Archive for the ‘Tote System’ Category

By Ray Paulick
For the second time in five days, wagering on a horse race at an American racetrack was allowed to continue until after the contest had been run. The latest incident, which involved Wednesday night’s second race at Penn National in Pennsylvania, came on the heels of a tote system failure at Hollywood Park on Saturday.

The Penn National tote failure was similar to the Hollywood Park problem in that a stop-betting signal was not communicated when the race began. United Tote, which has the contract at the Penn National Gaming racetracks, experienced a system-wide failure, allowing on-track and simulcast wagers to continue during and after  the running of the race. The Hollywood Park stop-betting signal from Scientific Games Racing tote equipment was not received by 33 simulcast sites.

John Pricci first wrote about the Penn National problem at Horse Race Insider.

United Tote personnel informed track officials about a communications router failure just as the second race was beginning, Chris McErlean, vice president of racing for Penn National, told the Paulick Report. “The stop betting command which is initiated here did not go out on track or anywhere in the network,” McErlean said. “The pools remained open and were opened well past the finish of the race.”

It was apparent wagers were made after the start of the race, but because United Tote cannot see details on every wager made, track officials were unable to segregate the late bets from those made before the race began, McErlean added. “We discussed with them the various scenarios and the best thing we could do was call the race a no-contest,” he said. “We took the position that the pools had been compromised, and based on the information we had at the time we took the most conservative path and made what we thought was the right decision.”

In Hollywood Park’s past-posting incident on Saturday, all  wagers from the 33 sites where the stop-betting signal was not received were thrown out of the pari-mutuel pools and the money refunded to bettors who retained their tickets.

A total of $164,000 was wagered on the race, which McErlean said may have been a little higher than normal but not exceedingly so. All wagers were refunded, though horseplayers were kept in the dark for some time as to why the race was not declared official. Those who had losing bets may have discarded their tickets before the  race was declared "no contest."

McErlean admitted that the decision was not communicated as well as it should have been across the wagering network. “I will say in terms of communication there was confusion,” he said. “The race was never made official. From a display point of view, the television monitors may have displayed official without tote prices. That was obviously not.”

The Pennsylania Horse Racing Commission and Thoroughbred Racing Protective Bureau were notified of the problems, McErlean said.

To his knowledge, this was the first time since McErlean joined Penn National Gaming in December 2006 that any of the company’s six tracks have experienced this type of problem. “It appears to be either networking or equipment failure involving a communications router ,” McErlean said. “The issue that has to be discussed and talked about is where is the potential safety valve if one system fails or one part fails. What is the backup or Plan B?”

Good question, and one racing regulators must demand from the tote companies that are jeopardizing the integrity of the wagering systems that are the foundation of this game. 

Be sure to vote in today’s Daily Paulick Poll asking whether you have confidence in the security of the U.S. pari-mutuel wagering systems.

Copyright © 2009, The Paulick Report

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By Ray Paulick
Betting windows at 33 simulcast sites remained open on Saturday’s Los Angeles Handicap at Hollywood Park until after the Grade 3 stakes race had been run because they did not receive a stop betting signal from the Scientific Games tote system that contracts with California racetracks to handle pari-mutuel wagering.

According to Eual Wyatt Jr., the Inglewood, Calif., track’s general manager, all of the money wagered at those sites – properly or improperly—was “thrown out of the pools” and refunded. Wyatt did not know the amount. He said the 33 simulcast sites all went through a single betting hub. (Click here to view the sites affected and the amount wagered at those sites.) 

The incident is under investigation by the California Horse Racing Board.

The past-post wagering was first reported by Mike Maloney, a Lexington, Ky.-based professional horseplayer and industry watchdog on betting issues, in an article posted on the Horseplayers Association of North America web site. Maloney, a frequent speaker at industry gatherings on the issue of integrity of totalizator systems, was recently named vice president of HANA.

