Breaking from the Gate

If you want to start a heated discussion among regular Customers in the racing industry, all you have to do is tell one of them that the tote system is secure and no money is being bet late.

After they get done yelling about Chris Harn, the two recent examples of past-posting, and all the odds shifting they see on the television feeds, even I start to wonder. And for the record, I’ve been a Teller, a Mutuel Manager, run a large ADW company, consulted with tote companies, and currently sit on the TRA 2020 Committee, the industry group which deals with issues having to do with our tote systems. In short, I know a little bit about how tote systems operate.

Let me go on record now and say that I do not believe in the normal operation of the tote system that there is ANY past-posting going on that is not intentionally enabled by the system. I can hear people falling off their chairs everywhere.

Yes, there is a mechanism built into the system which allows for the possibility of past-posting (or past-cancelling) and it is called the “close cancel delay.” For those of you that don’t know what that means, the close cancel delay is enabled at some racetracks to protect the mutuel teller from someone walking away from a ticket at off time. At most tracks, tellers are responsible for their shortages at the end of the day. It gives the teller a chance to cancel the ticket, so they are not out the money.

The TRA 2020 Committee has been working with tracks and State regulators to eliminate the close cancel delays, but they still exist at some places. The TRA keeps a list online of the close cancel delays at tracks. It was last updated on 11/14/07, and there was still a track listed with a 10 second delay! Before you start throwing stones at the outlet, which I am not naming here, keep in mind the delay might be gone by now. However, another note to the National Council of Legislators from Gaming States … start working on regulations to mandate no close cancel delays if your State still allows them.

In addition to allowing the ability to cancel a ticket, there is one other problem the close cancel delay helps to create … the perception of there being money bet after off time due to the late odds shifts players see when watching TV monitors. A host track is not able to post “final” odds until all outlets are in the pools. This means that if the outlet with the 10 second close cancel delay is also wagering on a track you are playing, final odds could not even begin to be calculated until at least 10 seconds after the race begins.

The TRA 2020 Committee has done a couple of things to help in this area. First, at the urging of the 2020 Committee tote companies now send the win odds to the host track first when updating the pools (exacta, trifecta, pick n pools are sent following the win odds). Second, the tote companies at the host track now “force” a win odds calculation at 10 seconds after off time. By doing these two things, it has been reported back to the 2020 Committee that over 98% of the win pool is reflected at 10 seconds. Not perfect, but a lot better than it was even a year ago.

Unfortunately this only solves part of the problem with the display feed that is being shown on television screens world-wide. The main cause of seeing odds shifts while races are being run has to do with converting the output from the tote system into the graphics that get over-laid on the host track’s video signal. And it’s not just odds … the running numbers mid-race also suffer. When I worked as a placing judge, I was appalled at how long it took for a change I keyed into the infield toteboard display to actually show up on the television. I always thought it made me look bad as a placing judge because the display updated sometimes as long as 10 seconds after I made the change to the running numbers.

There is also one other thing we found out about display feeds. Sometimes the odds that show up with each “chicklet” don’t update during the course of the race until the placing judges actually update the running numbers. So if the 1-2-3-4 ran all the way around the track in that same order, the odds on TV would never be updated, even if the tote had passed along the proper odds! The 2020 Committee has also begun asking the video vendors if anything can be done to help in this area.

It’s a little ironic that with the advent of the graphics packages that performance has gotten worse. I remember my days at Ak-Sar-Ben when the running numbers were overlaid using a display board that was in the TV room that was identical to the infield toteboard. Instant updates! A small camera shot the display board and it was overlaid onto the video picture. Updates were actually in real-time back then. Of course, it looked a little ugly and there were no odds.

Obviously there are issues with the tote system, and they can all be addressed with a little application of technology by the industry. After all, if millions of stock transactions can be handled by Wall Street, then certainly there is a way to fix the tote system.

Enter WTP. I can already hear people asking, “What the heck is WTP?” In short, WTP is a new tote protocol being developed by the tote companies, and some racetracks, which essentially ships the individual bets off to the host track for validation before a ticket is issued. This is different from the current ITSP protocol which batches the wagers together and sends pool totals. WTP does a lot of good things to help fix the tote issues the industry is currently facing:

1. Eliminates the refunding of tickets when a communication link is lost.
2. Lets the host track know exactly where and at what time every wager was placed.
3. Allows for instant updating of odds.
4. Assures that no more wagers are accepted after the pool has been closed.

While all of these are certainly good things, I am going to advocate a different solution, because I don’t think WTP goes far enough. I think we need to have one national bet processing center.

Note, I am NOT saying we need one tote company.

I am saying we need to separate the system that processes the wager from the systems that collect the wagering data. My thought process takes it one step further. I want to see a centralized bet processing center (well, actually two for redundancy purposes) that is a separate entity which is specifically NOT owned or operated by anyone that accepts a wager, or develops equipment that accepts a wager. It must be independently operated, not beholden to anyone that accepts a wager, and above all, it must be a non-profit organization.

To use the stock market example, I have an online brokerage account and an account with a full service broker. I can use either to buy shares of Google, but they both have to enter my purchase into the (centralized) NASDAQ system to make the trade. It sounds a little like WTP, but it goes a few steps further:

1. It’s now easier to secure the bet processing system, since there are fewer locations where bets are processed, and fewer people with access to the system.
2. It’s easier to attach a transaction monitoring to proactively watch for irregularities.
3. An auditing system can be more easily put in place to insure bets are only being accepted from approved outlets.
4. Customers could establish accounts which would allow portability to every outlet, and device attached to the system. 
5. If an upgrade to the system needs to be made, or a new bet gets introduced, everyone gets it at the same time.

I am not looking to put the tote companies out of business. They are all moving towards building centralized datacenters for their own businesses anyway, and most outlets are actually sending bets “off-site” now. The industry needs the tote companies, and if they don’t have to worry about processing the bets, they can focus on producing better customer facing products, and providing better on-site services.

To do this will require a sizable investment by the industry. I have an idea for a way to pay for this, and once again, I am going to invoke the word “fair” here.

I am suggesting that to start, 0.25% off all simulcast handle be used to pay for it.  According to the Jockey Club, in 2006, Off-track pari-mutuel handle on Thoroughbred racing alone was $13,097,000,000. Using just that figure, there would have been $32,742,500 to fund the new bet processing center in 2006. Factor in Standardbred and dog racing handle also, and there is plenty of money available to do this, including paying for all of the telecommunications that needs to be put in place to support it. If it doesn’t cost that much in the long term, then a lower percentage can be applied later. This is supposed to be a non-profit organization after all.

And no, I don’t want to raise takeout. It should come off the top before dividing up the takeout. It’s only fair.

So now we have: Host Track-4.9375%; Athletes-4.9375%; Outlet-4.9375%; Customer 4.9375%.

Going through this exercise can be fun. It actually reminds me a little bit of the movie Dave. For those of you who haven’t seen it, Dave is “hired” by the President’s staff to impersonate the President who has had a massive stroke. There is a lot more to the plot than this, but in the movie, he tries to make sense of the Federal budget. He takes a look at how stupidly some of the money is spent and re-distributes it to a worthwhile cause. We have a few worthwhile causes, so let’s continue.

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