Racing must fix tote system

Amidst calls for technological upgrades to our antiquated tote system and better monitoring of wagering pools, the Association of Racing Commissioners International kicked off its annual meeting in Lexington on Tuesday.

Just 24 hours later we had another real life example of why the industry needs to take action on the issue. On Wednesday at New York City Off-Track Betting, $2 bets processed through AmTote were deposited into wagering pools as $200 bets.

The mistake affected pools at Aqueduct, Golden Gate Fields, Gulfstream Park, Indiana Downs, Keeneland Race Course, and Tampa Bay Downs. (story)

The horse racing industry made a lot of recommendations and promises to improve tote security in the aftermath of the Fix Six scandal at the Breeders' Cup in 2002, when an Autotote employee exploited non-existent security measures and delays in the bet processing system to alter losing tickets into winners.

What has really changed since then? Not nearly enough.

A few states have taken up the issue (story), but it's arguable whether any of the objectives in this memo from the National Thoroughbred Racing Association have been fully achieved.

I think the following quote from John Sabini, chairman of the New York State Racing & Wagering Board, may sum up a big part of the problem.

"They were going on and on about how no stone is left unturned to protect the tribes and protect the casinos, to make sure the casino companies don't lose a nickel, lock-down security," Sabini told Thoroughbred Times senior writer Frank Angst at a gaming conference last year.

"Then I come to horse racing, I'm new to this, and ... You hear a lot of, 'It can't really be done right.' And it dawned on me that the difference between the two is if you steal from a casino, you're stealing the casino's money. If you steal from a pari-mutuel pool, most of the time it's the bettors' money. So there's less of an urgency to it."

Is Betfair a good idea for America?

The biggest development related to Betfair’s purchase of Television Games Network is whether it will bring exchange wagering to America.

A fixture in Europe for almost a decade, Betfair offers players a chance to play bookmaker. It’s an exciting idea, provided integrity and handle issues can be worked out.

The handicapper/bettor in me loves the idea of a betting exchange. For one, it’s easier to pick a loser than a winner. And horse racing needs innovative ideas to combat declining handle.

Exchange wagering gives more people more reasons to bet on horse racing, whether by laying odds on horses they don’t like or by betting on a horse at a few points higher than will be offered through pari-mutuel pools.

But given the integrity problems the sport already faces, such as tote security and performance-enhancing drugs, is now the right time?

Betting exchanges amplify the power of insider trading. In the pari-mutuel system, even if someone thinks they know Horse A is going to run poorly, they still have to pick the winner in order to leverage that opinion. The ability to bet on a horse to perform badly provides direct incentive for a poor performance.

The other issue will be to ensure racetracks and horsemen get a fair share of handle from Betfair. An estimate of how much Betfair will cannibalize existing pari-mutuel handle will have to be worked into that formula.

Betfair already has made progress in winning over the horsemen’s organizations. Tracks, particularly Churchill Downs Inc., will be another matter entirely.