Terry McWilliams, a West Coast representative for Scientific Games Racing (formerly Autotote), would not comment on Saturday’s betting irregularities, saying, “I am not authorized to speak on behalf of the company. “ McWilliams referred the Paulick Report to a corporate spokesperson who did not immediately return a phone call. Scientific Games Racing president Brooks Pierce also could not be reached for comment.

Here is one explanation of the incident provided to Hollywood Park officials by George Brannen, Western Regional Director of Scientific Games Racing, in an email provided by the California Horse Racing Board to the Paulick Report. “At stop betting of race 9 for Hollywood Park we were not receiving pools from a group of 33 imports,” Brennan wrote. “All of these import processes were running on the Slave system. We had 7 other systems in the room wagering on Hollywood and of those 4 were on the Slave system and did not get the stop betting message from the California tote. The other 3 systems imports that were on the Master system did get the stop betting and shipped pools final on time. Because of this we were pretty sure that a stop betting message was not sent to any of the 33 imports and made the decision to clear and close those 33 sites. We then stopped the Slave system, promoted the Clone to become Slave, restarted all the Golden Gate imports that were also hung on the old Slave so that Golden Gate would not be delayed. A more detailed report will follow.”

“This is my first recollection of this (type of wagering irregularity),” Wyatt said. “The good thing is whatever mechanical error occurred, it was discovered and those bets didn’t count.”

At least that’s what Scientific Games apparently is telling Hollywood Park officials. This isn’t the first irregularity in California regarding the tote company, which in 2008 agreed to a settlement with the California Horse Racing Board over software errors related to “quick pick” wagers. Scientific Games knew of the software flaws for months, yet failed to notify the tracks or CHRB. It wasn’t until a horseplayer discovered the flaws while making “quick pick” superfecta wagers on the 2008 Kentucky Derby that the software problem was made public.

Other Scientific Games tote problems have been reported in other states, including a Philadelphia Park past posting incident last June 28 when wagering sites in Florida did not receive a stop-betting signal from a Scientific Games hub. Maloney reported a past-posting incident on a race originating at Fair Grounds in New Orleans, which also used Scientific Games. The most infamous Scientific Games/Autotote incident, however, involved the 2002 Breeders’ Cup Pick Six scandal when company employees hacked into the system to make Pick Six wagers long after the betting cutoff and took home the entire pool.

Kirk Breed, executive director of the California Horse Racing Board, has ordered an investigation by his agency into the latest Scientific Games mistake. “I have read Scientific Games’ explanation and did not understand what it said,” said Breed. “It is their fault. They basically said it’s a malfunction, and I accept that as their malfunction, so they are taking responsibility. They’re the ones that are going to be charged with responding to whoever lost money or was left out.”

Is Breed satisfied that the past-post wagers on the Los Angeles Handicap were excluded from the pools? “I don’t know. I’m not satisfied with anything at this stage,” he said. “All I have is an explanation from Scientific Games sent to Eual at Hollywood Park and which he sent it to me immediately. He and I talked yesterday. Frankly, I do not understand what they are talking about.

“It’s like the quick-pick," Breed added. “It had been going on for nine months and they didn’t do anything about it and didn’t tell us about it. This is why we are trying to get some real-time monitoring in this state so we can have an independent source looking at our wagering, rather than depending on Scientific Games.”

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By Ray Paulick
Will a bet-processing tote division be the newest sibling in the Jockey Club’s family of companies? That’s the word I’m hearing from a variety of sources within the industry who say the not-for-profit breed registry is itching to get into the tote business with a new, for-profit subsidiary along the lines of Equibase, the horse industry’s official database for racing information that the Jockey Club owns in partnership with the Thoroughbred Racing Associations of North America.

Alan Marzelli, the Jockey Club’s president and chief operating officer, declined to comment when asked by the Paulick Report about the company’s possible entry into the tote business.

