which in turn may be symptomatic of wider illicit or even criminal involvement in the sport…

“The prevalence of doping in a racing jurisdiction may also be reflective of weaknesses in that racing organization's race day operations.”

The 2014 case of Masochistic case offers insight to how doping and wagering can be intertwined.

Masochistic debuted at Santa Anita on March 15, 2014, in a maiden race restricted to California-bred horses and the stewards' minutes, published by the California Horse Racing Board, explain the rest.

“Jockey OMAR BERRIO…was in the office to review the ninth race from yesterday's card. At issue was his lack of effort on his mount, MASOCHISTIC, trained by A. C. AVILA. There was no discussion of the pertinent facts as a formal hearing will be set in the near future. The Board of Stewards was concerned that Mr. Berrio prevented his horse from giving his best race. The horse was examined and tested post-race, and the CHRB investigators were directed to look into the matter.”

Video of the race is damning for Berrio. Masochistic was under a stranglehold the entire race, and Berrio never once asks the horse for an effort, cruising under the line in fifth as the 8-1 fourth betting choice.

On April 26, 2014, stewards held a hearing and reported that Masochistic tested positive for the sedative acepromazine and disqualified the horse from his fifth-place effort.

Seven days later, on May 3, Masochistic appeared in an open maiden race at Churchill Downs. The race was not just a class hike from state-bred maidens to open maidens, but was the third race on the biggest day of the year – Kentucky Derby day.

It was fairly unusual for a horse trained by Avila to race in Kentucky.

In the 10 years prior to this race, Avila trainees made nearly 1,400 starts and only six of those came in Kentucky, all in graded stakes races. Two of the six starts came on Kentucky Derby Day in 2005, when Oceanus finished ninth in the Grade 2 Churchill Downs Handicap at 60-1 and Santa Candida was eighth at 24-1 in the Grade 1 Humana Distaff Handicap.

Omar Berrio rode both.

Masochistic's maiden race was the only horse Avila was saddling at Churchill on May 3rd and he legged-up that day's eventual Derby winning jockey, Victor Espinoza.

The race jumped at 11:33 A.M. Eastern time, with total intra and inter-race wagering pools of more than $3.7 million. Masochistic went straight to the lead and never looked back, winning by 14 lengths. Despite the shift from state-bred maidens to open maidens, Masochistic was dispatched a solid 2-1 favorite.

Some 10 days later, the late Ned Bonnie, then a Kentucky Horse Racing Commission member, thought a betting coup was perpetrated on Derby Day.

Frank Angst from the Bloodhorse details the rest:

“Bonnie, who consistently reminds other commissioners that the betting windows can provide a bigger prize than a purse for nefarious horsemen, said the state needs to bring in outside help to investigate events surrounding the maiden win of Masochistic…

“While that race may have been run squarely, Bonnie believes the betting public was duped by a program line that didn't provide the whole story with its “fifth by 4 1/4 lengths” in Masochistic's March 15 debut at Santa Anita Park.

“Importantly, the comment line noted a disqualification but there was no room for the reason for the DQ—a failed drug test. It did not note a follow-up investigation of Masochistic's rider that day, Omar Berrio, who is being investigated by the California Horse Racing Board for lack of effort in the March 15 race…

“Despite the disqualification and the rider investigation in California, Masochistic was allowed to be entered at Churchill in the May 3 maiden race. Horse racing is regulated from state to state.

“Bonnie believes the May 3 race won by Masochistic should be investigated closely, particularly wagering associated with the race, because Churchill may have been used to carry out a betting coup. The thinking is that with larger than usual purses on Derby day, large wagers would not catch as much attention and the larger pools would help ensure higher odds.

“Kentucky Horse Racing Commissioner Dr. J. David Richardson said because the horse ran legitimately in Kentucky and any concerns about his effort occurred in California, it was up to the CHRB to conduct the investigation.

