Bay Area horse owner discovered that Kentucky Derby Quick-Pick bets excluded Big Brown

[clevfan]

State: Bay Area horse owner discovered that Kentucky Derby Quick-Pick bets excluded Big Brown

By Will Oremus
Bay Area News Group
Article Launched: 05/19/2008 09:41:11 PM PDT


A local thoroughbred owner who went to Bay Meadows Race Track to place 1,300 single-dollar bets on the Kentucky Derby knew winning was a long shot.
After all, he was going for the "superfecta," a notoriously difficult bet that requires picking the top four finishers in order. Rather than filling out each ticket by hand, he used a "Quick-Pick" feature to spit out random combinations of the 20 horses in the race in hopes that one would prove lucky.

What he didn't expect, however, was that not a single one of his 1,300 tickets would include the number 20 horse - the favorite and eventual winner, Big Brown.

That statistical anomaly has sparked an investigation that reaches far beyond Bay Meadows. It centers on a major producer of betting machines, which appears to have known about a system-wide malfunction that was robbing its customers but didn't immediately publicize it.

And it has invited scrutiny of the security and openness of the nation's multi-billion- dollar automated horse wagering industry.

The apparent glitch at Bay Meadows came to the attention of the California Horse Racing Board via the track's race stewards on May 7, said Richard "Bon" Smith, who is leading the regulatory body's investigation.

"We didn't have to consult with a statistician to realize it was virtually impossible for that to occur" naturally, Smith said. The law of averages suggests Big Brown should have appeared on hundreds of the randomly generated slips.

Officials, who have not identified the horse owner, quickly contacted the betting machines' vendor, a publicly traded, New York-based company called Scientific Games.
"As soon as we engaged them in conversation, they told us that this was something systematic" with their Quick-Pick randomization feature, Smith said.

It appeared the Quick-Pick was automatically excluding the last horse in each race from its selections. The problem wasn't limited to Bay Meadows it appeared to be happening on all of Scientific Games' BetJet-model terminals.

On May 9, the California Horse Racing Board ordered Scientific Games to stop accepting Quick-Pick bets at all state race tracks.

BetJets make up roughly a quarter of all the company's machines, or about 7,000 nationwide, said Tom Hodgkins, Scientific Games' vice president for government relations and public affairs. On each one, anyone who placed a Quick-Pick bet would automatically lose if the last horse was among the winners, he confirmed.

Hodgkins couldn't say how the problem happened, how long it went unfixed or how many gamblers might have been affected. He did say that Quick-Pick bets represent "a very small percentage of wagers in the U.S.," since most horse racing bettors like to make their own picks rather than letting a computer do it for them.

Hodgkins also said there's no reason to suspect fraud.

"To the best of my knowledge we're dealing with a software glitch here," he said. "Both the California Horse Racing Board and Scientific Games have begun investigations" of exactly what happened.

Part of the board's investigation is why Scientific Games didn't sound an alarm earlier, given Smith's assertion that its officials were already aware of the issue when he called them.

In a statement released late Sunday, racing board Chairman Richard Shapiro said, "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."

Hodgkins declined to address that question, saying, "It would be premature for me to comment on the timelines associated with this" until the company completes its internal inquiry.

Meanwhile, Los Angeles-based horse owner and frequent racing board critic Jerry Jamgotchian is asking why the board didn't publicize the issue more promptly.

Though California's Quick-Pick ban went into effect May 9, other states weren't alerted until after May 15. That's when Shapiro e-mailed Ed Martin, president of the Association of Racing Commissioners International, to spread the word about the problem.

Contacted at the trade association's headquarters in Lexington, Ky., Martin said, "I don't believe anybody heard about it until we heard about it from California."

The scandal remained under wraps until the trade magazine Blood Horse posted a story on its Web site Saturday afternoon. The California Horse Racing Board issued a press release about it Sunday night.

Smith said the board's top priority was to suspend the Quick-Pick betting option at the state's tracks. He said the board wanted to make sure it understands the extent of the problem before publicizing it.

"In the interim, when we were engaged in a specific fact-finding investigation, there's no particular benefit we could perceive to making it public," Smith said.

[The Major]

That's funny.

[howid]

A local thoroughbred owner who went to Bay Meadows Race Track to place 1,300 single-dollar bets on the Kentucky Derby knew winning was a long shot.
After all, he was going for the "superfecta," a notoriously difficult bet that requires picking the top four finishers in order. Rather than filling out each ticket by hand, he used a "Quick-Pick" feature to spit out random combinations of the 20 horses in the race in hopes that one would prove lucky.

