The Modern Games “scratch” and subsequent fiasco tells us plenty about the state of rule-making and pari-mutuel wagering technology.
It might even offer signs into the future of betting on the Breeders’ Cup and other big American racing events too.
Regardless, every stakeholder in the American racing industry should hope the future will be improved from the present.
According to the California Horse Racing Board (CHRB), and confirmed with a review of tote data by the Thoroughbred Idea Foundation (TIF), Modern Games is first reflected as a scratch at 5:35.35 P.M, approximately 138 seconds after Albahr is reported as scratched from the Breeders’ Cup Juvenile Turf.
For racing veterans, including experienced horseplayers, there is seemingly no coming back from a scratch.
J. Curtis Linnell, head of the Thoroughbred Racing Protective Bureau, an organization which includes tote security and monitoring under its duties, said as much in comments to the Daily Racing Form.
“Once a horse is scratched, it’s impossible to undo that…”
Shortly after 5:37 P.M., according to the CHRB, the impossible happened.
The state’s racing regulator, in a follow-up release the morning after the race, said “Modern Games was reinserted into the parimutuel wagering pools at 5:37.01.”
Reinserted?
“There are too many things that happen automatically,” Linnell said before the CHRB follow-up was released. “It’s not like [the pools are] sitting in suspension until the race goes official. That’s why everybody has to be very careful to not scratch a horse on a mistake.”
AmWager, a small ADW, offers a graph that depicts odds changes over the entirety of betting information for each race. Their graph below shows the betting changes of three horses from the Juvenile Turf: Modern Games (red), Albahr (white) and Dakota Gold (blue).
It is noticeable when Albahr scratches, the odds of both Modern Games and Dakota Gold drop as a result. When Modern Games is first reported as a scratch, Dakota Gold’s odds decline while Modern Games disappears entirely.
Source: AmWager
But what about when Modern Games is “reinserted,” his price returning to where it was prior to the scratch, while Dakota Gold reverts as well?
As Linnell stated, both his expectation and that of nearly every regular horseplayer is that once the horse is scratched, a series of automatic actions take place, which includes triggering refunds for all bets that included Modern Games in intra-race pools (win, exacta, etc).
That does not seem to have happened, and contrary to Linnell’s perspective shared to the Daily Racing Form, the win pool on Modern Games did appear to sit in a suspended state during the time of his original scratching.
The expectations of horseplayers once Modern Games was scratched would be a timely refund of all intra-race bets. Despite an initial scratching and a reinstatement, Modern Games was an active player in the pools for another six minutes, his price drifting higher the entire time.
The entire situation begs many questions. Among them:
- If this can happen unexpectedly in these circumstances, can it happen on a random Tuesday at a track with far fewer eyes than the conclusion of Future Stars Friday at the Breeders’ Cup?
- Is it possible for a horse’s pool to be temporarily closed in the moments before betting, only to be reinstated as if there were no issues, before such actions are noticed or reported to officials? Could it jeopardize the integrity of the pools, albeit for a short period?
- If automatic processes normally occur once the scratch is made, why did that not seem to happen here, with Modern Games being reinstated to the pools at the same odds when he was originally scratched? Why weren’t refunds processed at his original scratching? Why did the pari-mutuel system perform outside the expectations of normal behavior?
- Like the “Fix Six” fraud, which uncovered antiquated processes in tote technology in 2002, has this situation revealed any similar findings?
The incident would have occupied an entire chapter of TIF’s early 2021 series “Wagering Insecurity,” which questioned the evolution of tote technologies in the American market, threats to the integrity of wagering pools and more.
Answers to those questions are unknown at present. The public will have to wait to learn more as the CHRB commences an investigation into the incident. Mistakes happen, but human errors aside, are there weaknesses with the pari-mutuel system that this incident exposed?
“We look forward to the results of the CHRB investigation and working with all industry stakeholders, including horseplayers, to improve and modernize both existing rules and wagering infrastructure,” said Breeders’ Cup chief executive officer Drew Fleming.
In response to questions from TIF regarding the incident, Del Mar provided the following statement:
“Our regulator, the California Horse Racing Board (CHRB), is investigating the matter. Del Mar is fully cooperating with that investigation. We are very sympathetic to those bettors who had their wagers negatively impacted by Modern Games running for purse money only. We are withholding any further comment until the CHRB review is complete.”
