Racing insiders in New York are accused of using four offshore betting services to profit from bets after a horse was given illegal performance enhancements before a race at Aqueduct.
The scandal forced the New York Racing Association on Tuesday to pull simulcast agreements with the four operations: Euro Off-Track in the Isle of Man; International Racing Group Inc. and Elite Turf Club in Curacao; and a phone center operated by the Tonkawa Indian Reservation in Oklahoma.
NYRA is also developing post-race testing for sodium bicarbonate in hopes of preventing the illegal performance-enhancing practice known as "milkshaking."
The U.S. Attorney for the Southern District of New York named all four sites in an indictment of trainer Gregory Martin handed down last week. Martin is accused of treating a horse named A One Rocket with a milkshake, which resulted in a form reversal that produced a 10-length, $5.60 win in a Dec. 18, 2003 race at Aqueduct.
Martin and 17 others pleaded not guilty on Wednesday in U.S. District Court; a preliminary hearing is scheduled for February.
The offshore betting operations are known as rebate shops, and while they often have simulcasting agreements with tracks, they aren't regulated by the industry. NYRA betting pool is commingled with bets from the rebate shops.
NYRA, which operates Aqueduct, Belmont and Saratoga, joined prominent racetracks Churchill Downs, Hollywood Park, Arlington Park, Calder Race Course, Oaklawn Park, Woodbine, Tampa Bay Downs and Fair Grounds in cutting off or reviewing relationships with the betting shops.
"In addition to this immediate action, NYRA is undertaking an aggressive and expedited review of a number of selected secondary pari-mutuel organizations," NYRA President and CEO Charles Hayward explained.
The 88-count indictment claims that Martin and others ran a betting ring that processed more than $200 million in bets over four years and used the rebate shops to funnel funds.
The defendants are accused of taking bets on horse racing and other sporting events as law enforcement authorities capped a two-year probe into the gambling operations.
The indictment also claims that the group fixed the race at Aqueduct in 2003 by giving A One Rocket a milkshake.
The gambling ring is alleged to have operated in several states, including New York, New Jersey, Florida, California and Nevada.
If convicted, Martin and harness driver Rene Poulin face up to 25 years in jail. All 17 individuals named in the indictment are free on bail.
Martin, Poulin and Gerald Uvari, a horse owner and reputed member of the Gambino organized crime family, had their licenses suspended Friday by the New York State Racing and Wagering Board.
David Applebaum, a bettor, was charged in the horse-doping conspiracy and with 43 other counts, including gambling conspiracy, money laundering and wire fraud. If convicted, he faces up to 259 years in prison.
The sodium bicarbonate mixture used in milkshaking is believed to improve a horses' oxygen use during races. First a garden hose is inserted in a horse's nose before a race to remove whatever is in the stomach. Then a mixture of baking soda, sugar and liquid is inserted through the nose, which delays a horse's sense of fatigue. Because drugs are not involved, there are no problems passing a post-race drug test.
The mixture used is technically not a drug, but the process is illegal.
California and Florida recently began testing for milkshakes, and Hayward said NYRA is developing a post-race test to be used at its tracks starting next month.
"Any violation to this new testing procedure will be met with stiff punishment," Hayward said.
The scandal is just the latest setback for NYRA. The association has been under the eye of monitors appointed by both state and federal authorities and has been steadily losing money.
NYRA's franchise expires Dec. 31, 2007, and its embattled status makes it unlikely to earn a renewal to run the three racetracks. In his budget outline this week, Gov. George Pataki proposed that the next holder of the franchise pay a one-time $250 million fee up front. Other plans include the formation of a non-profit racing association oversight board and a new state gaming commission. Bidding on the franchise renewal could begin this year.
Hayward, meanwhile, said the focus of his staff will be on ensuring the credibility of the sport in New York is held to the highest of standards.
"We will take decisive action in an ongoing effort to ensure that access to our pari-mutuel pools passes the strictest test of transparency and integrity," he said. "We fully understand that the economic impact of this decision will be damaging to our bottom line, but the integrity of NYRA's pari-mutuel pools leaves no room for compromise."