11/20/2002 12:00AM

Bet review will cover entire year

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NEW YORK - Racetracks and totalizator companies have agreed to conduct a thorough examination of pick six and pick four payoffs since January 2002 as part of a wide-ranging review of the sport's electronic wagering network, officials of the National Thoroughbred Racing Association said Wednesday.

A consulting company run by former New York mayor Rudolph Giuliani will oversee the review, which was announced at a news conference in midtown Manhattan. The company, Giuliani Partners, was founded earlier this year in partnership with a handful of former City Hall officials and the accounting and consulting firm of Ernst and Young.

Giuliani's company is expected to make recommendations to the NTRA, racetracks, and tote companies about how to design a betting system that cannot be manipulated, officials said.

Serious concerns about the security of tote systems and the wagering network that links hundreds of betting sites across the country have been raised by the ongoing investigation into the Breeders' Cup pick six.

"We will apply very high standards to [the review], which is what they want, and try to come up with a system that is as foolproof as it could be," Giuliani said.

"In other words, as state-of-the-art as it can be in terms of offering people security in that when they make a wager, that it is a fair process, that people are not intruding into it, that people are not rigging it."

Giuliani said the review will likely take six to eight months. Officials would not say how much the NTRA would pay Giuliani's company.

Tim Smith, the commissioner of the NTRA, said it was "premature" to speculate on what the report's recommendations might be or how much it would cost the industry to comply. Smith said that the NTRA could not enforce the report's recommendations without the cooperation of racetracks and tote companies.

The review resembles an effort by the NTRA two years ago to build support for an IBM initiative to upgrade the industry's wagering and communications technology. In a report commissioned by the NTRA, IBM officials criticized the industry for relying on an outdated and inefficient system to process and account for bets, which is the job of the tote companies.

The IBM report recommended that the racing industry make a $100 million commitment to upgrade the wagering network while adding other communications features to address accounting and marketing issues.

Racetracks rejected the idea, calling it far too expensive and complaining that the NTRA would be able to exercise monopoly power over the wagering network. Currently, racetracks contract with three major tote companies to provide wagering equipment and services. The tote companies receive a small share of the handle, usually 0.25 percent, as payment.

But Smith said on Wednesday that racetracks and tote companies have so far committed to the effort that will be led by Giuliani's company.

"It's impossible to answer whether we will have the resources to implement a solution that hasn't been designed yet, but it stands to reason that the industry will do what is necessary," Smith said.

Another racing official who spoke on the condition of anonymity said that the IBM project might not be a fair comparison with what the Giuliani report will recommend.

"It may be something as simple as new software that flags things on a real-time basis," the official said. "It might be just putting in place an audit trail. It might not be the IBM idea to rewire the whole industry on a broadband network, the whole shooting match."

The review of pick six and pick four tickets placed since January of 2002 will target bets with large payoffs, according to Smith. Bets with smaller payoffs will be examined at random.

A racing official involved in the process said the review would concentrate on wagers with payouts of more than $10,000. The official said that wagers with payouts of less than $10,000 would still be subject to review but not on a comprehensive level.

Racetracks will assist in the review by looking for any tickets that were constructed on a similar pattern to the disputed pick six ticket, which used one horse each in the first four legs of the sequence and every horse in the last two.

Racing officials will look for pick four tickets that used singles in the first two legs and every horse in the last two, officials said.

Racing officials have been told to forward any suspicious bets to regulatory agencies in their states, NTRA officials said. Smith declined to identify any specific wagers that were under review.

"We would not want to do anything to assist anybody who attempts fraud by telling them what's being studied," Smith said. "But we have a commitment to transparency on what we find and what, if anything, needs to be improved."