It makes perfect sense for the Jockey Club to take over yet another segment of the Thoroughbred industry, though it would be a move that is not universally supported. Would its entry into the tote business be a case of merely doing what’s right for the industry, or an opportunity for empire building by the Jockey Club, which already has six for-profit divisions? Those divisions are Jockey Club Information Systems (a data provider to industry publications, sale companies, and others); equineline.com (which sells breeding and racing statistical reports); Equibase (which sells past performance information to Daily Racing Form and for programs sold at racetracks and provides some free information to the public); TrackMaster (which sells customized handicapping information); InCompass (which bills itself as a technology solutions company for the industry and is involved in such areas as racetrack paymaster accounts); and TJC Technology Services (which provides technological infrastructure and support for the various Jockey Club companies).

These Jockey Club companies are all inter-related. For example, Jockey Club Information Services and equineline.com require pedigree information, which is provided by the Jockey Club’s registration department. Racing results from Equibase are fed into TJCIS, equineline, and Trackmaster products for consumers and into software applications in racetracks. A bet processing or tote company and an account wagering division currently are missing pieces in a Jockey Club strategy to cover as many of the industry’s bases as possible. The various companies must pay for the data, but the money essentially shifts from one pocket to another.

Let’s look a little more closely at the state of the tote industry. The three existing companies – Scientific Games Racing (Autotote), AmTote and United Tote – each has roughly one-third of the North American market. All have been struggling for years, in part because racetracks have played one company against another in contract negotiations and have marginalized their business. As a result, they have not made the kind of profits that lead to substantial investment in research and development, and the end product has been one that is technologically inferior and suspect in its ability to maintain absolute integrity in wagering pools.

All three companies are for sale. AmTote, which Magna Entertainment acquired for $17.4 million in a two-phased purchase agreement in 2003 and 2006, is part of that company’s bankruptcy filing. Last month, Scientific Games, a company that makes most of its money in lotteries, hired a financial consultant to look into selling its pari-mutuel division, formerly known as Autotote. Youbet.com, an account wagering company that has not been profitable, paid $49 million for United Tote in 2005 (at least two times higher than the appraised value of some industry insiders). One year ago, Youbet.com officials said they were hoping to find a buyer for United Tote.

At this stage, a purchase by the Jockey Club of United Tote seems the most likely, and sources say a deal could be announced in the coming weeks. The company has contracts with the New York Racing Association, which walks in lockstep with the Jockey Club. United Tote also serves Keeneland, whose president, Nick Nicholson, was instrumental in the development of the “family of companies” strategy when he worked as executive director of the Jockey Club. United Tote has contracts with the other Kentucky racetracks, including Churchill Downs, which employs AmTote at the other racetracks it owns.

All of the uncertainty involving the three leading tote companies comes at a time when the integrity of the Thoroughbred industry’s pari-mutuel wagering systems is being questioned by racing commissions, track operators, and, perhaps most importantly, horseplayers. Autotote, in particular, has been at the center of several controversies, including the 2002 Breeders’ Cup pick six scandal when three of the company’s employees had the only winning ticket and were in line for a $3-million payout. It was discovered they hacked into the system and processed their pick six tickets after the first four races had been run.

Racing executives familiar with the tote business suggest that United Tote may have the best tote machines, while the back end or software infrastructure for AmTote is the most advanced. Scientific Games is viewed as the laggard of the three companies, from a technology standpoint.

SHADES OF EQUIBASE?
This all sounds a bit similar to when Equibase was created in 1990. The Daily Racing Form had been owned by Walter Annenberg’s Triangle Publications for well over a half-century when he sold it to Rupert Murdoch’s News America Corp. in 1988, ending what had been a very cozy relationship between the Form and the racing industry. Whether this upstart Aussie (whose publishing empire includes the New York Post, Fox and other major media outlets) upset Jockey Club pooh-bahs like chairman Ogden Mills (Dinny) Phipps or they were worried about price-gouging or additional changes in the Form’s ownership will probably never be known. But under the banner of the racing industry collecting and owning its own data (versus a private company like Daily Racing Form doing it), Equibase was established in the imposing shadow of the Jockey Club.

