Jorge Navarro (right)
Photo courtesy Alex Evers
This is Part 2 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 2 - INTERTWINED
Corruption resides at the intersection of significant financial gain and loose regulation. Purses boosted by subsidies from slots and other non-racing wagering present a robust opportunity for illicit activity but the sport’s regulatory structure has not kept pace, either with other racing jurisdictions around the world or modern sports.
Jack Anderson (below), a leading global expert on sports integrity, was the keynote speaker at the University of Arizona’s Global Symposium on Racing in 2018, presenting “Integrity in the World of Commercial Sport.”
Photo: Jack Anderson
Director of Sports Law at the University of Melbourne, he advises the Asian Racing Federation’s Council on Anti-Illegal Betting and Related Financial Crime (ARFCAIB), whose work will also be referenced later in this series, and is a current member of both the World Athletics Disciplinary Tribunal and the International Tennis Federation’s Ethics Commission, among other roles.
He spoke with TIF about the relationship between doping and other illegal activity to affect the outcomes of sporting events.
“Effective doping control is of course a vital element of the integrity objectives of a sport such as racing but it should not be the sole integrity concern and should not be seen in isolation.
“Doping in a sport such as racing is often intertwined with gambling interests, which in turn may be symptomatic of wider illicit or even criminal involvement in the sport.
“Studies commissioned by racing regulators in Great Britain and Australia noted an immediate concern with levels of criminality in the sport, attracted to the money and image laundering opportunities presented by the sport’s long association with gambling.”
Anderson told TIF that doping and gambling often go together, and the presence of doping in a racing culture can be symptomatic of other issues.
“The prevalence of doping in a racing jurisdiction may also be reflective of weaknesses in that racing organization’s race day operations such as:
- stewarding and standards of veterinarian oversight,
- lack of capacity in intelligence gathering on and knowledge of industry participants
- vulnerabilities in the licensing and registration of industry participants, and
- the ability of the racing organization or jurisdiction to punish misconduct by industry participants.”
There should be little need to explain the perception of doping in North America’s racing culture. While the sport is regulated, public confidence in the ability of regulators and their laboratories to catch cheaters is low.
Have any doubt?
How long did Jorge Navarro and Jason Servis win at unusually high rates never to be discovered by North American racing’s laboratory and regulatory structure but instead to be uncovered by a federal investigation?
EXAMPLES OF RACE FIXING, ETC.
Relatively few organized conspiracies have been uncovered in American racing over the past 20 years.
Those that have been uncovered were mostly, though not entirely, the product of state or federal law enforcement work, spurred into probing racing from other investigations rather than industry initiatives. Whether it is trainers and veterinarians illegally doping or jockeys manipulating races, TIF found only occasional instances of individuals identified and punished for attempting to profit via legal wagering channels over this period.
In January 2005, 17 individuals including trainer Gregory Martin were indicted on a host of counts including illegal gambling, conspiracy and money laundering. The plot involved the “milkshaking” of at least one horse at Aqueduct in an attempt to fix the race’s outcome.
In October 2005, jockey Roberto Perez was suspended for seven years after placing superfecta bets on a race he rode and where his mount finished out of the first four placings.
Jockey Ricardo Valdes was one of seven jockeys barred by Tampa Bay Downs in December 2006, and was later indicted by the federal government in May 2009. He pleaded guilty to one count of attempt and conspiracy to commit mail fraud, with 18 other counts dropped, and was sentenced to just more than one year in prison, with three years of supervised release, in April 2015. Two co-conspirators served longer jail terms as their criminal activities moved beyond horse racing and into influencing collegiate sport events.
In July 2015, three jockeys were arrested at Evangeline Downs in Louisiana after being accused of manipulating a race at the track a month earlier, and being caught with illegal electrical devices known as “buzzers.”
Texas stewards, and local courts, caught up with jockey Roman Chapa for a well-documented incident at Sam Houston Race Park a few months earlier regarding buzzer use in January 2015, handing the journeyman a five-year suspension and $100,000 fine. He has since returned to riding.