What he didn't expect, however, was that not a single one of his 1,300 tickets would include the number 20 horse - the favorite and eventual winner, Big Brown.

If I knew that I would gamble on getting my money back by a challenge of the system. Big Brown somehow finishes out of the race you may be lucky and have a ticket or two on it.

Come to think of it that was one of the strangest tickets I ever cashed, the favorite wins and the tri pays over 3 grand, possibly partly explained by the many quick pick tickets excluding Big Brown.

[Mr Memory]

Originally Posted by howid

If I knew that I would gamble on getting my money back by a challenge of the system. Big Brown somehow finishes out of the race you may be lucky and have a ticket or two on it.

Come to think of it that was one of the strangest tickets I ever cashed, the favorite wins and the tri pays over 3 grand, possibly partly explained by the many quick pick tickets excluding Big Brown.

With a twenty-horse race and Pyro out of the money, the tri and super can be substantial, even with a modest (2-1) favorite winning.

[Hartley]

Serves them right for betting a quick pick

[StarnetGypsy]

Originally Posted by clevfan

It appeared the Quick-Pick was automatically excluding the last horse in each race from its selections.

Originally Posted by clevfan

Hodgkins also said there's no reason to suspect fraud.

lol ... ayep, they're definately above reproach in my mind

[clevfan]

Betting glitch spurs reform calls

By Will Oremus
Bay Area News Group
Article Created: 05/20/2008 10:44:58 PM PDT


News of an apparent software glitch that robbed bettors of potential winnings is spurring calls for tighter oversight of horse-race wagering in California and around the country.

State Sen. Leland Yee, D-San Francisco/San Mateo, asked the state auditor to investigate the malfunction that excluded certain horses from supposedly random quick-pick betting selections at racetracks nationwide.

"Certainly hundreds, and potentially thousands, of California consumers may have been defrauded," Yee said in a statement.

Meanwhile, the chairman of the Kentucky-based Association of Racing Commissioners International said the quick pick debacle highlights the need for real-time monitoring of the $15 billion U.S. horse betting industry.

The attention stems from a problem discovered by an unidentified bettor at Bay Meadows Race Track who put down 1,300 one-dollar quick pick superfecta bets on the Kentucky Derby. Not one of the computer-generated tickets included the eventual winner, Big Brown.

The incident came to the attention of the California Horse Racing Board on May 7. It contacted the betting machine vendor, Scientific Games, which reported it had a "software glitch'' that was dropping the last horse in the field from quick pick tickets on all 7,000 of its BetJet machines nationwide.

On May 9, the racing board indefinitely suspended quick pick betting at all racetracks in the state.

Scientific Games, one of three leading gaming vendors nationwide, couldn't say how long the problem had been going on or how many bettors had been affected. It told the board it had no way of tracking quick pick tickets independently of the other tickets it sold.

Yee was not pleased to hear that. Beyond calling for an audit of the horse wagering system, he suggested an examination of the State Lottery, which relies heavily on computerized quick pick selections.

"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 there may be any potential problems with the State Lottery, where millions of quick pick tickets are purchased each year," Yee said.

The California Lottery contracts with Scientific Games for its scratch-off Instant Lottery tickets, but uses a different vendor, GTECH, for its main gaming system, including quick picks.

Spokesman Al Lundeen said the lottery has review measures that would quickly catch any quick pick malfunctions, but he couldn't reveal them, for security reasons.

The quick pick problems aren't the first to afflict horse race wagering in recent years.

In 2002, three men used Scientific Games' equipment to rig bets on Breeders' Cup races worth $3.2 million. The men, one of whom was a Scientific Games employee, were caught partly because a 40-to-1 long shot won the Cup, making their winning Pick Six ticket the only one in the country.

In the quick pick case, it's not yet clear whether anyone profited illegally. Racing board investigators declined to say whether they suspect fraud.

As for how much was lost, no one knows, but industry sources agree quick picks are a tiny percentage of all horse bets. Most gamblers prefer to make their own selections.

Moreover, some quick pick bettors may actually have benefited from the glitch — it would work in their favor in any race where the last horse didn't finish among the winners.

Regardless, the fact that 7,000 machines across the country had been malfunctioning indefinitely without anyone noticing is cause for concern, said Ed Martin, chairman of the Association of Racing Commissioners International.

"We spend a lot of time and focus policing the medication issue, but there is a collective need to focus on parimutuel wagering,'' Martin said. "It's the only form of legal gambling in the U.S. that has been allowed to operate absent a requirement for real-time monitoring.''

