more on Computer Programmer Fired In Pick SixInvestigation

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: PAUL JULIEN <p.julien () worldnet att net>
Date: Sat, 02 Nov 2002 00:45:41 -0500
To: dave () farber net
Subject: Re: <[IP]> Computer Programmer Fired In Pick SixInvestigation

re:  <[IP]> Computer Programmer Fired In Pick SixInvestigation


Dave:

Here is the New York Times story on this which has a much clearer
explanation (than the Wash Post story) of the authorities' theory of what
happened, and has much less posturing from company executives.


Paul Julien
La Crosse WI


*



November 1, 2002

The New York Times


Worker Dismissed as Inquiry Widens Into Big Racing Bet
By JOE DRAPE


As the authorities investigated whether an exotic bet worth $3 million on
last Saturday's Breeders' Cup horse races was rigged, the company that
processed the wager said yesterday that it had fired a "rogue software
engineer" who exploited a weakness in its system.

The company, Scientific Games Corporation of New York, said it had turned
over the employee's name and evidence of potential wrongdoing to the state
police and state wagering officials.

The employee attended Drexel University in Philadelphia with the winner of
the bet, racing officials and a state investigator said.

The head of the company, Lorne Weil, said the worker had the access and
know-how to breach the system run by the company's subsidiary Autotote,
which processes 65 percent of racing wagers in North America.

Industry and law enforcement officials said that the F.B.I. had joined the
police and the New York State Racing and Wagering Board in the inquiry of
the wager, known as a pick six, which requires bettors to pick winners in
six straight races. Payoff on the bet, made through the Catskill Off-Track
Betting hub by telephone from Baltimore, has been held up.

Investigators are also looking into whether there have been questionable
payoffs at other tracks. "This goes beyond one afternoon and the East
Coast," said an investigator, speaking on condition of anonymity.

Though Mr. Weil tried to calm investors in his conference call yesterday,
his disclosures pointed up the vulnerability of the $14.5 billion-a-year
betting industry for which consumer confidence is crucial.

As racing has become more reliant on off-track and telephone betting, it is
also depending more on a network of computers that link tracks and off-track
sites. If the systems are proved flawed, or susceptible to manipulation, it
could scare off bettors worried about the integrity of the process.

"There needs to be total review of the system so everyone can feel good and
see that these things are not widespread," said Bill Nader, a New York
Racing Association vice president. "Without integrity in the way a wager is
processed, we don't have a sport."

The case in question involves the pick six bet on the last six races of the
Breeders' Cup, horse racing's season-ending championship. The entire winning
pool was held by Derrick Davis, a 29-year-old Maryland man who made the bets
by phone.

Investigators are looking into whether the computer system was manipulated
so that a bet made after several races had been run would appear to have
been made beforehand.

Though Mr. Weil did not name the dismissed employee, the state investigator
and racing officials identified him as Chris Harn, 29, who worked in
Autotote's offices in Newark, Del.

Mr. Davis owns a Baltimore-based computer networking business, Utopian
Networks Inc., but said yesterday that he was a knowledgeable bettor whose
winning tickets were legitimate. "I didn't do anything wrong here," he said,
refusing to elaborate and referring questions to his Baltimore lawyer,
Steven A. Allen. Mr. Allen said his client was cooperating with the
authorities and had nothing to hide.

"He is caught in the middle of a maelstrom," Mr. Allen said. "As far as he's
concerned, he made a legitimate bet. The race was run, and he won, and he
should have received his payoff. And that should have been the end of it.
Now, instead, there's an investigation, people are making a variety of wild
accusations, and his reputation is being sullied for no good reason."

Thomas Davis, Derrick's father, said his son grew up in Baltimore and
attended engineering school in Pennsylvania, but would not be more specific.
"I just think it's like the equivalent of his hitting the lottery," the
father said. "I know in the bottom of my heart that it's a legitimate bet."

Stacy Clifford, a spokeswoman for the state wagering board, would not
comment on the personnel involved in the investigation or its progress.

"The board routinely involves other organizations in its investigations and
will involve law enforcement if it feels appropriate," she said. "They fired
this person in connection with what happened Saturday, and since we're
investigating what happened Saturday, we're certainly looking into it."

What started the investigation last Sunday was the configuration of the
winning tickets and that they belonged to one bettor, Mr. Davis, who called
his bets in by phone to the Catskill OTB hub, one of five regional
corporations that, with New York City OTB, handle off-track bets in New
York.

The winning tickets featured "singles," or races with only one horse
selected, in the first four legs of the ticket, and then every horse in the
final two races. On a $2 ticket, those combinations and strategy cost $192.

Mr. Davis bet a $12 pick-six ticket, or played that exact combination six
separate times, costing him $1,152. It was a highly unusual strategy for
betting the pick six - horseplayers like to cover as many combinations as
possible - and the configuration raised suspicions of New York Racing
Association officials, who alerted Breeders' Cup Ltd. and the state wagering
board.

Mr. Davis had opened the Catskill OTB account within two weeks of the
Breeders' Cup, had deposited money on five occasions - four increments of
$500 and one of $250 - but had not made a bet until that pick six, according
to investigative sources.

The six winning tickets were each worth $428,392. In addition, by including
every horse in the last two races, the bettor collected 108 of the 186
consolation payoffs for hitting five of six winners; each consolation ticket
was worth $4,606.20.

After an initial review on Monday, officials for Autotote and Catskill OTB
said the tickets were recorded about 20 minutes before the first leg and
appeared legitimate. But after further review, Mr. Weil said, the company
determined that the fired employee had taken advantage of a weakness in the
processing of bets.

While the tickets were logged and totaled at satellite sites such as
Catskill OTB, they were not transferred to the host site, Arlington Park
outside Chicago, until after the fifth race when the exact bets were
verified. In this state of limbo, Mr. Weil said, the employee, who had the
password to the data system, was able to alter the ticket after the results
of the first four races of the pick six were known.

When Scientific Games announced the firing, trading in its stock was
suspended on Nasdaq for more than 20 minutes. The stock closed at $7.62,
down 57 cents. Mr. Weil maintained he was confident Autotote's systems were
impenetrable to outside hackers.

"I think people see this for what it is - a rogue individual bound and
determined to exploit the only weak link we see in the system so far," he
said.

http://www.nytimes.com/2002/11/01/sports/othersports/01RACI.html?pagewanted=
1


Copyright 2002 The New York Times Company


------ End of Forwarded Message

-------------------------------------
You are subscribed as interesting-people () lists elistx com
To unsubscribe or update your address, click
  http://v2.listbox.com/member/?member_id=125275&user_secret=1aa8f2d6

Archives at: http://www.interesting-people.org/archives/interesting-people/