Stewards at Canterbury Park in Minnesota suspended jockey Denny Velazquez for one year after finding a buzzer in his possession in July 2020.
Gulfstream Park has dealt with a few incidents that raised eyebrows, drew bettor complaints, and did yield some suspensions. Ray Paulick outlined those in a January 2020 article which included a series of incidents, strange superfecta payouts and more.
Florida racing is highly de-regulated, with individual tracks often controlling nearly all measures of oversight.
Paulick wrote:
“The track is under no obligation to notify the wagering public who is banned or suspended, for what reason, for how long, or whether or not a suspension (made public or not) has been reduced in time…
“It is not the most transparent way of doing business and does not instill a great deal of confidence in the wagering public.”
The indictments that scooped Jorge Navarro and Jason Servis, among others, were made public thanks to the eventual involvement of the U.S. criminal justice system. Notably, private investigations sponsored by The Jockey Club, among other groups, were seemingly crucial to yielding these indictments, though the majority of the cases have yet to be tried as of April 2021.
Federal involvement also led to the conviction of veterinarian and trainer Alfredo Lichoa when he was sentenced in February 2021 to three months in prison for his role in a money laundering scam that involved a Florida-based horse owner and dirty money from Brazilian politics.
As the site of these more recent incidents, it is notable that Florida no longer has a racing commission. The sport is regulated by an amalgamation of house (racetrack operator) rules and some state oversight on testing and licensing.
The indictments from these cases revealed no details regarding wagering on the horses or races involved. If racetracks or other groups have investigated suspicious wagering, the public is unaware of any outcomes. The lack of transparency, of any public discourse on these matters, is itself disconcerting. An opaque integrity infrastructure is like having no integrity infrastructure.
MASOCHISTIC
Jack Anderson’s remarks connecting doping, wagering and other concerns are worthy of reiteration:
“Doping in a sport such as racing is often intertwined with gambling interests, which in turn may be symptomatic of wider illicit or even criminal involvement in the sport...
“The prevalence of doping in a racing jurisdiction may also be reflective of weaknesses in that racing organization’s race day operations.”
The 2014 case of Masochistic offers insight to how doping and wagering can be intertwined.
Masochistic debuted at Santa Anita on March 15, 2014 in a maiden race restricted to California-bred horses and the stewards’ minutes, published by the California Horse Racing Board, explain the rest.
“Jockey OMAR BERRIO…was in the office to review the ninth race from yesterday’s card. At issue was his lack of effort on his mount, MASOCHISTIC, trained by A. C. AVILA. There was no discussion of the pertinent facts as a formal hearing will be set in the near future. The Board of Stewards was concerned that Mr. Berrio prevented his horse from giving his best race. The horse was examined and tested post-race, and the CHRB investigators were directed to look into the matter.”
Video of the race is damning for Berrio. Masochistic was under a stranglehold the entire race, and Berrio never once asks the horse for an effort, cruising under the line in fifth as the 8-1 fourth betting choice.
Masochistic
Photo courtesy Alex Evers
On April 26, 2014, stewards held a hearing and reported that Masochistic tested positive for the sedative acepromazine and disqualified the horse from his fifth-place effort.
Seven days later, on May 3, Masochistic appeared in an open maiden race at Churchill Downs. The race was not just a class hike from state-bred maidens to open maidens, but was the third race on the biggest day of the year – Kentucky Derby day.
It was fairly unusual for a horse trained by Avila to race in Kentucky.
In the 10 years prior to this race, Avila trainees made nearly 1,400 starts and only six of those came in Kentucky, all in graded stakes races. Two of the six starts came on Kentucky Derby Day in 2005, when Oceanus finished ninth in the Grade 2 Churchill Downs Handicap at 60-1 and Santa Candida was eighth at 24-1 in the Grade 1 Humana Distaff Handicap.
Omar Berrio rode both.
Masochistic’s maiden race was the only horse Avila was saddling at Churchill on May 3rd and he legged-up that day’s eventual Derby winning jockey, Victor Espinoza.