“We're not in California, and we're not in Kansas,' Richardson said to Bonnie…

“Kentucky Horse Racing Commission supervisor of pari-mutuel wagering Greg Lamb said Kentucky has previously worked with other regulators and has provided wagering information as needed. After the meeting, Lamb provided a spreadsheet that showed $3,741,395.97 was wagered on the May 3 race at Churchill.

“The most money wagered on the third race May 3 at Churchill was the $545,292.50 sent in on-track. The other four outlets with more than $100,000 wagered were advance-deposit wagering outlets TwinSpires.com, TVG.com, XpressBet.com, and Churchill Downs-owned Isle of Man-based rebate shop Velocity Wagering.”

Nearly a year after Masochistic's sedated debut, the California Horse Racing Board suspended Avila for 60 days and fined him $10,000, the maximum allowed under the rules of the state. Berrio's ride in the race is never referenced again in any other CHRB report, and in March 2021, a CHRB spokesperson confirmed to TIF that no complaint was ever filed against him for the ride.

Masochistic went on to become a Grade 1 winner for a different trainer and was the center of controversy after the 2016 Breeders' Cup Sprint, a race where he finished a close second, but tested positive for a banned steroid and was disqualified.

As the back-and-forth at the Kentucky Horse Racing Commission exhibited, state-by-state finger-pointing is of no benefit for the bettors, who surely took the brunt of the incident on both days. While horsemen have recourse as purses are re-distributed following positive tests, bettors have none.

In this case there was active, visible oversight. There were meaningful investigations. But due to a variety of factors, those measures failed. Instead, it showed the inherent impracticality of relying on state regulation of what has become a national business.

Overall, the greater industry has generally fought-off for decades meaningful attempts to improve integrity, specifically in regards to wagering. In our next installment, “Wagering Insecurity” details how nearly 20 years ago, and with key entities in the sport aware of exact vulnerabilities in wagering systems, a $3 million fraud was perpetrated on the sport's biggest day.

Coming Tuesday, April 20 – Part 3 – Volponi

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

Part 1 – Expectations

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TIF: Wagering Insecurity, Part I–Expectations

This is Part 1 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. 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.

Participants across racing should have some basic expectations met.

Simply put, the competitions within racing should be fair and honest. Horses should be free from any illegal performance enhancement. Jockeys should expect horses are sound, track surfaces are safe and stewards enforce rules consistently. Bettors should expect that jockeys give horses their best chance to win, betting information is accurate and that wagering systems are secure and do not advantage some customers over others.

Are we meeting these expectations?

This series delves into the integrity of North American horse racing, specifically as it relates to the $11 billion wagered through the pari-mutuel system, and the uncounted billions wagered outside the purview of North American racing regulators.

Horse racing is competing for customers, working to retain existing ones while trying to attract and develop new ones, like any business. Proper standards of integrity are necessary.

Are racing's customers, the bettors, properly protected at present?

TIF believes the answer to that question is “no.” The security of racing's wagering systems is not up to contemporary standards. The oversight of racing from stewards and regulators is not sufficient at present for customers to have confidence in the legitimacy of results.

To read the rest, click here.

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Wagering Insecurity: Are We Meeting The Basic Expectation Of Integrity In Racing?

This is Part 1 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. 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.

Integrity is essential in horse racing to give all participants confidence.

Customer confidence is important for any business, but especially so when people are investing their money.

Across the forthcoming installments of the “Wagering Insecurity” series, several unsettling perspectives are offered. TIF spoke with nearly 50 long-time current and former industry executives, regulators and officials from around the racing world, some for direct attribution and others on background, who shared their unease with the status quo. A common thread: the blame is shared.

The poor state of wagering systems security and integrity measures is not the fault of any one individual, group, regulator or corporation, it is how horse racing in North America has evolved.

Wholesale improvements are needed. If we lift our standards, confidence will build, participation will grow and racing's future will be more secure.

