On Track - March 2003

21 March 2003
Coeur d'Alene Reinstated in Simulcast Program

With new procedures in place guaranteeing that the Coeur d'Alene Casino and Account Wagering operations comply with California laws and regulations, the California Horse Racing Board advised the state's racetracks last week that Idaho-based Coeur d'Alene can rejoin the California simulcast wagering program.

The board had shut off the signal to Coeur d'Alene on March 7 while the CHRB reviewed allegations that Coeur d'Alene was illegally accepting wagers from California residents. Under state law, only those Advance Deposit Wagering (ADW) operations approved by the board can legally accept such wagers. The only three approved ADW operators are TVG, XpressBet, and Youbet.com.

Since the exclusion, Jerry Krieg, chief financial officer for the Coeur d'Alene Casino Resort, has advised CHRB Executive Director Roy Wood of new procedures to prevent California residents from opening and funding accounts with Coeur d'Alene. He said a valid state-issued drivers license or official state-issued ID must be on file before any account holder will be allowed to wager, and all new applicants must submit a notarized statement that their residence is outside of California.

"Our primary concern was that California residents were placing telephone account wagers through the Coeur d'Alene betting system," said CHRB Chairman Roger Licht. "We now are confident that such wagers are not being accepted by Coeur d'Alene."

The CHRB will continue to aggressively pursue all violations of the ADW law and will sanction the violators appropriately, officials said in a statement. The CHRB has made ADW compliance with California law a high priority. All operators will be compelled to comply with a rigorous set of guidelines that were instituted in connection with the Coeur D'Alene investigation.

Betfair.com Soars During Festival, Tote Crashes

The three-day racing frenzy that has become the Cheltenham Festival brought mixed success for the betting industry.

The world's leading person-to-person betting exchange, Betfair.com, matched just under £25 million during the festival, smashing the 2002 record of £8 million. The site also saw numerous £1 million races during the three-days, a feat that it has matched only once in its history, during last year's Breeders' Cup Mile.

The nearly 200,000 who attended the festival added to the betting frenzy that Betfair was able to service online through the hundreds of thousands who followed the races from home. Punters were treated to a repeat winner in the Gold Cup, the festival's premiere race, with Best Mate and already has bookmakers and punters debating the merits of a three-peat winner in the event.

While Betfair was busy having a record festival the same couldn't be said for the Tote system. Although the state-run system did more than £100 million in turnover during the festival it could have done much more.

The betting system crashed on three different occasions, which stopped thousand of potential clients from having a bet.

In response to the crashes, the Tote is offering a free £10 bet to the 28,500 people on Cheltenham's mailing list by way of compensation, and executives with the Tote pledged to rectify the embarrassing computer problems immediately.

"The Tote did not live up to the high standards our customers expect at Cheltenham," Tote Chairman Peter Jones said. "We apologize for any inconvenience and, having held a thorough examination, we are totally confident they will not be repeated."

Tote Decreases Its Cut of Racing Pool

While the Tote suffered somewhat of a black eye during the Cheltenham Festival, it quickly won over punters this week when it announced that it was cutting the rake-off it takes from win and place pools.

The move is seen as an effort to ensure that its win odds beat the off-course bookies' starting price in the majority of the races.

As part of the announcement the, Tote said it would drop its cut from win pools from 16 percent to 13.5 percent. Jones said the deduction will be the lowest available in any major racing nation. The biggest deduction, though, will come in the rake-off on place pools, which will go from 24 percent to 18 percent. The decrease in rake-off will mean a £4 million retuned to Tote punters, according to Jones.

"These changes will raise the profile of pool betting with the Tote and make it even better value," he said. "If we offer the punter better value than the SP, then that's an important marketing tool."

Jones said the idea is that much of that money that has been "given back" to punters will be recycled through the Tote, creating larger pools that will also attract new converts to Tote betting.

If the pools grow accordingly, Jones said, the new deduction would pay for itself within two years.

At present, Tote pool betting accounts for just 2.5 percent of Britain's annual turnover on racing. In many major racing countries--including Hong Kong, France, Australia and much of the United States--pool betting has an off-course monopoly, but the British Tote, which was created in 1928, has struggled to compete with fixed-odds betting since off-course shops were legalized in the early 1960s.

The Tote has struggled against overwhelming odds for the last 40 years, and published reports claim there is clearly a feeling at the organization's headquarters that if its latest plan does not work, nothing will.