The association recently developed and endorsed a system that Martin said he believes could have detected the quick pick irregularities. In April, New York became the first state to require the independent, real-time monitoring, and Martin is urging California and others to follow.

Mike Maloney, a big-time Kentucky horseplayer and bettors'-rights advocate, said that would be a step in the right direction.

"What disturbs me is that there's a continual, industry-wide lack of concern about protecting bettors' interests,'' he said. "When I trade stocks, I have the (U.S.) Securities and Exchange Commission to look out for my interests. In racing, there's no organization like that.''

For that reason, Maloney said, incidents like the quick-pick malfunction often get swept under the rug.

The California Horse Racing Board's executive vice president, Richard "Bon'' Smith, said his organization is interested in the independent monitoring system but needs to learn more about it and find funding before it is implemented.

Quick pick aside, Smith said, "I have full confidence in the integrity of the system, in terms of the total amount of money that is bet'' being accounted for. If California ever reinstates quick pick betting, he added, it will certainly require tighter tracking of those bets.

[Hartley]

It also demonstrates why saying that online casinos are totally random because they use random number generators don't necessarily guarantee true randomness.

[clevfan]

California probes whether wagering machine glitch was kept quiet

By Will Oremus
MediaNews
Article Created: 05/21/2008 07:05:06 PM PDT


A probe into a mysterious software glitch that affected some 7,000 horse race wagering machines around the country is focusing on how long the machines' producer knew about the problem without alerting the public.

In a leaked e-mail dated May 15, a top California horse racing official suggests New York-based gaming vendor Scientific Games may have kept quiet about the malfunction for months.

On Wednesday, however, investigators said they haven't confirmed that.

The flaw in the machines' "quick-pick" function, discovered by a Bay Meadows customer betting on the Kentucky Derby, has triggered scrutiny of the nation's $15 billion horse betting industry. The question now is whether it was an innocent computer programming mistake or something more serious.

The e-mail obtained by MediaNews this week shows some officials suspect the latter.

"We have contacted Sci Games and they apparently became aware of this problem in February, but failed to disclose it to its customers, or certainly to us in California," wrote Richard Shapiro, chairman of the California Horse Racing Board, in the message to other racing officials.

"This is a breach of the public trust," he added.

Shapiro downplayed those statements Wednesday, saying they aren't based on firsthand knowledge.

"That is not something I know for sure," he said. "I was told by somebody that this situation may have existed back in February and may have been brought to (Scientific Games') attention."

Scientific Games spokesman Tom Hodgkins said it would be premature to comment on the timeline of events until the company completes its own internal inquiry.

Meanwhile, he said, Scientific Games has instructed all its tellers to disable the quick-pick function on its BetJet machines. For an unknown period of time, the machines had apparently been excluding the last horse in each race from their presumably random, computer-generated selections.

Hodgkins said the company can't tell how many bettors were affected or how much money was involved because it doesn't specifically track quick-pick wagers.

Richard "Bon" Smith, who is leading the California Horse Racing Board's investigation, said Scientific Games officials were already aware of the glitch when he first contacted them on May 7. Whether they had known about it for days or months remains unclear, he said, though he's hoping to get some answers soon.

It took an unusual circumstance for the error to come to light.

Officials say the unidentified Bay Meadows bettor placed 1,300 quick-pick superfecta bets on the Kentucky Derby. That's an uncommonly high number, especially since most bettors prefer to make their own selections rather than leaving them to chance.

A winning ticket — with all four of the top finishers picked correctly, in order — would have paid $29,368.90.

Going through his betting slips after the race, however, the bettor found that Kentucky Derby winner Big Brown wasn't included on a single one.

Bay Meadows stewards alerted the California Horse Racing Board of the anomaly May 7. Two days later, the board ordered a stop to all quick-pick wagering in the state.

The May 15 e-mail from Shapiro to Ed Martin, president of Associated Racing Commissioners International, was intended to spread the word to other racing organizations around the country.

Still, the issue wasn't made public until this week. On Tuesday, state Sen. Leland Yee reacted by calling on the state auditor to investigate. He wants to know the scope of the problem and why it took at least two weeks to become public.

[tony27]

I would of loved to use the machine last sunday..........