EXPECTATIONS

Participants across racing should have some basic expectations met.

Are we meeting these expectations?

Horse racing is competing for customers, working to retain existing ones while trying to attract and develop new ones, like any business. Proper standards of integrity are necessary.

Are racing's customers, the bettors, properly protected at present?

Both perspectives are addressed throughout the series.

When American racing fails its bettors and stakeholders, it loses customers. In a world where sports betting is available to almost half of the American population and typically just involves downloading a mobile app, cheaper and better policed gambling opportunities are easily found.

Do participants in racing have confidence in the outcomes on the track and through wagering? Right now? No. Could they? Yes, or at least far more so than exists now.

Confidence is good for business.

WHO IS BETTING WHAT

Racing's business statistics are deliberately opaque. There is no central office that tracks racing's betting business and performance, a perpetual disservice to the sport's stakeholders. Basic metrics on wagering would be helpful for many stakeholders in the sport but getting them is practically impossible.

This lack of clarity has become increasingly problematic because the business changed fundamentally in the 1990s and the division of revenues from wagering did not keep pace. Handle shifted from on-track to off-track as full-card simulcasting and internet-enabled advanced deposit wagering (ADW) took hold. On-track betting revenues are often the most lucrative for purses under current agreements between bet-takers, tracks and horsemen. It has declined while the ADW business has grown in significance, with the pandemic-related closures turbocharging that growth, accounting for an estimated $7 billion of U.S. Thoroughbred racing handle last year.

Now, who is betting what, and through which channels?

When Equibase reported total wagering on U.S. racing in the pandemic-impacted 2020 was $10.92 billion, down less than 1% from the previous year despite nearly ten months of racing without live attendance, that felt like a decent showing.

But total handle figures at a nationwide level, or even at the individual track level, do not offer much insight to the health of the business. They tell us very little. It is the composition of that handle which is a more meaningful measure, but such details are almost never available to anyone except the host track where the race occurs.

Citing total handle figures as a measure of performance should be viewed skeptically, particularly by horsemen.

Where does handle come from? How many individual customers are wagering? How many new customers have been created, and how many are still betting? How many customers are betting substantial amounts over $10 million, $50 million, or over $100 million annually? What is the effective takeout for customers of different ADWs? How much are purses earning from different customer segments?

Without centralized reporting of these figures made available to all parties in the sport, it is almost impossible to know.

Here is what we do know.

Reports from the Oregon Racing Commission, which serves as a hub for the largest registered ADWs, show that handle for the three largest ADWs in 2020 – TVG, TwinSpires and Xpressbet – was more than $6.2 billion. That includes all breeds and greyhound betting through those ADWs, not just U.S. Thoroughbred betting, though Thoroughbred racing does generate the vast majority of total action.

NYRABets, a fourth major ADW which hubs some of its betting through Oregon, reported handle of $225 million, but that isn't the entire picture as much of its handle comes from New York residents, which is not included in Oregon figures. The New York in-state numbers have not been made public.

What about the rest?

THE GROUPS

Some came from on-track money from January through early March when tracks were open. A small amount came from tracks with live attendance after March. Some came from smaller ADWs hubbed in North Dakota, where betting handle by ADW is not made public. Some came from Canadian customers.

But much of it came from groups like Elite Turf Club, entities which TIF has called “high-volume betting shops” (HVBS) in our previous white paper but are more formally known within the industry as secondary pari-mutuel organizations (SPMOs). These groups are the biggest customers by handle, receive substantial rebates and have direct access to pari-mutuel pools.

In his 2016 book “The Perfect Bet,” author Adam Kucharski calls it “scientific betting.”

“The techniques are now so effective – and the wins so consistent – that teams…don't celebrate when their predictions come good.”

These groups participate at an institutional level. They bet big because that is what the math dictates. It is cold, calculated investing. Kucharski continues:

“It's not cheap to set up a scientific betting syndicate. To gather the necessary technology and expertise, not to mention hone the prediction method and place the bets – costs most teams at least $1 million. Because betting strategies are expensive to run, teams in the United States often seek out racetracks that offer favorable gambling conditions.”

