Wagering Insecurity: Damage

This is Part 8 of the Thoroughbred Idea Foundation’s (TIF) series “Wagering Insecurity.”

Faced with remarkable competitive pressure from the rise of legal sports betting, horse racing is at a crossroads.

Confidence amongst horseplayers and horse owners is essential to the future sustainability of the sport. Efforts to improve the greater North American Thoroughbred industry will fall flat if its stakeholders fail to secure a foundation of integrity, along with increased transparency of the wagering business and its participants over time. Achieving this is growing increasingly difficult after the sport has neglected its core base – horseplayers – for decades.

“Wagering Insecurity” details some of that neglect, and the need to embrace serious reform. Fortunately, there are examples across the racing world to follow.

PART 8 – DAMAGE

Just because American racing offers only pari-mutuel wagering on racing does not suggest it is less vulnerable to corruption.  History demonstrates otherwise. But compared with international counterparts, North American racetrack operators and regulators do far less to watch guard on their own sport.

Australia, Great Britain and Hong Kong serve as examples with greater controls on the oversight of wagering, no matter the channel. While in Hong Kong the only legal market is pari-mutuel and operated by the Hong Kong Jockey Club, Australia and Great Britain have incredibly diverse wagering markets.

The Hong Kong Jockey Club (HKJC) is the only licensed operator for betting in Hong Kong, has total handle exceeding US$15 billion annually from more than 800 races across 88 race days. That total dwarfs U.S. handle while conducting about 3% of the number of races.

One difference, racing information is incredibly detailed and free, provided by the HKJC. Another, they take the policing of racing seriously.

Challenges maintaining integrity are ever-present, as described by the recent handbook published by the Asian Racing Federation’s Council on Anti-Illegal Betting:

“The HKJC has a dedicated racing integrity betting analysis team which operates sophisticated monitoring systems and processes to detect irregular and suspicious betting activity on both the legal and illegal markets…

“The bespoke HKJC monitoring capabilities use technology designed and built in-house specifically for the integrity threats to HKJC racing…

“Betting alerts are based on unique betting algorithms which have been developed to detect suspicious betting on Hong Kong racing; these alerts are graded based upon the degree of irregularity, and are updated as the betting market evolves…

“In 2018, betting alerts raised concerns of suspicious betting on a leading jockey who, after an investigation, was banned for 15 months for betting offenses at a subsequent inquiry…

The reference is to the suspension of jockey Nash Rawiller, which is covered in this article from the South China Morning Post.

Monitoring in Hong Kong goes several extra steps too, as the ARFCAIB Handbook explains.

“The principles behind bet monitoring have expanded to include integrity profiles on all licensed persons. Alerts are run on a wide range of performance outcomes and are based upon the structure of the betting alerts.

“For example, if a jockey has an irregular trend for being slow to leave the starting stalls, a graded alert will be triggered.”

Great Britain and Australia both have wagering alternatives which may have contributed to their implementation of expanded oversight measures. On its website, the BHA describes the role of its integrity team both in advance of racing and working with officials during the race day. There is little comparable at North American racetracks.

“Throughout the day…BHA betting analysts monitor the markets for any signs of unusual activity. This takes place across all the modern betting platforms, and analysts can also call upon bespoke monitoring software to drill down and understand the emerging picture…

“As well as the betting markets, the BHA’s analysts also study the races themselves, using speed maps and a database provided by an industry-leading software company to establish the likely shape of races, both from a performance perspective and a betting angle.

“Before racing, the BHA’s Integrity team will update the professional Stipendiary Stewards at each racetrack with betting information, and highlight to them any potentially unusual activity or horses to be wary of or vigilant about, based on the emerging intelligence and profiling work.

“Post-race, the Integrity team can advise the Stewards on any issues about runners and/or rides that concern them, and on occasion can request action before a race, when betting patterns are especially unusual. On rare occasions, a pre-race Stewards’ enquiry is held, which can disrupt a potentially corrupt event by letting those involved know the BHA is aware of what is going on.”