DISREGARDING BETTORS
Under CHRB rules, Modern Games was permitted to run in the Breeders’ Cup Juvenile Turf for “purse only.”
The rules were followed, but they are flawed and disproportionately unfair to bettors.
American bettors are accustomed to the purse-only situation mostly through experiences in New York, where horses can be coupled due to shared ownership and a late scratch of one entrant requires the other horse or horses in the coupling to run for purse only.
This more frequently applied New York rule provides customers a modicum of protection, but still falls short of the mark.
Both states’ situations can be considered here, though the focus will be on California’s rule, reprinted below.
“Rule No. 1974: Wagering Interest…
“(b) If a horse is removed from the wagering pool due to a totalizator error, or due to any other error, and neither the trainer nor the owner is at fault, the horse shall start in the race as a non-wagering interest for the purse only and shall be disregarded for pari-mutuel purposes.
The philosophy behind CHRB Rule 1974, and any rule enabling a horse to race for purse-only, seems fair on the surface - don’t penalize one horse’s connections for an error beyond their control and let it run for purse money only.
It is anything but fair.
Allowing any horse to run for purse only creates two races, one for owners and one for bettors.
If consideration was given by a regulator to the concerns of bettors, such a situation would never be memorialized in rules. Such a rule engenders the opposite of a customer-centric approach.
The outcome of the race for bettors is then allowed to be impacted by an interest that is not part of the wagering options. Modern Games could impact the pace. Modern Games could swing wide and force other horses out too. Modern Games could back-up on the rail and disturb other horses.
Disregarding a horse for “pari-mutuel purposes” and then running the race with that horse in it is equivalent to disregarding the interests of betting customers altogether.
For one longtime regulator, steps must be taken to change rules which demote the interests of the betting public. Instead, their interests should be a primary concern.
“If Modern Games was scratched, and it was irrevocable, that would have been a really bad beat for his connections. It would be unfair,” said Joe Gorajec, who served as executive director of the Indiana Horse Racing Commission for 25 years.
“Having said that, if the only other option is to have them race as a purse-only participant, that is actually more unfair to the betting public.
“In the hierarchy of special interests, the horse and rider are paramount. Next in line is the betting public. A distant third is everyone else. The interests of the horsemen should never supersede those of the betting public.”
The wagering impact of a horse running for purse only is never known until after the race. But there is some impact, and that yields an outcome that should never be forced onto customers.
An act which is believed to be incredibly fair to the connections of the horse, allowing the horse to run for purse only, is fundamentally unfair to the bettors of the “same” race.
Any rule in any state which permits a non-wagering interest to race adjacent to wagering interests, when such situations are fully known prior to the race, should be abolished. The rules of racing have not evolved favorably for betting customers.
The lack of a customer-centric approach on these matters, in California and New York particularly, is disturbing.
“Generally speaking, when commissions make or amend rules and regulations, they look at the interested groups in front of them and the positions they take,” said Gorajec.
“Most times, those interests tend to be horsemen and track operators and more often than not, bettors are never even considered. My experience has been that a lot of regulators are ignorant about what is in the best interest of bettors. That is a problem now and it has always been a problem.”
A fairer outcome to a greater number of stakeholders is a laudable goal for the future, and it goes beyond just updating American state rules on these matters. More could be within reach as internationalized pari-mutuel wagering markets evolve.
GLOBAL APPROACH COULD REVOLUTIONIZE
OPPORTUNITIES AND BETTORS’ INTERESTS
If such a mistaken scratching occurred in Hong Kong, where the per-race pools are the highest in the world, there would have been no betting permitted altogether.
All wagering pools would have been refunded, the track would have received no revenue on the race and multi-race bets would have paid to every horse, respecting the bettors while still paying the purse.
The opinion of betting operators outside America is increasingly meaningful in these matters as pari-mutuel pools globalize through commingling.
For the first time since 2014, bettors in Hong Kong had a chance to wager on American racing as both the Breeders’ Cup Mile and Turf were offered via separate pools in the early hours of Sunday morning. After witnessing the Juvenile Turf fiasco, the Hong Kong Jockey Club made their thoughts known to the Breeders’ Cup hours before presenting two American races to their customers.