According to court filings from 2017, The Stronach Group (now 1/ST) owns Elite Turf Club.

Based on a variety of projections which TIF has updated to account for 2020 figures, we estimate total betting from the HVBS/SPMOs was likely between 33% and 40% of total U.S Thoroughbred handle, in the vicinity of $4 billion out of the total $10.92 billion. The reality could be higher or lower. In 2003, they represented approximately only 8% of total wagering.

These groups might not be growing, but rather they are representing a larger percentage of wagering as mainstream horseplayers abandon racing, or shift more of their action to legal sports betting options.

The majority of play from the HVBS/SPMOs is not counted in the ADW figures. Customers like those at Elite, and it is only a few customers, place their bets directly into the pools, bypassing an ADW intermediary. There are also smaller computerized robotic wagering groups which DO process bets through ADWs, entities betting tens of millions annually. Their total handle is unknown to the wider industry because it is commingled with ADW betting.

Bettors may not understand how the big HVBS/SPMO groups operate and exactly what they are betting, but they can readily observe their impact on the game.

What horseplayer hasn't watched as a horse that is last into the gate at 23-1, breaks on top and is never headed, winning at a much-reduced 11-1? Horses routinely enter the gate at 5-1, only to win at 5-2. Or in the last flash of a mandatory payout when a bet of half a million dollars shows up in the pool?

These are discouraging experiences for the people who cash a bet in those races and draws headshakes from many others. For more than two decades, these incidents have plagued North American racing's customers without any meaningful attention or action from track operators. Perhaps their most noteworthy response has been removing the odds from the screen in the final seconds of loading through the first quarter-mile of a race so the drops are less visible. In many cases, the big syndicates wagering hundreds of millions annually through HVBS/SPMOs are the cause of such price crunches, degrading the experience for everyone else.

The inability of regular horseplayers to have any idea what price they are getting damages the product every day. Sports betting customers know exactly what their return will be if their bet wins. What was once a harmful feature of pari-mutuel wagering is now a huge competitive disadvantage.

Sports betting is growing at an explosive rate with attractive betting offerings and widespread distribution. Operators are spending vast sums using bonuses and promotions to acquire customers and are embracing modern betting technology. That is not bad news for racing companies in the racing wagering space, like TVG and TwinSpires, whose parent companies run sports betting businesses, but it is bad for those who depend on purses for their livelihoods.

For the last 25 years, as betting shifted online, purses in many North American jurisdictions have been bolstered by subsidies from additional gaming, be it slot machines, video lottery terminals (VLT), historical horse racing (HHR) machines or others. That era in American racing is far closer to sunset than sunrise as casino wagering moves online where revenues are undivided. Decoupling racing from slot and casino revenues will likely increase. While all stakeholders in racing should undoubtedly pursue every funding source possible, the single greatest, sustainable source of revenue for racing on the continent remains actual wagering on racing.

There are avenues for improvement, but any efforts to attract new wagering on racing will fall flat if the North American racing industry fails to embrace integrity across the sport – within its wagering systems, betting platforms and the running of the races themselves.

In our next installment, one leading expert makes it clear – doping in racing is intertwined with gambling. So why is gambling almost never referenced or investigated in North America in such cases?

Coming Thursday, April 15 – Part 2 – Intertwined

Review the Executive Summary to “Wagering Insecurity”

Want to share your insights with TIF? Contact us here.

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Wagering Insecurity: Thoroughbred Idea Foundation To Examine Current State Of Oversight

The Thoroughbred Idea Foundation (TIF) will launch “Wagering Insecurity,” a multi-part series which will examine the current state of oversight of North American Thoroughbred racing and wagering, beginning Tuesday, April 13.

