by Frank Angst

Despite purchasing $1,300 worth of wagers billed as random on this year’s Kentucky Derby Presented by Yum! Brands (G1), a California bettor never had a chance to win.

The California Horse Racing Board has terminated all Quick Pick betting in the state after an apparent Scientific Games computer problem caused certain program numbers to be omitted from what was purported to be a purely random selection method. The CHRB is investigating the problem.

The scandal was sparked when a bettor noticed his 1,300 individual $1 superfecta Quick Pick tickets on the Derby, purchased at Bay Meadows Race Course, did not include No. 20 in any position on any of the tickets. The Derby was won by Big Brown, who was No. 20. Quick Picks are supposed to be random combinations of numbers but No. 20 was not generated.

On Tuesday, California State Senator Leland Yee requested the state auditor investigate and determine the cost of the problem to California consumers and taxpayers.

“Certainly hundreds, and potentially thousands, of California consumers may have been defrauded,” Yee said. “We have no idea who knew what and when, how much this has cost Californians, how long this has been happening, and whether or not the problem spills over to the state lottery, where millions of Quick Pick tickets are purchased each year.”

Scientific Games officials were not immediately available for comment Tuesday afternoon.

CHRB Chairman Richard Shapiro said the board’s investigation will center on what happened, and more importantly, if Scientific Games was aware of the problem and failed to report it.

“It will be of particularly grave concern if the investigation reveals that Scientific Games knew of this malfunction before the CHRB discovered it but did not report it,” Shapiro said. “The industry must have transparent and competent wagering systems, and this apparent breakdown of a system must be dealt with aggressively. We must protect the public at all costs as integrity of our wagering is job one. The CHRB is committed to using all resources available to it, both within and outside of the agency, to fully understand the scope of the issue.”

Association of Racing Commissioners International President Ed Martin said he has forwarded information about the problem to all RCI member regulators. Martin said RCI Integrity Services monitoring software could have spotted the problem of the Quick Pick not generating a truly random sequence.

The RCI has passed a model rule requiring states to add monitoring software but states have been slow to adopt it. However, Martin is optimistic because the New York State Racing and Wagering Board approved the model rule on wagering integrity in April. With little chance of discovering such problems in real time, racing typically must react after the fact.

As for the latest scandal, CHRB Executive Director Kirk Breed issued a directive on May 9 to Scientific Games, which contracts with all California racing associations and fairs to provide totalizator equipment, directing the company to “cease accepting Quick Pick wagers in facilities authorized by the California Horse Racing Board.” This includes all racetracks in the state, which were individually notified.

Given the possibility that the same programming failure might exist in other racing jurisdictions serviced by Scientific Games, Shapiro advised Martin of the problem.

“We have discovered a potentially serious issue,” wrote the chairman in a May 15 e-mail to Martin. “I want to share this with ARCI, so that other jurisdictions that use Sci Games are both aware of this problem and can deal with it accordingly.”

 Breed said the CHRB would not tolerate any compromising of the integrity of pari-mutuel wagering. CHRB Assistant Executive Director Richard "Bon" Smith is leading the board’s investigation. Yee has asked the state auditor to conduct a thorough review.

“I find it unconscionable that this has occurred and equally disturbing that there was never an independent audit of this wagering system,” Yee said. “California consumers deserve better and, at the very least, the public deserves answers. I urge the CHRB, Scientific Games, and any other interested parties to fully comply with any and all investigations.” 

Frank Angst is senior writer for Thoroughbred Times