International Racing Group Enacts Action Plan Against Illegal Wagering

The International Federation of Horseracing Authorities, which represents racing interests in 50 different countries, agreed on an action plan to combat all forms of unauthorized betting and agreed on some basic principles concerning cross-border wagering at its annual meeting this week in Paris.

Facing a rising amount of lost revenue from companies pirating international racing data and not paying royalties back to the racing industry, the IFHA is hopeful its new plan will create the foundation to prevent all types of unauthorized wagering on horse races, most of which is generated through online operations.

Under the action plan, the IFHA is calling on all betting operators -- both land-based and interactive -- to pay a fee to the organizers or rights holders of a race if they use the race data for betting purposes.

Maurits Bruggink , who was hired earlier this year by the IFHA as executive director to deal with betting issues, admitted that the action plan is not foolproof, but he said something had to be done to combat the amount of piracy of race data.

"There are a lot of organizations that want to pay for our product," he said. "We don't anticipate much of a problem from them. But we have no way of knowing how effective this action plan will be against those groups that have a blatant disregard for the industry or for steeling our data."

Also as part of the action plan the IFHA is calling on betting operators to stop accepting wagers from punters located in countries where the activity is forbidden by law.

Louis Romanet, general director of France Galop and president of the IFHA said it is a fine line the racing industry walks since it relies heavily on money from bookmakers.

"Our industry is substantially funded by the revenues from betting," he said. "New technologies like the Internet have made it possible for pirates to offer betting services without paying for the product they are basing their business model on. We will not sit along the sidelines and watch this happen."

Bruggink, from the Netherlands, said the action plan gives good operators a seal of approval and helps define illegal operators. He said informing customers of the illegality of their practice has helped curtail unauthorized betting in Asia.

The IFHA also said it will look into the blocking of Internet traffic and requiring approved credit cards for Internet wagering, a practice that the Japanese enacted last year.

Also as part of the action plan the IFHA would create a database for its members that would provide information on laws in countries already exposed to illegal competition. Internet monitoring also would allow the organization to identify illegal operators and exchange information on malpractice worldwide.

The action plan is the first sign of an international approach in battling the epidemic of data piracy, according to Romanet.

"With these principles, the entire global racing industry has joined hands in the fight against unauthorized use of the racing product for betting purposes," he said.

Bruggink said the IFHA isn't opposed to the concept of Internet betting on horse races, he just feels that the right approach needs to be taken. To that end the group also encouraging international joint pools and simulcasts be established to give alternative offers to customers.

Bruggink said in the next three years, the IFHA will work to increase legal certainty among its members, stop unauthorized offshore betting, and create an environment for growth.

"We know this industry isn't going away," he said. "We hope to be able to work with the operators to make it a win-win situation for both sides."

Bruggink said the action plan also include a push for legislation in countries and on international levels with such groups as the World Intellectual Property Organization as racing tries to fight unauthorized wagering.

He said the racing industry is facing a similar challenge that the recording industry is dealing with in trying to cut back on the increasing number of illegally downloaded music on the Internet.

"They have fought hard to keep illegal downloads to a minimum and their efforts have been met with some levels of success," he said. "We feel we have similar approaches that to take legally that will achieve those same levels of success."

Also at its meeting in Paris the IFHA discussed betting exchanges and their affect on the industry.

Christopher Foster, executive director of the Jockey Club in the UK said his group has made great strides in dealing with exchanges, namely the industry leading Betfair.

"The real key to protecting the integrity of racing from the potential misuse of betting exchanges was getting access to the trail of bets, initially with Betfair and then with other operators," he said. "We developed a memorandum of understanding, which has the effect of opening the window wide on which betting account holder is betting what and when. This very powerful transparency of betting transactions not only provides the reason why we are now able to bring forward more cases, but more importantly, and perhaps for the first time, provides the prospect of an effective deterrent to future malpractice."

Bruggink said certain aspects of the action plan will take place immediately with the entire project being a "work in progress," with efforts continuing on for the next two-plus years.