In the aftermath of the infamous “Fix Six” at the 2002 Breeders' Cup, the American racing industry pledged millions of dollars to improve the monitoring of pari-mutuel betting and create a central office to oversee wagering security. While plenty was spent, the oversight never materialized. Vulnerabilities still exist, late odds changes impact many races and transparency is nowhere to be found.

TIF believes improved measures of integrity will boost customer confidence, which will lead to increased participation and put racing on a path to a more sustainable future, particularly in light of the rapid expansion of legal sports betting across the continent.

Customer confidence is crucial to any business, especially gambling, but North America's racing industry has done little to instill it over the last two decades.
“Automated bingo card devices in church basements have more independent monitoring than the tote systems,” said Kevin Mullally, Vice President of Government Relations and General Counsel for Gaming Laboratories International.

Track operators seem indifferent. As one 25-year U.S. state racing regulator told TIF for this series:

“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.”

In 2005, when speaking of the racing industry's post “Fix Six” efforts to upgrade wagering oversight which eventually failed, then Del Mar Thoroughbred Club President Craig Fravel acknowledged the track operators might fall short of the mark.

“We [track operators] are a little suspect because we are maybe overly confident at times. I think to allow customers to have sufficient levels of confidence in us, we have to not only demonstrate we are capable of reviewing things, but that there is a sufficiently independent and authoritative organization out there than can be the ultimate arbiter of those kind of decisions.”

Such a group still does not exist.

THE TRPB

The Thoroughbred Racing Protective Bureau (TRPB) is North American racing's only provider of any wagering oversight, but the group has been defunded over years and is not independent. It is a wholly-owned subsidiary of a consortium of North American racetracks.

The TRPB provides member tracks a platform to monitor wagering on their own races and assist them when needed. The tracks essentially monitor themselves.

Given the consolidation which has taken place in horse racing over the last 20 years, tracks control most of the levers of the greater business. They own most of the online betting platforms which process the majority of bets on North American racing, known as ADWs. They own two of the three main tote companies which handle most betting activity. One conglomerate even owns at least part of a major off-shore rebate shop whose few customers account for an enormous amount of total handle.

Tracks fund the TRPB, which was once called horse racing's own “little FBI,” but has seen its policing functions largely reduced. Horse racing may have been once described as “the best policed sport of all,” but that has changed.

“It was an erosion, over time,” Paul Berube told TIF of the TRPB which he ran for nearly two decades after working as an investigator with the group for another two decades before that.

“Today, there is no national unity, but in the heyday of the TRPB, that was our strength.”

Despite several attempts from TIF, the TRPB's Executive Vice President Curtis Linnell declined the opportunity to answer questions for this series.

SUSPICIOUS BETTING

While the TRPB has taken on an almost invisible profile to most bettors, there is an unexpected group which has started paying more attention to North American racing,

Unbeknownst to most American horseplayers, a large bookmaking market has emerged in Europe offering fixed odds bets on North American racing. Total handle is believed to exceed $1 billion annually. Contracts enabling these relationships are often facilitated by XB-Net, a subsidiary of 1/ST, formerly the Stronach Group.

Bookmakers have their own monitoring group which examines wagering on all sports, investigates suspicious wagers and raises alerts to regulatory authorities with whom they have information-sharing arrangements. For the first time ever, they identified suspicious wagering on U.S. races in the fourth quarter of 2020.

According to Matt Fowler, Director of Integrity at the International Betting Integrity Association (IBIA), the recent alerts on U.S. races go “well beyond just an unusual betting pattern or unexpected price movements.”

European fixed odds betting operators are identifying activity involving U.S. racing that should be concerning to all U.S. racing stakeholders. Where is the American oversight on American races?

At present, there is no reporting relationship between European bookmakers and any American counterparts, the TRPB, North American track operators or regulators. For now, the findings will inform bookmaking decisions but not the patrolling of American races, where pari-mutuel handle vastly exceeds bookmakers.

