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Updated on 09/16/2011 9:36AM
Tote worker fired in pick six scam
NEW YORK - Autotote Corporation, the country's largest totalizator supplier, fired one of its employees Thursday, presumably for altering the suspicious winning ticket placed on the Breeders' Cup pick six, company officials said.
Lorne Weil, chairman of Scientific Games, the parent company of Autotote, declined to identify the employee but said he was a software engineer who worked at the company's Delaware headquarters. Weil said the company has turned over information about the engineer to the New York state police and the New York State Racing and Wagering Board.
"It was a rogue software engineer who works for Scientific Games who had the necessary password into the system and had the capability to do what he did," Weil said Thursday. "We believe the individual had the ability to alter the ticket."
The firing is the first break in a case that has shaken the confidence of horse racing bettors, some of whom have called for boycotts of pick six wagers, if not the racing industry altogether.
The winning Breeders' Cup pick six wager was purchased Saturday by a 29-year-old Baltimore resident through a telephone account with Catskill Off-Track Betting Corporation in New York, according to racing and wagering officials, who immediately became suspicious because of the way the bet was structured. Autotote provides the computerized wagering service for Catskill OTB and about 60 percent of the country's betting outlets.
"This is a big left turn in the story, I'm afraid," said Donald Groth, the chairman of Catskill OTB, who had consistently maintained since Sunday that the bets were legitimate, but raised doubts on Thursday. "I'm still in shock. It's always regrettable when humans act like the textbooks say they should."
The investigation centers on an oddly structured wager that contained all six winning tickets and 108 of the 186 consolation tickets on the Breeders' Cup pick six last Saturday at Arlington Park near Chicago. With a $3 million guaranteed mutuel pool, the bet was targeted by some of the most sophisticated handicappers in the country and attracted $4.6 million in wagers.
The winning wager was made in a $12 denomination and used one horse in each of the first four legs and every horse in the last two races. The ticket cost $1,152 and was worth $3.1 million, but the payoff has been withheld pending the results of an investigation, which was launched on Sunday.
Several officials involved in the investigation said Thursday that critical pieces of evidence were missing, including an audio recording of the bet being placed over Catskill OTB's touch-tone telephone system. Another official, citing missing security logs of Autotote employees entering and leaving the tote system, characterized the investigation as a "nightmare."
Stacy Clifford, a spokeswoman for the board, said that the investigation is "progressing and moving forward," but she declined to offer any further details.
"Our job is to protect the integrity of the racing industry, and this issue is getting our full and undivided attention," Clifford said.
Autotote announced the firing at 1:11 p.m. Eastern time Thursday, and trading on the stock of Scientific Games Corporation was suspended for 35 minutes. The stock dropped 57 cents, or 7 percent, to $7.62.
Investigators have been focusing on whether the winning pick six ticket was altered after as many as four races in the sequence were run. In order to alter the ticket, most wagering experts have said that the bet would have to be modified by someone with access to the tote system, most likely a totalizator employee.
"The systems are very secure, and whenever there's been one of these maneuvers, it's been an insider," said Porter Houston, a tote company employee for 23 years who now works as a consultant to Autotote's parent. "It's never been proved that you can hack through the system from the outside."
Although the amount of a pick six ticket is transmitted into the commingled parimutuel pool within minutes of the bet being placed, the totalizator system does not immediately transmit the information about which individual horses are used in the bet. Instead the remaining information is transmitted only for bets that are still live after the fourth race in the pick six sequence. The delay is intended to minimize traffic on the tote system, a sophisticated computer network that links betting sites around the country.
Investigators and wagering experts said they believe that if someone were to manipulate a pick six ticket, the person would first submit a bet selecting one horse in each of the first four races followed by two "all" selections in the final two races and then wait. After the first four races were run, the person would enter the tote system and change the betting numbers to the winners of the first four races before the system sent the bet into the commingled pool.
That appears to be what happened, according to Weil.
Investigators and racing officials said the bet was placed by Derrick Davis, a self-employed computer technician who lives in Baltimore. Davis has not responded to several messages requesting a comment. According to investigators, Davis punched in the bet on a touch-tone telephone through an account he opened with Catskill OTB a week earlier.
At Catskill, Groth confirmed that an audio recording of the wager Davis allegedly placed does not exist because Catskill has not installed the security device that records bets placed through the touch-tone system.
"This is a topic we are taking up with Autotote," Groth said. "The system is relatively new."
The audio recordings of touch-tone calls are considered a backup to other security data, but one former employee of a tote company said Thursday that it would be a critical piece of evidence in the investigation.
"When you have an [interactive telephone] system, it's an extra cost and an extra hassle to record the call of the touch-tone, where you can positively say that this bet was one by one by one by one, with the right numbers," the official said.
One tote official, who declined to be identified, said of the security gap: "If they did it, they went in through a weak link."
Tote officials declined earlier in the week to describe the controls in place that would prevent a computer hacker outside the system or an insider from altering a pick six ticket. Autotote began its internal review after officials from the New York State Racing and Wagering Board asked for documents related to the pick six wagers, investigators said.
Some officials said that the investigators have been unable to find adequate security logs for technicians and employees who entered Autotote's system on Saturday. It was not clear, the officials said, whether the logs were missing or were never properly kept.