Updated on 09/16/2011 9:36AM

Scandal prompts audits, tighter security


NEW YORK - The three largest racing companies in the U.S. began on Friday to conduct audits of the systems that process bets at their tracks in response to the ongoing pick six scandal, according to a joint announcement from the three companies that was released on Saturday.

In the release, Churchill Downs, the New York Racing Association, and Magna Entertainment said that they are also putting in place new "security measures" in totalizator rooms at all their tracks. The audits are also being performed for the companies' off-track betting sites and account-wagering operations, the release said.

Tote rooms contain the computers and network equipment that process wagers made at the tracks and at simulcast sites around the country. The rooms are generally staffed by a combination of both tote and racetrack employees.

Barry Schwartz, the chairman of NYRA, said that the audits would look at "everything and anything," including past pick 6 wagers, but he declined to be more specific on Saturday night.

Together, Churchill, Magna, and NYRA operate more than 20 racetracks that are responsible for more than two-thirds of the national handle, including Belmont, Saratoga, Santa Anita, Hollywood Park, Churchill Downs, and Gulfstream.

The response comes six days after the New York State Racing and Wagering Board launched an investigation into highly suspicious winning wagers on Saturday's Breeders' Cup pick six. The matters underlying the investigation, which is currently focusing on a Maryland bettor and a former tote employee who was fired on Thursday, has incensed many horseplayers and raised questions about the security of pari-mutuel wagering pools.

According to racing officials, of increasing concern to tote and security experts are so-called "scan bets," or wagers that are not transmitted entirely into the pari-mutuel pools at the time the bets are placed. The officials said that scan bets are most susceptible to tampering.

Scan bets can include the pick six, pick four, and superfecta, according to tote officials. Information on scan bets is transmitted twice: the amount of each wager is transmitted within minutes of it being placed, but the identity of the horses used in the bet is not transmitted until a later time. In the case of the pick six, the information on which horses were used is not transmitted until after four races have been run.

Investigators believe that the former tote employee, Chris Harn, 29, who worked at Autotote's Delaware headquarters, may have been able to alter a pick 6 ticket after four races had already been run. The person who placed the wager, Derrick Davis, also 29, was a member of the same fraternity as Harn at Drexel University in Philadelphia from 1992-'93, according to school records.

The security issues surrounding scan bets were not well-known in the racing industry until the pick six investigation began. Since then, the racing industry has struggled to answer bettors' concerns about the integrity of the pari-mutuel pools.

In the Saturday release, Churchill, NYRA, and Magna said the security audits would be performed in conjunction with the three tote companies that serve all U.S. racetracks - Autotote, Amtote, and United Tote. The audits include background checks on all tote employees, putting new restrictions in place on who can enter tote rooms, and checking to see if current internal controls that monitor who logs on to the tote system are being properly maintained.

"We are taking these immediate steps to ensure the security of our wagering systems and to eliminate any questions concerning their integrity," said Tom Meeker, the president of Churchill Downs, whose Arlington Park hosted the Breeders' Cup on Saturday. "It is imperative that we protect the interests of the customers that support our industry. We will work diligently to maintain their confidence in the pari-mutuel wagering system."

On Friday, the National Thoroughbred Racing Association and Breeders'Cup, which merged last year, established a task force that is supposed to examine security issues. The Saturday announcement said that the three companies anticipate working with the task force.