A world-wide market requires world-wide supervision. The TRPB is the closest thing North American racing has to self-regulation, which is fine…until it isn't.

What we have now is insufficient.

Racing on the continent in the 2020s is run with an integrity infrastructure better suited to the 1970s and a business model from the early 1990s. The oversight measures for the races themselves and their wagering systems have degraded over time. Racing's integrity infrastructure is falling farther behind that of the rest of the developed racing world, where more robust monitoring of all markets is far greater, transparent oversight is commonplace and customers are far better protected. Examples of these modern steps are plentiful throughout the series.

OPPORTUNITY

Improvements to racing's integrity infrastructure will improve customer confidence, increase participation in the sport and lead to a more sustainable future.

“Wagering Insecurity” provides several recommendations for North American racing to consider.

Notably, the new Horseracing Integrity & Safety Authority (HISA) must include elements of bet monitoring to its practices once launched.

Global sports and racing integrity expert Jack Anderson of the University of Melbourne, who was the keynote speaker at the University of Arizona's Global Symposium on Racing in 2018, highlights several key points throughout “Wagering Insecurity” which support this conclusion.

“Effective doping control is of course a vital element of the integrity objectives of a sport such as racing but it should not be the sole integrity concern and should not be seen in isolation. Doping in a sport such as racing is often intertwined with gambling interests,” Anderson said.

“The prevalence of doping in a racing jurisdiction may also be reflective of weaknesses in that racing organization's race day operations such as:

– stewarding and standards of veterinarian oversight,

– lack of capacity in intelligence gathering on and knowledge of industry participants,

– vulnerabilities in the licensing and registration of industry participants,

– and the ability of the racing organization or jurisdiction to punish misconduct by industry participants.”

The role of HISA can and should go farther than its more commonly understood functions which have dominated early dialogue around it – namely its racetrack safety and anti-doping and medication control programs.

The legislation which established HISA empowers much more, declaring that HISA shall “exercise independent and exclusive national authority over the safety, welfare and integrity of covered horses, covered persons, and covered horseraces.” The definition of covered horseraces includes those with interstate wagering and ADW account betting.

TIF makes several other recommendations in the series related to adopting modern, transparent best practices, many of which are in place in other racing jurisdictions and sports. Significant upgrades are possible and, fortunately, the proverbial wheel does not require reinvention.

The opportunity for significant reform is real, lifting the standards of North American racing like never previously considered and importantly, rebuilding confidence in racing's voluntary participants – horseplayers and horse owners.

“TIF's advocacy has focused on improving the business for horseplayers and horse owners as their participation in racing fuels everything,” said Craig Bernick, President and Chief Executive Officer of Glen Hill Farm and founder of TIF. “We need confidence in both groups to sustain the industry, and as the various installments of the series will reveal, it is frightening just how far behind we are in protecting customers.

“Industry consolidation of track operators, technology companies and other service providers has not improved the sport,” Bernick added. “As we move forward over the next two decades, racing needs to compete for customers. Meaningful integrity controls and better pricing are needed to meet the expectations of modern bettors. Right now, we are falling woefully short and present an increasingly uncompetitive wagering offering.”

TIF's Board of Directors established the Wagering & Integrity Issues Steering Committee in July 2020, which was instrumental in the development of this series.

Patrick Cummings, TIF's Executive Director, said: “We are incredibly appreciative of the dozens of current and former racing and gaming industry executives as well as regulators from North America and abroad who provided so much insight, both on the record and for background in this series.”

“This project pulled together many pieces that have not been connected previously, and I believe readers will walk away with a much greater understanding of what has happened for the last 20 years, the extent of the threats facing the business and the tremendous opportunity to bring about changes through HISA. We look forward to sharing the various installments in the coming weeks.”

The post Wagering Insecurity: Thoroughbred Idea Foundation To Examine Current State Of Oversight appeared first on Horse Racing News | Paulick Report.

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