"We will never change the betting patterns of many regular small-stake punters," Jones said. "But if we can get the sort of pools we do at Royal Ascot and Cheltenham for every race every day then we will begin to attract a larger punter who can place his bet without worrying that the odds will be reduced. We wouldn't be doing this unless we seriously believed that over a scale of time it will pay out for us."

BHB Hopes to Make British Racing the World's Best

A Formula 1-style championship linking around 24 Group 1 races run in Britain could be the next project of the British Horseracing Board, as it presses ahead with plans to establish the U.K. racing calendar as the best in the world.

Following the launch of the £1 million Summer Triple Crown and Grand Slam, which carries a £5 million bonus prize, executives are examining a number of other proposals that would help provide more coverage to both Flat and jumps programs.

Among ideas currently being discussed is the creation of a premier league for the flat and a jumping triple crown made up of the King George VI Chase, Cheltenham Gold Cup and Grand National or Martell Cup.

One of the favorites is a Grand Prix-type series, put forward by the Super 12 group of racetracks, that would comprise every domestic Group 1 race for three-year-olds up from the Sagitta 2,000 Guineas in May to the Emirates Airline Champion Stakes in October and could be up and running as early as 2004.

Levy Likely to Take £12 Million Hit this Year

The amount of money going into UK horseracing this year through the levy on bookmakers is likely to be at least £12 million less than was originally forecast.

That was the message the Bookmakers' Committee gave to the Levy Board prior to an annual strategy meeting. According to the committee, the yield for 2002-3 is expected to be £80 million, not the projected £92 million.

The board was already working on a reduced spending budget, since the bookmakers produced evidence of a £6 million black hole last September. Then they blamed the shortfall on the combined effects of the soccer World Cup, which had a greater impact on U.K. horserace betting than expected. Now they say that deficit has grown by another £6 million.

With no World Cup to contend with, and results having gone in the punters' favor in the last quarter of 2002, the bookmakers are saying the betting exchanges are responsible for the greatest impact on their gross profits from horseracing, on which the levy is wholly based.

The bookmakers' claim--and Levy Board officials agreed with them last year--is that competition from betting exchanges has resulted in smaller margins for on-course bookmakers, which in turn means smaller starting-price margins and less profit for those operating off-course, and therefore less in levy.

Levy Board Delays Decision on Hedging

A decision on whether to allow on-course bookmakers to use betting exchanges has been postponed by the Levy Board.

The board, facing a split between independent members who are in favor of allowing hedging by on-course layers and representatives of the Bookmakers' Committee and the British Horseracing Board who appear to be against, said it will seek further legal advice before voting on a proposal at its April meeting.

The outcome could have far-reaching implications for the way bookmakers' prices are formulated in the future.

A late submission from betting exchange Betfair, arguing the case to allow on-course bookmakers to hedge with exchanges, was one of the causes of the deferment put forward by Levy Board Chairman Rob Hughes.

Hughes, one of the board's three independent members, said Betfair's argument was strong enough to warrant more time for the debate.

"We had a late representation from Edward Wray of Betfair writing in with his view that on-course bookmakers should be able to hedge with them and giving us a further legal opinion," he said in a statement. "In as much as the legal opinion reinforced the views that the independent members of the board have already taken, we were quite relaxed about this. But other members of the board wanted further time to consider it."

The National Joint Pitch Council will also be consulted to find out how effectively a current ban was enforced during the last month, especially during the Cheltenham Festival.

Officials with Betfair.com have gone on the record saying any ban is an illegal restriction on its business and if a permanent ban is put in place, it would turn to the courts to get it overturned.

Pick 6 Winners-Turned-Losers Receive Sentencing

The racing industry hopes to move forward now nearly six months after one of the ugliest and most public betting scandals ever came to a close this week.

The three former fraternity brothers who thought they had hatched a plan to take advantage of flaws in bet-processing computers were sentenced on Thursday putting an end to the scandal.

The leader of the group, Chris Harn who was a former computer engineer for Scientific Games and was responsible for processing bets, received the lightest sentence of the three in exchange for his cooperation during the investigation.

Harn could have faced the maximum sentence of seven years in prison, but instead was given a term of a year and a day.

Co-defendant Glen DaSilva was sentenced to two years in prison and Derrick Davis received three years. DaSilva and Davis placed the bets using their telephone wagering accounts and then Harn delayed the computer transmission of the bets after he had the chance to manipulate them.

Harn told authorities how he used Autotote's computer system to rig the bet and implicated his co-defendants.

Harn and DaSilva pleaded guilty to fraud and money laundering. Davis pleaded guilty to wire fraud conspiracy.