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System needs overhauling
NEW YORK - Every horseplayer in America has been secretly hoping that the highly suspicious winning Breeders' Cup pick six ticket was an innocent and lucky accident, or at worst an isolated incident of attempted fraud.
I have no such hope. This story is only going to get worse. While each day brings new information that makes it increasingly unlikely that the winning ticket was legitimate, the most incriminating fact is that this may well have happened before under very similar circumstances.
When I was working for the New York Racing Association in 1995, I brought a peculiar pick-six payoff to the attention of officials, who researched it and gave it a clean bill for all the good reasons missing from the current story. The winning bettor was a longstanding customer who invested a lot and got lucky when everything broke the best way for him. The ticket was consistent with the way big bettors approach the wager and with the winner's usual strategy. There was a clear, time-stamped audio recording of his call. Case closed.
Then one of the officials, a man revered throughout the industry for his parimutuel expertise and integrity, began to reminisce.
"I'm pretty sure that we got stung a few times a few years back," he said. "We found out that one of the upstate OTB's was sending in tickets after four legs had already been run, singling the first four winners. We closed the loophole they were using but the whole system still makes me nervous."
It sure seems that the loophole has been reopened, and now every customer is understandably nervous, too.
It was suspicious when this Breeders' Cup pick six was hit at all. Six winners seemed like way too many - a $1.2 million parlay that produced only a $428,392 payoff. When it was announced that all six tickets were sold through Catskill OTB, that conversation from 1995 came to mind and my blood ran cold.
Every subsequent detail of the "winning" bettor's account of his $3 million handicapping triumph has thickened the stench. He supposedly had just moved to Maryland, opened an account with Catskill OTB, of all places, and on his very first wager made a $12 cold pick six singling the first four winners and wheeling the last two races. It is implausible that someone would make the wager in a $12 unit, or that someone who liked a $54 and a $28.40 winner enough to single them in a pick six would not bet them in any other fashion.
The winning bettor was quoted as saying he made the $12 bet by accident - how do you accidentally confirm and accept a $1,152 wager when you meant to spend $192? - and that he picked his horses by doing "a lot of research." Three days later, a woman answering the phone at the telephone number he had previously supplied told a Daily Racing Form reporter that "he doesn't live here anymore."
The best reason to doubt this was a scam is that it is difficult to believe a sophisticated criminal enterprise, which had to include conspirators inside the parimutuel process, would provide such a preposterous cover story. An explanation became necessary, however, only when so many longshots won on Breeders' Cup Day, capped by Volponi in the last leg of the bet at 43-1. Had there been chalkier results, these six winning tickets would have been lost in the shuffle of dozens of winners at a modest payout. Instead, they now accounted for more than 85 percent of the entire pool.
Breeders' Cup and the National Thoroughbred Racing Association acted with commendable speed and clarity, freezing the payout and demanding an investigation by the New York State Racing and Wagering Board. Other organizations, however, have behaved disgracefully. Officials of Catskill OTB and the totalizator companies Amtote and Autotote immediately tried to make the story go away, defending the winning ticket as an authentic stroke of good fortune while insisting their systems are impenetrable. Their lack of even feigned concern about the situation or respect for a serious investigation only raised more flags.
Then three days after Brooks Pierce, the president of Autotote, said that the winning ticket was legitimate and actually "good for racing," Autotote announced it had fired a "rogue software engineer" who "had the ability to alter the ticket." The fired engineer is reportedly the same age, attended the same college, and was a member of the same fraternity as the winning ticketholder.
Obviously, a massive and thorough investigation must be sustained, one that looks not only at the Breeders' Cup incident but also at any other large pick-six payoffs that have resulted from unusual tickets singling the first four winners - the precise number of races run before scans of remaining "live" tickets are forwarded to the host of the pools.
Fortunately, the bane of horseplayers may turn out to be a forensic godsend: the Internal Revenue Service requirement that all winning wagers $602 and over on a $2 base bet are reported on W2-G forms. It may take months to correlate mutuel records and tax forms to see how widespread this scam may have become, but consumer confidence will not survive without a thorough inquiry and vigorous prosecution of those involved.
In the meantime, the tote companies and tracks can no longer defer the expense of bringing their technology into the 21st century. The idea that pick-six combinations are not transmitted until after the fourth leg because the data would clog network connections is outrageous. Every single wager should be sent and registered before a single race has been run.
Track operators have got to start putting integrity above greed by closing betting pools earlier. If the pick six needs to close five or 10 minutes before post time in order to transmit the data without problems, people will grumble for a day or two but they will get used to it.
Even before this scandal, fans had no confidence that odds changes during the running of races might not be another form of computer fraud. Tracks could have erased those concerns simply by closing all offtrack betting pools a minute or two before post time. Customers would have gotten accustomed to this and accepted it. But the industry rejected this proposal because tracks were afraid they would lose out on booking last-minute bets - a completely unjustified concern if every track would institute the policy.
Their failure to do so ensures that most customers now believe that every bet they make is subject to computer fraud. This is probably not the case. Odds changes during a race are another result of antiquated technology that accepts offtrack money in only 45-second cycles, but these are transmissions of actual bets, not just pool totals with actual combinations delayed two hours. The pick six was uniquely vulnerable due to this enormous window for mischief.
This story could have a happy ending for some of those who may have been specifically defrauded on Breeders' Cup Day. If the winning ticket is invalidated, the pool will be redistributed to those who had 5-out-of-6 consolations, and the $4,626 conso payoff will soar to nearly $43,000. These bettors could be tracked down and compensated since they had to sign W2-G's. (If they used the racetrack parasites known as "10 percenters" to duck the IRS, they're going to receive an expensive lesson in tax evasion.) That could take quite a while, though, after investigations and inevitable lawsuits have run their course.
In the meantime, the entire racing industry must regain the trust of its customers by acting immediately to remove the perception that parimutuel pools are vulnerable to hacking every time a bet is placed. The NTRA's announcement Friday that it is forming a task force to address the integrity of the system is a good first step. Only by thoroughly investigating every suspicious incident, acting quickly to secure and update tote systems, and instituting new procedures can racing begin to convince its customers that the game is on the level.