“I think it is something which is definitely of concern,” Winfried Engelbrecht-Bresges, the Hong Kong Jockey Club’s (HKJC) chief executive officer, told the South China Morning Post the day following the 2021 Breeders’ Cup.
“We had a discussion and we informed the Breeders’ Cup after the incident that we respect the rules they have but that if something like this would happen with our simulcast races, we would void the race and pay back the bets as our customers would not accept it.”
Engelbrecht-Bresges (below), who is also the new chairman of the International Federation of Horseracing Authorities (IFHA), asserts all bets on the race would be refunded, while all horses would be treated as winners in multi-race sequences.
Photo: Hong Kong Jockey Club
The HKJC prepared for a repeat of the Friday fiasco on Breeders’ Cup Saturday and their policies were tested immediately. Another Godolphin-owned, Charlie Appleby-trained runner was scratched at the gate in the first American race with Hong Kong betting in eight years.
Master Of The Seas got fractious prior to the Breeders’ Cup Mile and was withdrawn. The HKJC tote, which operated its own pools on the race, did not scratch and refund bets on Master Of The Seas until after the race had started and it was abundantly clear he would not be “reinserted” or allowed to run for purse only, like Modern Games.
The betting operator protected customers and sacrificed a higher commission by holding its scratch until a repeat occurrence of the Juvenile Turf was not possible.
Hong Kong has been growing its business as a global hub of betting on major race days and is actively pursuing vastly enhanced pari-mutuel wagering protocols on a worldwide level. Executives from the HKJC and Australian wagering behemoth Tabcorp co-chair the World Tote Association, formed in 2020.
The HKJC has advanced the reality of globally commingled betting pools since welcoming pari-mutuel punters to its famously massive pools on its own races since 2013 and has grown substantially. Across its 2020-2021 season, 17% of total handle on Hong Kong racing came from commingled sources, an amalgam of 60 betting partners from 26 countries and jurisdictions, including the U.S.
Concurrently, the HKJC has evolved its role as the central pari-mutuel hub for major European race days, one which has been branded “World Pools.”
“Under World Pool, punters from around the world bet into a single pool hosted by the Hong Kong Jockey Club, providing huge liquidity and ensuring more stable dividends, meaning a significant bet no longer results in plummeting dividends,” wrote Bill Barber, industry reporter for the Racing Post, in October.
Where were the pari-mutuel pools at Royal Ascot and Glorious Goodwood hosted in 2021?
Hong Kong.
Irish Champions and British Champions Day too.
Total pari-mutuel handle for the 17 days of British and Irish racing with betting hubbed in Hong Kong was reported by the Racing Post to exceed the equivalent of $480 million. The HKJC served as the global betting hub for the 2021 Dubai World Cup and its final local prep day too. American customers had access to wager into all of them.
With global betting comes the need to improve the transaction protocols and rules which govern such wagering.
Betting snafus such as that in the Breeders’ Cup Juvenile Turf are unpalatable at any time, but should be mitigated in the future, particularly as the push towards global commingling of big race days reaches American shores.
In his October address at the IFHA’s annual conference, Engelbrecht-Bresges tasked a new commercial committee within the organization, chaired by France Galop CEO Olivier Delloye, to pioneer a more integrated, advanced set of betting protocols.
“There will be a particular emphasis on driving growth through simulcasts with a focus on commingling, especially with World Pools, which has already provided significant revenues for its participant and presented an unprecedented growth opportunity for our sport,” said Engelbrecht-Bresges.
“To support the further development of World Pools and commingling, we should develop a new racing, wagering, information and transaction integrity protocol.
Basically – better technology to process bets from all over the world.
Eventually, it could be possible to centralize all Breeders’ Cup betting through World Pools or whatever emerges from the concerted efforts of the IFHA, a development that could significantly increase total wagering on U.S. racing’s big season-ending championships to previously unconsidered levels.
“Whatever steps can be taken to drive more uniform, global standards, not only with respect to horse safety and medication, but commercialization and wagering, are vitally important for the future of the sport,” said the Breeders’ Cup CEO Fleming.
“We look forward to helping that process along in any way that we can.”
“It was a significant step to have customers from both Japan and Hong Kong betting on some of our championship races and we are hopeful that relationship can expand in the future.”