The effects of one of the biggest betting scandals to hit the pari-mutuel betting industry in years are starting to be felt.
Within the last week, some of racing's most distinguished companies have taken steps to prevent another Breeders' Cup Pick 6 fiasco. But not all remedies have been met with applause.
On Tuesday, three former fraternity brothers were charged with using an automated telephone betting account with Catskill OTB and a computer to manipulate a series of bets that produced a $3 million prize.
Derrick Davis, Chris Harn and Glen DeSilva surrendered to authorities in New York Tuesday morning and after subsequent court appearances were released on a bond of $200,000.
Harn, who was employed by Autotote, is accused of breaking into the computer system and entering the winners for each of the first four races of a Pick 6 bet after the races had been run and before the wagering information had been passed on from Catskill OTB--where the bet originated--to the host pool at Arlington Park.
The Pick 6, like the Win 4 and the Superfecta, is a "scan bet," in which wagers are not recorded until after the next-to-last leg is run. Thus, the transfer from the OTB was not made until after the fifth of six races was complete. Davis selected all the runners in the final two legs of the bet, guaranteeing a winning ticket.
In response to the scandal, Churchill Downs Incorporated, which operates a current meeting at Churchill Downs in Louisville, Kentucky and Hollywood Park in California, began closing betting on each race at about 1 1/2 minutes to post time. The Illinois Racing Board has also curtailed betting on scan wagers.
The incident has caused a commotion north of the border as well.
The Canadian Pari-Mutuel Agency has taken measures to avoid a similar incident, and Woodbine Entertainment, one of the largest betting and track operators in Canada, isn't too thrilled. The agency said it will undertake an "in-depth review on all procedures related to the transfer of pari-mutuel betting information in networks" and has called for the suspension of Pick 6, Win 4 and Superfecta betting on any of its live or simulcast racing products until further notice.
Woodbine, which has OTB and simulcasting facilities all over North America, has requested a 48-hour stay in the decision. The request was denied, but Woodbine will try again this morning at a meeting in Ottawa with senior CMPA officials.
New York state might have avoided the betting scandal if it had licensed off-track betting workers, the state's top racing regulator said yesterday.
New York tried for years to license OTB workers and to order OTB security audits, but the legislative proposals, already in place at thoroughbred and harness race tracks, have been successfully opposed by lobbyists, said Michael Hoblock, chairman of the state Racing and Wagering Board.
Ron Nichol, the director of operations programs and national standards for the pari-mutuel agency, said the decision to suspend the wagers was due in large part to the susceptibility of foreign betting hubs sending signals to Canada. He said the country's biggest hubs--Woodbine, Vancouver, and Montreal--have a high number of outside hubs channeling bets into them.
"There are hubs retaining betting information and knowing the results of the race before they send their money," he said. "I don't think customers want to bet a Win 4 when they know there's someone out there who has two winners and hasn't sent in their bets yet."
Steve Mitchell, the vice president of wagering operations for Woodbine, feels the CMPA's reaction was out of line.
"This bureaucratic knee-jerk reaction to the Pick 6 investigation in the United States is, in my opinion, not a reasonable or progressive response to this serious issue," he said. "My understanding of the 's mission is to protect the betting public, not deprive them of wagering opportunities."
In addition to the charges faced by the three men, which could carry prison terms of five years, Davis and Desilva tested positive for cocaine on Tuesday and were ordered to undergo random drug testing.
In court on Tuesday U.S. Attorney James Comey likened the trio's actions to a real-life version of "The Sting," the movie starring Paul Newman and Robert Redford.
New York State Racing and Wagering Board chairman Mike Hoblock said the episode should be a warning to anyone contemplating a similar scam.
"This was an inside job, and the fact that just two weeks after the bets were placed three individuals are in custody and will appear before a federal judge should send a message to those who would try to cheat the system."