12/05/2006 12:00AM

Groups debate who should monitor bets


TUCSON, Ariz. - State racing regulators and a racetrack-funded investigation group remain at odds over the best strategy to monitor the racing industry's bet-processing network for fraud, according to officials who spoke Tuesday morning at the University of Arizona's Symposium on Racing in Tucson.

The conflict concerns who is best qualified to monitor the bet-processing network: the state racing commissions or the racetracks themselves. And it has arisen just weeks before the launch of a monitoring system developed by the Association of Racing Commissioners International, a trade group of racing commissions that has spent the past year devising a program that would overlay the racing industry's bet-processing network to flag suspicious transactions or wagering patterns.

Officials of both the ARCI and the Thoroughbred Racing Protective Bureau, an investigation arm of a racetrack trade group called the Thoroughbred Racing Associations, were pressed Tuesday morning at the end of a panel discussion on racing integrity to state their positions on who should be responsible for monitoring the network, and the officials' different answers indicate that the racing industry may become locked in a dispute for several years.

"The person driving the bus is the only one mandated or licensed to drive the bus," said Tom Casaregola, the director of audits and investigations for the New York State Racing and Wagering Board, a member of the RCI. "And that would be the regulators themselves."

"We view wagering to be a product of racetracks, and we have business members who want certain business interests to be preserved, and that's not the business of regulators," said Frank Fabian, the president of the TRPB. "Regulators have a role to regulate, but in my view, the business of racetracks, the operations of racetracks, [the responsibilities] belong to those that are operators, and those are racetracks."

Both the RCI and the TRPB have developed separate monitoring systems. The RCI system, which is scheduled to be launched on Jan. 1, would need to be adopted by either racetracks or bet-processing companies, which would pay a fee to the RCI for the use of the system. The TRPB system has been developed over several years to collect wagering data from the TRA's 41 member racetracks, but the TRPB views that data as proprietary.

In addition, the TRA is designing a new network for bet processing that supporters said would eliminate many of the concerns of horseplayers about suspicious bets and payouts. That system, called Wagering Tote Protocol, has no scheduled release date, and Fabian said that "there is still a question over costs and who should be responsible for those costs."

The new monitoring systems were developed in response to the 2002 Breeders' Cup pick six scandal, in which an employee of the bet-processing company Autotote - which is now known as Scientific Games Racing - exploited loopholes in the network and a lack of controls over access to the system to modify a pick six wager after races in the sequence were already run.

Already, the RCI is attempting to get racing commissions to adopt rules that would require racetracks or bet-processing companies to use its system or one similar to it as a requirement of licensing. In New York, the state racing and wagering board is already reviewing new rules governing bet-processing operations that would require the adoption of such a system, and Colorado has already adopted such rules.

According to Ed Martin, the executive director of the RCI, the RCI is going to aggressively push for the adoption of the rules in all racing jurisdictions after failing to get an agreement from racetracks that the system should be voluntarily adopted.

"We've put the tools on the table to get the job done, and we fully anticipate that a number of jurisdictions will move forward to get that job done," Martin said, in an interview after the panel discussion. "We'd love to do it as a joint venture with the industry, but those discussions have not gone anywhere."

Paul Bowlinger, the executive vice president of the RCI, said that adoption of the RCI's system was crucial to soothing horseplayers who have grown suspicious about the role played by relatively new technological innovations in the racing industry, particularly the use of computerized robotic wagering systems, which analyze betting pools and then pour hundreds of wagers into the pools just before post.

Having racetracks monitor wagering pools "doesn't pass the smell test," Bowlinger said, citing his concerns as a horseplayer about late odds changes. "If you want to tell the public that the regulators have turned over the monitoring of the industry's betting data to the industry, it's like telling them that the [Securities and Exchange Commission] has turned over regulation to Wall Street. You'd be laughed out of the room."

Ron Nichol, the director of operations for the Canadian Pari-Mutuel Agency, said that he hopes the two sides will be able to cooperate on any new system, and said that the RCI's monitoring program and the TRPB's could work in tandem.

"These are not competing but complementary technologies," Nichol said. "Hopefully we will see a merger of these sooner rather than later."