The race jumped at 11:33 A.M. Eastern time, with total intra and inter-race wagering pools of more than $3.7 million. Masochistic went straight to the lead and never looked back, winning by 14 lengths. Despite the shift from state-bred maidens to open maidens, Masochistic was dispatched a solid 2-1 favorite.
Some 10 days later, the late Ned Bonnie, then a Kentucky Horse Racing Commission member, thought a betting coup was perpetrated on Derby Day.
Frank Angst from the Bloodhorse details the rest:
“Bonnie, who consistently reminds other commissioners that the betting windows can provide a bigger prize than a purse for nefarious horsemen, said the state needs to bring in outside help to investigate events surrounding the maiden win of Masochistic…
“While that race may have been run squarely, Bonnie believes the betting public was duped by a program line that didn’t provide the whole story with its “fifth by 4 1/4 lengths” in Masochistic’s March 15 debut at Santa Anita Park.
“Importantly, the comment line noted a disqualification but there was no room for the reason for the DQ—a failed drug test. It did not note a follow-up investigation of Masochistic’s rider that day, Omar Berrio, who is being investigated by the California Horse Racing Board for lack of effort in the March 15 race…
“Despite the disqualification and the rider investigation in California, Masochistic was allowed to be entered at Churchill in the May 3 maiden race. Horse racing is regulated from state to state.
“Bonnie believes the May 3 race won by Masochistic should be investigated closely, particularly wagering associated with the race, because Churchill may have been used to carry out a betting coup. The thinking is that with larger than usual purses on Derby day, large wagers would not catch as much attention and the larger pools would help ensure higher odds.
“Kentucky Horse Racing Commissioner Dr. J. David Richardson said because the horse ran legitimately in Kentucky and any concerns about his effort occurred in California, it was up to the CHRB to conduct the investigation.
“We’re not in California, and we’re not in Kansas,’ Richardson said to Bonnie…
“Kentucky Horse Racing Commission supervisor of pari-mutuel wagering Greg Lamb said Kentucky has previously worked with other regulators and has provided wagering information as needed. After the meeting, Lamb provided a spreadsheet that showed $3,741,395.97 was wagered on the May 3 race at Churchill.
“The most money wagered on the third race May 3 at Churchill was the $545,292.50 sent in on-track. The other four outlets with more than $100,000 wagered were advance-deposit wagering outlets TwinSpires.com, TVG.com, XpressBet.com, and Churchill Downs-owned Isle of Man-based rebate shop Velocity Wagering.”
Nearly a year after Masochistic’s sedated debut, the California Horse Racing Board suspended Avila for 60 days and fined him $10,000, the maximum allowed under the rules of the state. Berrio’s ride in the race is never referenced again in any other CHRB report, and in March 2021, a CHRB spokesperson confirmed to TIF that no complaint was ever filed against him for the ride.
Masochistic went on to become a Grade 1 winner for a different trainer and was the center of controversy after the 2016 Breeders’ Cup Sprint, a race where he finished a close second, but tested positive for a banned steroid and was disqualified.
As the back-and-forth at the Kentucky Horse Racing Commission exhibited, state-by-state finger-pointing is of no benefit for the bettors, who surely took the brunt of the incident on both days. While horsemen have recourse as purses are re-distributed following positive tests, bettors have none.
In this case there was active, visible oversight. There were meaningful investigations. But due to a variety of factors, those measures failed. Instead, it showed the inherent impracticality of relying on state regulation of what has become a national business.
Overall, the greater industry has generally fought-off for decades meaningful attempts to improve integrity, specifically in regards to wagering. In our next installment, “Wagering Insecurity” details how nearly 20 years ago, and with key entities in the sport aware of exact vulnerabilities in wagering systems, a $3 million fraud was perpetrated on the sport’s biggest day.
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
Part 8 - Damage
Part 9 - Alerts
Part 10 - Grey
Part 11 - Recommendations
Part 12 - Pravda
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