[Total Square]

Originally Posted by tony27

I would of loved to use the machine last sunday..........

saturday too

:)

[clevfan]

Sci Games Seeks 'Quick-Picks' Dismissal

by Ryan Conley
Date Posted: 9/17/2008 4:09:09 PM
Bloodhorse.com

Scientific Games claims the lawsuit brought against the gaming company over the recent “quick-picks” wagering situation cannot be judged in the California federal court system, and its settlement with the California Horse Racing Board was an appropriate measure to satisfy damages caused by any “alleged” defect in its betting systems.

In a dismissal motion filed Sept. 15, Scientific Games discounts the allegations raised in a styled class-action suit filed by horse owner Jerry Jamgotchian, including his charges of breach of contract, fraud, negligence, and unjust enrichment.

Jamgotchian in August filed the lawsuit, claiming Scientific Games purposely or otherwise mishandled several aspects of an alleged programming glitch in its BetJets self-wagering terminals. The snafu, which was acknowledged in the July settlement with the CHRB, apparently eliminated the highest-numbered post position from any quick-picks wagers made through BetJets terminals in California and other states.

In asking to have the Jamgotchian lawsuit thrown out, Scientific Games in its dismissal motion in part claims California law doesn’t allow for legal disputes over gambling to be heard in the court system.

“For more than a century, plaintiffs have been barred from bringing claims under California law arising out of a gambling contract or transaction, regardless of the theory under which the claims are brought, and regardless of whether the gambling activity at issue is legal or illegal,” the motion said, citing what it claims is extensive applicable case law.

Instead, Scientific Games calls the lawsuit of Jamgotchian “an ill-fated attempt to recover losing bets he (and a putative nationwide class of bettors) allegedly placed on horse races from the vendor who supplied equipment to the state-regulated racetracks where the bets were placed.”

“These hopelessly speculative claims are nothing more than an attempt to use the legal system as insurance for losing wagers,” the motion said.

A California-based attorney representing Scientific Games called Jamgothian’s complaint a “baffling, misguided lawsuit.”

“It’s hard to understand what is going on with this lawsuit, as we laid out in our motion to dismiss,” said Theodore J. Boutrous Jr. of the Gibson, Dunn & Crutcher law firm in Los Angeles. “California law is absolutely clear that this sort of lawsuit is absolutely prohibited. And when you look at the fact that the CHRB thoroughly investigated this issue, and that the company cooperated fully, there is no reason for this to go forward.”

Jamgotchian, who in interviews has alleged various levels of collusion between Scientific Games and one of his frequent targets, the CHRB, bristled at the premise the courts would throw out his lawsuit.

“According to the … motion, a California bettor does not have any contractual relationship with the racetrack where the bet is made,” he wrote in an e-mail to The Blood-Horse. “Therefore, if the bettor happens to win, (Scientific Games’) position is that the racetrack is not legally obligated to pay the bettor and the bettor has no judicial recourse.

“(Scientific Games) further states that they can't be liable for any quick-pick damages because (the company) merely ‘supplies equipment to a vendor,’ and since the vendor isn't liable to the bettor based upon state law, neither are they.

“If that really is the law, why would anyone make a horse racing bet in California?” he concluded.

Jamgotchian estimates damages to the class group are in excess of $5 million. Scientific Games and the CHRB counter that the pool is much smaller, and throwing out the highest-posted horse likewise often increased a bettor’s chance of winning a wager.

Scientific Games has said it will consider reimbursing bettors who made quick-pick wagers through its BetJets terminals while the glitch was present. Details of the refund policy have not been made public. It is believed that just a handful of inquiries on possible refunds have been made to Scientific Games.

[clevfan]

'Quick-Picks' Lawsuit Dismissed

by Ryan Conley
10/24/2008 5:29:37 PM
Bloodhorse.com

A California judge has dismissed the lawsuit against Scientific Games over the “quick-picks” wagering situation, agreeing with the company that state public policy prohibits such a complaint as it was presented.

U.S. District Judge George H. King entered the judgment Oct. 23 in the Central District Court of California after considering Scientific Game’s motion to dismiss the case. The lawsuit, which was filed in August by California horse owner Jerry Jamgotchian, sought at least $5 million in damages over an admitted glitch in the Scientific Games BetJets self-service terminals.

The BetJets terminals for a period of months produced quick-picks tickets that omitted the highest-numbered horse in the field. The situation came to light in May after an unidentified Bay Meadows bettor purchased $1,300 superfecta tickets on the Kentucky Derby Presented by Yum! Brands (gr. I), wagers that didn’t include in any leg eventual winner Big Brown, who broke from the outside No. 20 post.

