Memorandum from the National Trainers
Federation (DGB 47)
1. INTRODUCTION
1.1 The National Trainers Federation (NTF)
is the representative body for licensed racehorse trainers in
Great Britain. Of the 563 licensed trainers, 523 (93 per cent)
are members of the Federation.
1.2 The impact of Betting Exchanges on racing
concerns two key issues—funding and integrity.
1.3 We believe the funding issue is essentially
a commercial question, which should be resolved by the industry
in negotiation with betting exchange companies. Our comments are
therefore directed at the impact on integrity.
2. REGULATION
OF INTEGRITY
2.1 Trainers are licensed by the Jockey
Club and must abide by the Rules of Racing. Inter alia, these
rules require that all horses are run on their merits and achieve
the best possible placing. Trainers must provide adequate instructions
to their jockey to ensure that the jockey gives the horse the
opportunity to obtain the best placing.
2.2 These rules are fundamental to the integrity
of horse racing.
2.3 The NTF has been proactive in addressing
integrity concerns. In the first instance we discussed with a
representative of Betfair the use of Betting Exchanges by licensed
persons. We progressed immediately to the view that trainers should
not be allowed to lay their own horses on Exchanges and therefore
supported the introduction of a rule to that effect by the Jockey
Club. This applies also to trainers' staff.
2.4 Subsequent experience of betting activity
on Exchanges has amplified our concern at the opportunities they
provide for malpractice and it is in the light of these concerns
that we put this paper before the Joint Committee.
2.5 The Department of Culture Media and
Sport has stated that it is the responsibility of the Jockey Club
to regulate the sport so the task of maintaining standards of
integrity in the face of changes caused by Exchanges lies with
the Jockey Club.
2.6 We pose the question, "Is that
realistic?"
3. EFFECT OF
BETTING EXCHANGES
ON INTEGRITY
3.1 The advent of Betting Exchanges allows
punters the chance to benefit financially from losing horses.
Previously, bookmakers were the only party licensed to "lay"
a horse. In other words, the punter could "back" a horse
to win and only gained when that horse was successful. Now a punter
using a Betting Exchange can gain by any other horse in the field
being unsuccessful.
3.2 As there can only be one winner (excepting
dead heats) it can be seen that the opportunity for financial
gain from losers is not only new, but is substantial greater.
3.3 It follows that the incentive for the
unscrupulous to make sure an individual horse cannot win is vastly
greater than before.
3.4 Exchanges operate on a platform that
provides a unique method of displaying the betting market. It
is easy to see at a glance the fluctuations in the market. Horses
whose price lengthens as punters oppose their chance of winning
are said to "drift." This effect is so transparent on
the Exchanges that suspicions are easily aroused if the price
of a horse with an apparently good chance on form begins to drift.
3.5 The media has been quick to report these
cases. Every time it happens the trainer is indirectly implicated
in malpractice. This is a source of great concern to the NTF and
its members.
3.6 Having consulted our members, the NTF
Council has formulated its view, which we set out below.
4. IS THERE
ANY EVIDENCE?
4.1 Suspicious betting activity
(a) A company called Racefax, which monitors
betting activity, claims that there have been 171 cases of suspicious
betting activity on Exchanges in the last 12 months. It implies
that the races concerned were "rigged."
(b) In response, Betfair can demonstrate
that in the same period, 1,761 horses drifted on their Exchange
and still won, many of them doubling or more in price.
(c) Furthermore, Betfair point out that Racefax
can only monitor the front end of the Exchange (ie what they see
on the screen). It has no idea which client's activity is affecting
the market. The Exchange operator on the other hand can look behind
the scenes because all their clients' activities are traceable.
(d) Betfair has found barely a handful of
suspicious cases, the information on which it has handed over
to the Jockey Club for investigation under the terms of the Memorandum
of Agreement between the parties.
4.2 Injured horses
(a) There have been a few cases where horses
have drifted on Exchanges, run poorly and have subsequently been
found to be injured.
(b) When this happens, there are suspicions
that someone close to the horse knew that there was something
wrong with the horse and it could not win.
(c) We would like to make it clear that no
trainer would run a horse, which he knew to be lame and thereby
jeopardise both the life of the horse and conceivably the jockey.
4.3 Price fluctuations
(a) A representative of one of the Exchanges,
Betdaq, has stated that the only way Exchanges have altered integrity
is by "shining a spotlight" on suspicious activity so
that everyone can now see what is going on.
(b) We believe this is a misleading half-truth.
Certainly, price fluctuations are more visible but does everyone
understand them? Betfair says that 50 per cent of betting activity
on its system is clients "trading prices" rather like
a futures market. These trades can exaggerate the momentum of
a price fluctuation irrespective of a horse's real chance.
4.4 Conclusion
(a) Our own view is therefore that the current
level of damage to integrity is limited. However, the fact remains
that the opportunity and incentive has increased enormously.
5. MORE OPPORTUNITIES
5.1 That there are now more opportunities
for malpractice is well illustrated by an incident reported to
us by a leading trainer.
(a) One of his horses was being prepared
for a top race. Not long before the race, the horse developed
a minor physical problem, which was investigated by the trainer's
vet one evening.
(b) The following morning, the trainer decided
he could not risk the horse in the race and rang the owner to
inform him the horse would not run.
(c) Less than a minute later, the trainer
received a telephone call from a journalist, who said that he
understood the horse would not be running in the race.
(d) When the trainer asked how the journalist
could possibly know, as he had only just informed the owner, he
was told the horse had been drifting badly on the Exchanges.
(e) The important point this illustrates
is that it is a very small step from someone close to a stable
making money from information suggesting a horse will not run
up to its merits to the same person profiteering by making sure
that a certain horse will not run up to its ability.
5.2. Hasn't it always happened?
(a) A common response to this problem is
the allegation that this has always happened in the past, usually
when a bookmaker has offered to lay a horse, which its connections
believe is unlikely to win, for the financial benefit of those
connections.
(b) That may be so. The significant difference
is that now an unscrupulous person does not need the bookmaker,
who was an indispensable intermediary.
(c) This has unquestionably widened the opportunities
dramatically.
6. CONCLUSION
6.1 While we believe the current level of
malpractice has been mercifully small, we have also shown that
the potential for it has vastly increased.
6.2 In addition, the unbalanced reporting
of so called "suspicious cases" gives the public a misleading
picture of racing, which casts doubt on its integrity and may
undermine public confidence.
6.3 Though Racefax's vision may be currently
an exaggeration, it is certainly possible in the future.
6.4 We ask the Joint Committee to consider
whether, if there were 171 (or more) cases to investigate, the
racing industry is ever likely to be in a position to give the
Jockey Club enough resources to deal with this scale of problem?
6.5 In our view there is a clear case for
those who lay horses on Exchanges being registered in some way.
We suggest that this should come within the licensing provisions
of the Gambling Bill.
J R Arnold
Chief Executive, on behalf of the National Trainers
Federation.
December 2003
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