At the time, there were pronouncements that the industry needed to provide more information to fans. Alan Marzelli, then the chief financial officer of the Jockey Club, said the “promotion and betterment of racing is behind the decision” to start Equibase. David Haydon, a longtime Jockey Club employee and the first Equibase president, took it one step further, saying the new company would “address racing’s need for fan base expansion.” Jockey Club chairman Phipps himself said, “Everyone in the industry realizes we have to make a day at the races more enjoyable and less intimidating for the general public.”

Equibase has succeeded as a business. Now, instead of competing with the Daily Racing Form, which eventually closed its track and field data collection operations, the Form is its biggest customer, purchasing past performance information to provide in its daily newspaper and for its online products. Most racetrack programs now include past performances – at a fee to consumers.

But where exactly has Equibase succeeded in expanding the fan base or making the races less intimidating?

Other sports, from Major League Baseball to the National Football League, National Basketball Association, and the PGA Tour, provide extensive data at absolutely no cost to the fans. This information is used by fans to make watching the sports action that much more enjoyable, and allows them to be more informed, whether it’s for their own general knowledge or to participate in the fantasy leagues that have become so popular, especially with young people.

Racing, or more specifically Equibase, insists on charging its fans for some of the most basic data. Lifetime past performances of a single horse cost a consumer $8; lifetime stats on a jockey or trainer cost $7 on Equibase’s sister site, equineline.com. If you want career statistics for a baseball player, just go to Google and type “Barry Bonds stats” and you’ll have a plethora of choices for free.

If you want to look at a simple race chart that’s more than a few days old, Equibase charges you $1.50. You want the box score of an NBA game from last month? Go to NBA.com, and click on scores. They’ll provide you with more stats on the game than you could possibly ever want – at no charge.

“It is symptomatic of our industry being a step behind,” said one racing executive who has grown wary of Equibase’s profit-driven motive and thinks the company has strayed from its original mission. “It’s short-term thinking. If our objective in racing is for the horseplayers to win, we should do everything we can to help him, and increase the churn. That’s where the revenue for our business should come from, not from the statistics the horseplayer needs.”

Hank Zeitlen, the current president of Equibase, said fans can get deals for free past performances from some of the account-wagering companies (which, of course, have to pay Equibase to buy the data) and there is often past performances for “feature races of the week” that Equibase makes available at no charge.

 “If you look back to 1990 and see what information was available and how it was made available, we’ve accomplished a lot,” said Zeitlen, who added that it’s unfair to compare racing with other sports. “The economic models of other sports are different than ours,” he said. “Each of those leagues has revenue coming from television. We don’t have that. And Equibase is not a handle-driven business.”

Zeitlen overlooked the fact that the tracks in the TRA that own two-thirds of Equibase (the Jockey Club owns one-third) are handle driven businesses.

JOCKEY CLUB’S THIRST FOR PROFITS
Perhaps it’s this thirst for profits that makes more than a few people wary that the Jockey Club may be getting into the tote business. There are some in that industry who say the Jockey Club, despite its claims, is not a very savvy technology company, and that its entry into the business would not be a giant leap forward – particularly if they wind up with a monopoly. Others believe the Jockey Club should focus on its core business, registering foals, and let private enterprise take care of other segments of the industry.

It was 10 years ago that Tim Smith, then commissioner of the National Thoroughbred Racing Associations, tried to forge a deal between the North American racing industry and IBM Global Services, which promised to modernize the tote system. An IBM executive told the Jockey Club Round Table in 1999 that he had never seen an industry so far behind in technology. The IBM proposal was blown up by some tracks who didn’t see the need for change or improvements in the industry’s tote and simulcasting technology.

Ten years later, we’re even farther behind. It’s clear something must be done to guarantee that the process of handling wagers is improved. If not, the industry will continue to lose the confidence of horseplayers, many of whom are convinced that past-posting of bets and tampering within wagering pools is all too common.

Is the industry ready for the Jockey Club’s family of for-profit companies to grow? Do we really have a choice?

Copyright © 2009, The Paulick Report

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By Ray Paulick

Copyright ©2008, The Paulick Report

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