Without specifically commenting on the merits of Jamgotchian’s complaint – which included charges of breach of contract, unjust enrichment, negligent misrepresentation, fraud, and negligence – King in published civil minutes of his decision instead focused on Scientific Game’s primary dismissal argument: That California case law prevents lawsuits by bettors attempting to collect lost wagers.

King wrote that the court didn’t agree with Jamgotchian’s assertion that the complaint, which was filed as a class-action lawsuit, was not about trying to recover lost bets.

“Moreover, though plaintiff claims that the identity of the winning horse is irrelevant under this theory, we doubt that he will seek to undo any transactions where he held a winning ticket,” he wrote.

In an accompanying order, King ruled that the lawsuit is dismissed with prejudice, which generally means that the lawsuit can’t be filed again.

Jamgotchian, who in interviews with The Blood-Horse also criticized the California Horse Racing Board for its part in the subsequent investigation and an eventual $200,000 settlement with Scientific Games, was not happy with the court decision.

“Judge King failed to understand that our action was based on (Scientific Games’) outright fraud, breach of contract and other claims which did not relate to gambling, (and) to Scientific Games latest ‘scheme’ to defraud all (California) bettors,” he wrote in an e-mail statement. “What makes it even worse is that CHRB chairman Richard Shapiro and the CHRB condoned these illegal activities and ‘partnered up’ with Scientific Games to continue defrauding California bettors, and then even extended the Scientific Games contract (to provide wagering products to the state)!

“Based upon this illegal and despicable conduct by both Scientific Games and the CHRB, why should anyone have confidence that wagering in California has any integrity or safeguards?” he continued. “The simple answer is that it doesn't, and the CHRB won't require any such integrity or safeguards from their ‘partner,’ Scientific Games.”

An attorney representing Scientific Games said the company was pleased with King’s ruling.

“Scientific Games acted just the way the betting public should want companies to act,” said Theodore J. Boutrous Jr. of the Gibson, Dunn & Crutcher law firm in Los Angeles. “The company moved quickly to work with regulatory authorities to resolve the issues and to protect the betting public. California law is very clear that these types of lawsuits are barred and meritless. The district court got it exactly right.”

King’s decision marks the third dismissal in lawsuits filed against Scientific Games related to the quick-picks situation. A federal case filed in California in June was dismissed following the July announcement of the settlement with the CHRB, while a California state case was voluntarily dismissed by the plaintiff Oct. 23.

Jamgotchian said he and his legal counsel will consider appealing to the California Supreme Court what he called an “irresponsible ruling” by Judge King, and would also consider filing claims to see if the CHRB and Scientific Game will actually refund wagers based upon the settlement agreement. The settlement terms allows for holders of quick-picks tickets purchased during the glitch-period to request refunds from Scientific Games.

[clevfan]

Appeal Filed in Scientific Games Lawsuit

by Jack Shinar
Date Posted: November 21, 2008
Bloodhorse

Horse owner Jerry Jamgotchian, dissatisfied with a California federal court judge's decision to dismiss his lawsuit against Scientific Games over the "quick pick" wagering snafu that came to light last spring, has taken his case to the U.S. Court of Appeals.

The action was filed Nov. 17 in the Ninth U.S. District by attorney Robert Goodin on behalf of Jamgotchian.

U.S. District Judge George H. King dismissed the case Oct. 22, concurring with Scientific Games that case law prevents lawsuits by bettors attempting to collect lost wagers.

Jamgotchian contends that King, in granting the dismissal, did not understand that his claim was not related to a gambling loss. Instead it was aimed at "fraud" perpetuated by Scientific Games when it accepted quick pick wagers with knowledge that the company's BetJets terminals had a glitch that automatically eliminated the last number of a race's field in its random sequence, he said.

The defect was disclosed after a bettor at Bay Meadows purchased 1,300 $1 superfecta quick pick tickets on the Kentucky Derby Presented by Yum! Brands (gr. I) and later realized that the number of the winner, Big Brown, who broke from the outside post 20, was not included on any leg of the tickets. Jamgotchian believes that Scientific Games violated its contract to accept wagers on behalf of the California pari-mutuel system.

"It's clear to me and my legal counsel that the judge cannot distinguish between a contract and a wager," Jamgotchian said Nov. 20. "Scientific Games admitted that it had committed a fraud."

In his original complaint, which was filed as a class action, Jamgotchian charged Scientific Games with breach of contract, unjust enrichment, negligent misrepresentation, fraud, and negligence.

The Scientific Games attorney, Theodore J. Boutrous Jr. of the Gibson, Dunn & Crutcher law firm in Los Angeles, could not be reached for comment.