Updated on 09/17/2011 1:05PM

Panel hopes paper can clean up betting process

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A panel of horseplayers set up by the National Thoroughbred Racing Association to analyze bettors' concerns in the wake of 2002's Breeders' Cup pick six scandal has released a calling for an end to late-odds drops, a reduction in the takeout rate, and changes to federal laws regarding taxes on winnings.

The position paper, developed over the last 10 months, is the first officially sanctioned document to be produced by horseplayers about their concerns, racing officials said. The NTRA gathered the 12-member panel in the spring of 2003 after the pick six scandal revealed a number of deficiencies in racing's bet-processing network, many of which were at the source of bettors' longtime complaints.

The paper takes strong and detailed stands on a number of issues, including calling on bet-processing companies and racetracks to upgrade the nationwide betting network in order to stop late money from dramatically upsetting odds on horses after a race starts. The paper also characterizes a reduction in takeout as the best way to increase handle and advocates a host of new federal tax laws that would reduce the burden on professional and casual horseplayers.

Many of the panel's recommendations would require changes to federal and state law, as well as the cooperation of racetracks, industry groups, and regulators across many states. As a result, it is unclear how many of the recommendations can be acted on, either in the short-term or the long-term.

"That's the big question," said James Quinn, a handicapping author who is the chairman of the panel. "We don't have an answer to that yet, but we're waiting to hear back."

According to Keith Chamblin, the vice president of marketing for the NTRA, the NTRA's board of directors has already reviewed the paper and forwarded it to member tracks and associations. The paper has also been circulated among totalizator companies and industry groups, Chamblin said.

"We're going to wait to hear how the industry responds to a lot of these things," Chamblin said. "I don't think there's going to be 100 percent consensus on all the issues. But I'm hopeful that the industry will pay attention to what our customers and our best players are telling us they want done."

The 12-member panel was heavily weighted with professional players and was far less representative than a random sampling of 12 players from a racetrack grandstand. According to Quinn, six of the panel's members are players who receive rebates, or cash-back awards based on handle. A liberal estimate for the total number of players who receive rebates is 500, Quinn said, among the millions of regular horseplayers.

Quinn, who picked many of the members of the panel, acknowledged that he received criticism from some racing fans about the panel's makeup. He said, however, that it was necessary to include a high percentage of professional players in order to properly address some of the more complex issues facing horseplayers.

"I needed people that could bring a high level of expertise to the discussion, and these are the people who are most affected by parimutuel irregularities," Quinn said.

The paper takes an ambivalent stand on rebates, which is one of the most controversial issues in racing today. The paper says that rebates are beneficial to the industry because they allow players to increase handle dramatically, but the paper also acknowledges that the only way to address the inequities created by rebates is to reduce the takeout for all players.

Quinn said the panel agreed that the most pressing need for the industry was to eliminate late odds-drops. He said the panel believed the drops have created widespread suspicion of cheating and turned players away from the game.

The paper makes several recommendations on eliminating the drops, from giving priority to the calculation of win odds, to requiring the bet-processing network to recalculate the odds on a more frequent basis. Bet-processing companies are currently working on several methods to cut down on the incidents.

Among tax recommendations, the paper calls on the industry to lobby for an increase in the threshold on reportable winning wagers from bets paying off at better than 300-1, to bets paying off at better than 750-1. The withholding tax should also be lowered to 10 percent, from the current level of 25 percent, and bettors should be able to deduct their losses against winning without using itemized deductions, the paper said.

Chamblin said the tax law changes will be among the hardest to get passed but also added that the NTRA has already informed its lobbyists to begin work on the recommendations.

"None of those things are going to be easy, but that doesn't mean they're not worth tackling," Chamblin said.