[IP] Computer Programmer Fired In Pick Six Investigation

[Dave Farber <dave@farber.net>]

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Washington Post
Computer Programmer Fired In Pick Six Investigation
By Greg Sandoval and John Scheinman
Friday, November 1, 2002; Page D01

ALBANY, N.Y., Oct. 31 -- A software programmer at Autotote, the company
responsible for the computer systems that collected and processed wagers
for Saturday's Breeders' Cup thoroughbred racing championships, manipulated
software to trigger a winning $3 million payoff for a Baltimore man,
company executives said today.

The company has fired the employee and turned over his name, as well as all
information uncovered during an internal investigation, to New York State
Police and the New York State Racing and Wagering Board, said A. Lorne
Weil, chairman and chief executive of New York-based Scientific Games
Corp., the parent company of Autotote.

Weil did not disclose whether the unidentified employee had been arrested.

He also declined to say whether the winner of Saturday's Ultra Pick Six
bet, Derrick Davis, 29, of Baltimore, had been implicated in the alleged
fraud.

"The good news, if there is any, is our detection system worked the way it
should have," Weil said in a conference call in which he declined to take
questions from reporters. "No money was paid or changed hands."

The bet placed by Davis{ndash}on a telephone keypad through his recently
opened account with the Catskill Region Off-Track Betting Corp. in New
York, and not to a live operator -- raised immediate suspicion after the
races at Arlington Park outside of Chicago. Davis isolated single horses on
his Pick Six ticket in the first four races -- including long shots that
went off at odds of 26 to 1 and 13 to 1 -- then bet all the horses in the
final two legs.

Further, Davis played the wager in a $12 denomination, which enabled him to
collect a payout of $428,392 six times, plus consolation wagers for picking
five of six races. He was the only bettor to hit the Pick Six.

The consolation payoff for hitting five of six races was $4,606.20. Each of
the 72 other holders of those tickets, which have not been paid out, should
now collect an additional $35,699.

Attempts by The Post to reach Davis were unsuccessful today. He was quoted,
however, in Thursday's New York Post as saying he was innocent of any
wrongdoing: "If they got proof that I did something wrong, then show it to
me. If not, give me my money."

Weil did not divulge any known relationship between Davis and the software
programmer, who took advantage of a glitch in the way wager information is
transmitted.

The programmer "had a password into the system and the ability to do what
he did. He could have altered the ticket internally," Weil said.

While Davis placed his winning wager around 2 p.m. Saturday, well before
the start of the first leg of the Pick Six, the Breeders' Cup Mile, the
individual data was not transferred from the Catskill OTB to the host
network at Arlington Park until after the fifth leg of the Pick Six races.

In any other bet type, the data is immediately sent to the host site. The
vast amount of data associated with the Pick Six, however, cannot be moved
from all the satellite account-wagering locations at the same time without
causing disruptions to the Autotote computer system, Weil said.

"Our people were equally certain that this bet was entered well before the
stop betting" deadline, said Weil, whose company has handled $150 billion
in wagers over the past 10 years. "I considered it absolutely impossible --
as did our technical people" to hack into the system.

Asked whether other frauds could have been perpetrated on the Autotote
system, a Scientific Games Corp. spokesman said, "We have no reason to
believe there are any other situations that require investigation."

Whether it could happen again is another question. On Saturday, Santa Anita
in Arcadia, Calif., will offer a $1 million Pick Six wager handled by
Autotote. The vulnerability in the system still exists, Weil acknowledged,
but he said that his company will be watching future races closely until a
fix can be found.

"The question is how to prevent this from happening again," Weil said.

The Jockey Club, a Kentucky-based industry organization, plans to organize
a task force to seek a way to transmit Pick Six wagering data to the host
site without delay.

The details of Davis's bet touched off a wave of skepticism among bettors.

The New York State Racing and Wagering Board received a flood of calls from
people who wanted to share their theories on how fraud might have been
committed, said Stacy Clifford, spokeswoman for the board.

The Catskill OTB received complaints as well.

"Hi . . . Can I still make a wager on the Breeders' Cup Pick Six with your
company?" read one post on the company's Internet message board.

Don Groth, president of the Catskill OTB, initially said that Davis made
his bet legally and should be paid. Today, however, he said he was "shaken
by the news."

"I deeply regret this," Groth said. "I am grateful to Autotote for removing
a human weakness from the parimutuel system."

Asked what the finding of fraud means for Davis, his customer, Groth said,
"It is unlikely he will be getting paid."

National Thoroughbred Racing Association President Tim Smith and Breeders'
Cup President D.G. Van Clief Jr., who initiated the request for a probe by
the New York State Wagering Board, could not be reached to comment.

Trading of Scientific Games Corp. stock was temporarily suspended yesterday.

Groth said he maintains confidence in the company, but is concerned about
the ability of people to penetrate what is supposed to be an airtight
system.

"We're open for business," Groth said. "We continue to have faith in the
company. The only thing I can imagine is that such a thing <[could happen]>
in many places and it may not be a single incident."

Scheinman reported from Washington.

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