11/25/2002 12:00AM

NYRA closes another potential loophole in tote security

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NEW YORK - The New York Racing Association began on Saturday to prohibit its mutuel clerks from canceling tickets in the moments immediately after the start of a race, closing another potential security gap in racing's electronic wagering network.

Mutuel clerks in New York were previously allowed up to 15 seconds to cancel bets made at their computer terminals, a practice referred to as "cancel delay." A similar rule is in place at most racetracks to protect clerks from last-second errors and to prevent someone from placing a large wager and then refusing to pay after the ticket has been entered into the mutuel machine, thereby affecting odds and payouts.

NYRA officials said they were concerned that the ability of clerks to cancel tickets could lead to suspicions that some bettors were able to withdraw their bets after watching the start of a race.

"We have to worry more about protecting the public than protecting the tellers," said Barry Schwartz, the chairman of NYRA, on Monday. "So from now on, if a teller punches the wrong ticket, he's responsible. If the person calls the wrong ticket, that guy is responsible."

The issue of cancel delay was raised in the wake of the Breeders' Cup pick six investigation, which has revealed a number of security gaps in the way bets are processed. A 29-year-old former employee of Autotote, one of the country's three major bet-processing companies, has entered a guilty plea in the case, saying that he took advantage of security gaps to alter bets and to find and cash unredeemed tickets.

Racing officials have become concerned that a bettor, working in concert with a mutuel teller, could use the cancel delay to withdraw large wagers if the selected horse stumbled out of the gate or had other early trouble.

The typical cancel delay at a racetrack is three to eight seconds, according to Chris Scherf, the executive vice president of the Thoroughbred Racing Associations, a racetrack trade group that works closely with tote companies. Scherf said that NYRA's 15-second delay was the longest in the country.

Mutuel tellers are in most cases ultimately responsible for the cash in their drawer at the end of the day. Racing officials have said the responsibility ensures that tellers do not "bet out of the box" without refunding the money they wager.

Use of the cancel delay is supposed to generate a security report indicating that the ticket has been canceled. In the past, mutuel managers had relied on the reports to determine whether a teller was canceling an inordinate amount of wagers relative to his co-workers.

Schwartz said that NYRA had not uncovered any evidence that its tellers were using the delay in a wrongful manner.

"It just didn't make sense" to keep the cancel delay in place because of the concerns over betting since the pick six investigation was launched, Schwartz said. "I told them to just get rid of it."

Canceled tickets could have an impact on how odds change during a race. If a large bet to win were canceled after a race started, the updated odds would reflect higher odds on the target horse and lower odds on the other horses.

Being able to cancel a ticket up to 15 seconds into a race would be a big advantage for someone who made large win bets, especially those betting on speed horses who run best when they quickly take the lead.

Late-changing odds have unnerved many bettors over the past two years. In some cases, odds have changed on horses after a race has already been run, leading to widespread suspicion that someone was placing bets after the gates had opened.

Mutuel managers, tote officials, and racing executives have said that no one is placing bets after the race has started, pointing to the electronic time stamps that mark the exact time a wager is placed. Instead, officials have blamed the time it takes for racetracks to send and consolidate all wagering information for any late odds changes.

Churchill Downs recently began closing all betting at several of the tracks it owns - Churchill, Hoosier Park, and Calder Race Course - two or three minutes before the start of a race so that the odds would not change during the race, a strategy that has prevented odds movement during the race in nearly all cases since it was implemented two weeks ago.

Beginning Dec. 4, NYRA will close offtrack betting when the first horse goes into the gate. Ontrack customers will be able to bet until the gate opens.

Julie Koenig, a spokeswoman for Churchill Downs, said on Monday that Churchill's new policy had eliminated any need to change its cancel-delay protocols because the cancellations are not occurring after the race has started. Churchill has a six-second policy; Calder has a five-second policy; and Hoosier does not allow cancellations after the gates open.

Koenig said that prior to the change employees regularly checked reports showing which tellers were canceling bets, the frequency with which bets were canceled, and how the canceled bets were structured. At Hollywood Park, which has not received approval to close its windows early, employees still run those checks.

"Our tellers use it very carefully to protect the customers and themselves," Koenig said.