This is Part 4 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 4 – CONFIDENCE
The Breeders' Cup Fix Six rocked North American racing.
In response, the National Thoroughbred Racing Association (NTRA) launched the Wagering Integrity Alliance and a separate entity, the Wagering Technology Working Group (WTWG).
In August 2003, a report published by the WTWG, in concert with the NTRA's security consultants, recommended three “primary measures”:
– Create the National Office of Wagering Security,
– Establish uniform, minimum security standards for wagering systems,
– Enhance the technology infrastructure of wagering systems to enable additional cyber-security measures.
The report was released in advance of that year's annual Jockey Club Round Table (full transcript).
Jim Quinn was the horseplayer representative in the WTWG that assembled the report and highlighted the interests of horseplayers emerging from the Fix Six:
“In regard to reform, what did the players want? Three things, primarily:
“One, the transmission of all wagering data from the simulcast outlets and hubs to the commingled pools should be state of the art, that is, as good as it gets.
“Two, as soon as possible, technology upgrades must be implemented, so that the late mergers of simulcast pools that cause the suspicious drops in the odds for unacceptably lengthy intervals after the horses have left the starting gates, would be eliminated, or effectively mitigated.
“Three, the players demanded to know, what is the scope of the problem, or how long has this been going on?”
Greg Avioli, then chief operating officer of the NTRA, recognized the need for a national response:
“A national office is our best means for detecting and responding to potential security threats across multiple jurisdictions or tote systems.”
Roger Licht, then chairman of the California Horse Racing Board, offered a regulatory perspective:
“Perception is often more important than reality. The perception is that people are betting after the commencement of a race.
“From what we have learned to date, that is not reality, but unless we upgrade our tote systems, we'll continue to have disgruntled horseplayers who feel that the odds on the winner – especially when we bet on him – are dropping after the commencement of a race.
“Let's change that perception – as fast as we can.”
Rudolph Giuliani, the former New York City mayor hired as an NTRA consultant through his firm Giuliani Partners, said:
“The idea of a wagering security office is very, very important.
“The only way in which you can assure yourselves and assure the public that there's a standard of integrity necessary for people to continue to invest in this sport in all different ways is to centralize the data and to have an office that focuses on accomplishing that mission and then making certain with tests along the way that integrity is maintained.”
Horseplayers in 2021 will be nodding their heads in agreement with all of these takes relative to betting on racing in North America 18 years after they were first shared. That should serve as a significant indictment.
Given the state of affairs at the time, the move to create the national office was met with optimism.
Horse racing's wagering business was changing. Bettors' perception was poor. The Fix Six scandal undermined confidence and discredited whatever controls the industry thought it had in place.
It did not go as planned.
ORGANIZED OVERSIGHT FAILED SLOWLY
Financial reports from the time show the NTRA spent almost $3 million on consultative work to form and launch the Wagering Integrity Alliance and a national office after the Fix Six through 2003.
Sharon O'Bryan, the initial Alliance director hired by the NTRA, turned-down the post one week before she was supposed to start. An interim director, Isidore Sobkowski, was hired a month later. But the project languished and NTRA annual reports from this period serve as reminders of the shifting interests of the time.
The Wagering Integrity Aliance became the National Office of Wagering Security but was soon rebranded as the Office of Racing Integrity (ORI). In its 2005 year-end publication, the NTRA indicated the ORI would be functional by the end of 2006.
In December 2005, Craig Fravel, then in the midst of a 20-year leadership role with Del Mar, highlighted the tough position of track operators being the only responsible entity for wagering integrity, with help from the shrinking TRPB.
After outlining a suspicious wagering outcome raised by a customer which he investigated with TRPB help, Fravel told an audience of industry professionals at the University of Arizona's symposium that self-oversight was not enough.
“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.
“And to a degree track management does have a vested interest in making sure that, [not only are we] at least portraying the game as on the up and up, but we are a little suspect simply because we are maybe overly confident at times, and I think the Breeders' Cup Pick-6 scandal was a classic case of that.
FORMER DEL MAR PRESIDENT CRAIG FRAVEL
PHOTO: ALEX EVERS
“I had said for years that, upon representations by various tote companies, there's no way anybody could get in and manipulate the mutuel pools.
“Well, in 2002 we found out that that was absolutely untrue and I had been told for years that there was no way that anybody could do past posting and found out about six months after that, that somebody was past posting in New York.”
Self-oversight remains the status quo and is insufficient for the modern gambling marketplace in 2021.
Despite the initial impetus to promote wagering security, the national initiative floundered.
After spending nearly $3 million in its first two years, NTRA outlays on wagering security initiatives dropped to just $1.1 million across 2004 and 2005 combined. The NTRA's five-year strategic plan for 2006-2010, published in June 2005, indicated the NTRA was budgeting $1 million annually for each of the next five years to support the Office of Racing Integrity. Instead, spending fell to just $28,531 in 2006 and $125,040 in 2007, about $1.8 million less than projected spending announced 18 months earlier.
The NTRA reported the ORI mission was to take “a lead role in the Wagering Transmission Protocol project to improve the technological infrastructure of the pari-mutuel wagering system.”
By 2008, ORI was gone and the hope of independent oversight of wagering was fading.
In December 2008, three executives from different spheres of the business addressed the topic of wagering security in Arizona. All three abandoned their work in racing soon thereafter.
Coming Tuesday, April 27 – Part 5 – Bingo
Miss a previous installment? Click on the links to read more.
Part 1 – Expectations
Part 2 – Intertwined
Part 3 – Volponi
Want to share your insights with TIF? Email us here.
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