01/15/2005 1:00AM

NTRA once again urges scrutiny of rebate shops


The National Thoroughbred Racing Association on Saturday urged its member tracks to cut off rebate betting shops unless the shops disclose their ownership and allow tracks to review their wagering data.

The recommendation, released in a statement from the NTRA's commissioner, D.G. Van Clief, was made in response to the indictment Thursday of 17 individuals, including three alleged members of the Gambino organized crime family, on charges related to money laundering and filing false tax returns. The indictment alleged that the principals in the group wagered a total of $200 million through four rebate shops over a period of four years and used those shops to avoid paying income taxes on winnings while using losses to file false tax refunds.

At least one state, New Jersey, has already informed the betting shops mentioned in the indictment that it will no longer accept wagers from them.

"We call on each and every member of our industry to enforce existing standards and security protocols to retain the integrity of our competition," Van Clief said. "Only by consistent application of security protocols can we prevent the parimutuel industry from being victimized."

The NTRA had made the same argument five months ago, after the release of a report examining, in part, the impact of rebate shops on the industry's financial health. That report recommended that tracks ask rebate shops to provide details about their business practices and customers before the tracks entered into any contractual arrangements with offshore locations.

Although the NTRA cannot issue directives to its members because of concerns that any direct order would violate antitrust laws, the NTRA statement was unusually specific, in part because of the urgent concerns of the industry about the potential ramifications on the industry's public image, according to several racing officials.

"Until such time that we can assure our customers that these operations adhere to those standards - including disclosing their ownership and allowing U.S. host tracks full access to wagering data for security purposes - it is not in the best interests of U.S. racetracks to allow these operations access to commingled pools," Van Clief said.

The four shops named in the indictment were Euro Off-Track, based in the Isle of Man; the Tonkawa Indian tribe, which runs a betting service off a reservation in Oklahoma; International Racing Group, based in Curacao; and Racing Services Inc., a defunct rebate shop based in North Dakota that was indicted in 2003 on charges of running an illegal gambling operation and money laundering.

The New Jersey Sports and Exposition Authority, which owns and operates The Meadowlands and Monmouth Park, notified the rebate shops named in the indictment on Friday that they would be cut off from the pools beginning as early as Sunday, according to Bruce Garland, the executive vice president for racing at the authority, which is owned by the state.

"It had nothing to do with our status as a state agency," Garland said. "This was purely a business decision."

Churchill Downs Inc., which owns six racetracks, including Hollywood Park, Arlington Park, Calder Race Course, and Fair Grounds, is currently reviewing its contracts with rebate shops, according to Andy Skehan, the company's chief operating officer, who issued a statement through a Churchill spokesperson.

At the New York Racing Association, management plans to review the status of its relationships with rebate shops over the next several days, according to Bill Nader, NYRA's senior vice president. He said a decision on how the association will respond to the NTRA statement would likely be made by Monday or Tuesday.

Several racetracks have cut off rebate shops over the past several years, although concerns about the legitimacy of the shops' betting activities were not at the core of the decisions. Among the tracks were Woodbine, Tampa Bay Downs, and Oaklawn Park. Officials for the tracks said last year after the NTRA released its report that they did not intend to allow rebate shops to bet on their signals in 2005 as well.

The tracks that had already cut off rebate shops had said that they made their decisions because the customers of the shops win at such high percentages that regular players were being placed at a disadvantage. Rebate shop customers receive cash awards based on their betting handle, typically in the range of 10 percent. The rebate allows the players to bet against a lower takeout than players that do not receive rebates.

Laura D'Angelo, the legal counsel to one of the most high-profile rebate shops, Racing and Gaming Services, said that RGS expected to continue doing business with the racing industry, citing the company's past cooperation with racetracks and the NTRA.

"RGS agrees with commissioner Van Clief's recommendation of greater transparency by all wagering entities," D'Angelo said Saturday in a prepared statement. D'Angelo said that last year, as part of the NTRA's examination of rebate shops, RGS had disclosed its ownership to the NTRA and had invited representatives of racetracks to tour its facilities.

The indictment released Thursday also included an allegation that one of the participants in the scheme arranged for a horse to be administered a performance-enhancing substance, and that the other participants bet on the horse with the knowledge that the horse had been illegally medicated.

Officials said the horse had been administered a so-called milkshake, a concoction of sodium bicarbonate, sugar, and electrolytes that is typically pumped into a horse's stomach through a nasal-gastric tube. Administering a milkshake is banned at every racetrack in the U.S.

The NTRA statement on Saturday praised racetracks in southern California for implementing prerace testing for milkshakes last year, and called on other racetracks to put in place similar programs and increase backside security.