The Australian state of Victoria is similar. Racing Victoria also has betting analysts working as part of their overall integrity team, in regular contact with stewards at racecourses, providing information that could be helpful in policing the sport.

The ARFCAIB highlights that there are strong common characteristics linking these entities. Each jurisdiction has:

–          Dedicated betting analysis teams,

–          Human assessment supported by automated systems,

–          Real-time monitoring and assessment,

–          Licensed betting operators in well-regulated environments which provide useful data.

If these elements are present in North American racing, no one sees or feels their impact.

BET MONITORING IN PRACTICE

Just like the races themselves, there are regional intricacies when it comes to the monitoring of wagering.

According to details in the ARFCAIB Handbook, the BHA successfully prosecuted 82 individuals, including 12 jockeys, following betting corruption investigations in the ten years from 2009 to 2018. Bet monitoring and systems to flag suspicious bets, developed by the betting companies themselves, have featured in many of them.

In one example, jockey Darren Egan was suspended for 12 years in 2015 for incidents where Egan did not ride horses on their full merit, in conspiracy with bettor Philip Langford, who paid Egan to stop the horses from winning. The details of Langford’s betting around the incidents were damning.

Betting operators shared information with the BHA crucial to the investigation. Betfair suspended Langford’s account after he risked more than the equivalent of $1.1 million with profits of approximately $75,000. The full BHA report is here.

More recently, the Irish case of trainer Charles Byrnes combined a series of nefarious actions which fleeced bettors, endangered other horses and jockeys and brought another cloud over the sport. But the case itself was made because of the collaborative relationship between regulators and betting operators.

As the Irish Horse Racing Board (IHRB) Tribunal report outlines, Byrnes was suspended six months for being “seriously negligent” after an investigation revealed Viking Hoard, a horse he trained, was doped with a sedative while unaccompanied in the pre-race stables at Tramore Racecourse on October 18, 2018.

Furthermore, information sharing between betting operators and regulators confirmed unusual wagering activity on Viking Hoard to lose. Global sport and racing integrity expert Jack Anderson summarizes the situation:

“The IHRB received alerts from the British Horseracing Authority (BHA) based on information received internationally from commercial betting exchanges.

“This information indicated that there was a substantial lay bet on the Tramore race, with a potential liability of €34,889 if the gelding won.  The sum risked to win was €3,200.  This represented 50% of the relevant exchange market.  The IHRB Tribunal was satisfied that this risk/reward ratio demonstrated substantial confidence on the part of the layer, and evidence was also given of similar patterns in the horse’s previous two starts.

“Further evidence suggested three of these lay bets had been traced through the Betfair exchange to the same account number and that the lay bets were initially placed with a limited liability company, which placed them in turn with Betfair. The Tribunal was also informed that the controlling person behind the company was an individual based in a third jurisdiction and was said to be associated with match fixing and associated betting in connection with other sports.” 

The IHRB report noted that while there was no connection between Byrnes and the betting patterns, the impact was clear:

“Significant actual damage flowed from the neglect of the trainer. The damage was financial in the case of affected punters, and reputational in the case of the racing industry. This case illustrates the specific and additional challenges and dangers to the integrity of racing posed by the widespread ability to back horses to lose races for significant returns.”

While lay betting features prominently in many of these cases, that option is not available to customers in North America through legal operators.

Regardless, racing regulators and stakeholders across the sport must be attentive to the threats posed from ANY wagering market on its races. U.S. customers might not be able to enter lay bets or fixed odds bets on its races at present, but the rest of the world is firing away and it is naïve to think some are not looking to capitalize on any opportunity.

Coming Tuesday, May 11: Part 9 – Alerts

Miss a previous installment? Click on the links to read more.

Part 1 – Expectations

Part 2 – Intertwined

Part 3 – Volponi

Part 4 – Confidence

Part 5 – Bingo

Part 6 – Proof

Part 7 – Z

Want to share your insights with TIF? Email us here.

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