Wagering Integrity
Encouraging Best Practices for Cross-Border Wagering
Maurits Bruggink Maurits Bruggink - Executive Director, IFHA

Maurits Bruggink: Thank you, Frank. Good morning, ladies and gentlemen.

This is my third consecutive year in Saratoga and it is great to be at the Round Table again. Thank you for inviting me to be part of it.

Today I want to present the particular role that our international federation plays in betting and integrity issues and I will elaborate on some of our ongoing projects.

For those who are less familiar with our international horseracing federation, allow me to start with a brief introduction of its composition and workings.

The International Federation is the representative body for racing authorities around the world, and we're also the only truly global organization representing Thoroughbred horseracing, with members in over 50 countries including all the main racing nations from North and South America, Asia, the Pacific Rim, Australia and Europe.

The IFHA (International Federation of Horseracing Authorities) was formally created in 1993 for the purpose of promoting and facilitating international participation in horseracing by harmonizing rules on breeding and racing. The U.S. Jockey Club is one of its founding members.

Our rules are set forth in the International Agreement on Breeding and Racing, which contains many detailed rules on issues like movement and transport of horses, use of medical substances, jockey equipment, transfer of horse-related data, etc.

In addition to these regulatory rules, we are also known for our classification of races, our global racing and betting statistics and the World Thoroughbred Racehorse Ranking.

With the development of new technologies, in particular the Internet, we created, in 2004, a global office to deal with cross-border wagering issues.

Some of the issues we are more particularly looking at include:

  • Illegal activities of some betting service operators
  • Piracy of intellectual property rights by Internet-based betting
  • Integrity
  • Betting exchanges

I am the executive director of this global office and report to a steering committee consisting of one representative from each of the three main racing regions: the Americas, Europe and Asia.

Alan Marzelli of The Jockey Club is one of the three members of this committee. The steering committee members were appointed by the federation's executive council consisting of 12 representatives from each of the three regions. In addition to Alan, North America is also represented by D.G. Van Clief and David Willmot on the executive council.

Since my last presentation two years ago, we have taken at least one major step forward.

All 50 member countries have agreed on two common principles to be respected with regard to cross-border betting.

These principles are set forth in our International Agreement on Breeding, Racing and Wagering. They read as follows:

  • Betting can only be offered to people living in countries where this is allowed, or legal, and
  • Betting on a race can only be offered when the operator has the agreement from the racing authority or rights holder of the racing event.

This position is basically the same position held by the Asian Racing Federation in developing a "Good Neighbor Policy" that has been endorsed by all of the racing nations in that region. The authorized racing bodies in Asian countries cooperate regularly, like good neighbors do, in their fight against illegal betting, pirating of the racing product, money laundering and indeed preserving the integrity of racing.

As mentioned earlier, the International Federation is the only global body and, therefore the appropriate platform, to develop similar "good neighbor" policies on cross-border wagering.

Our global common position on wagering has given us much clout and has enabled us to approach a number of international and national governments.

As Alan already mentioned, we are working with the World Trade Organization to get a declaration against unauthorized cross-border betting.

And we are also lobbying the World Intellectual Property Rights Organization for international protection of our IP rights. The most complicated aspect seems to be our attempt to get legal protection for our race data, which is not recognized in many, many countries. The last couple of years, we have also been able to talk with representatives of dozens of governments around the world and call for action against unauthorized cross-border betting.

One area in which we're having a difficult time is Australia, where we assist local racing in its fight against exchange betting. The main betting exchange used Australian racing for many years without the authorization of the racing bodies. Whether Australians were allowed to bet on a betting exchange a concept as you know developed in the UK or any other off-shore betting website was long unclear.

In any case, the Australian racing authorities, like most racing authorities in the world, refused authorization to exchange betting because of its concerns about integrity. For those unfamiliar with exchange betting, there is the option to bet on horses to lose.

The vast majority of racing authorities in the world believe the risk is unacceptable if you allow everyone as opposed to only licensed bookmakers to bet on horses to lose. The resistance to exchange betting is so universal that we will consider taking an official federationwide position against it in the near future.

The same racing authorities also reject betting exchanges for the minimal return to racing it generates. The following numbers produced by the British Horseracing Board illustrate the situation in the UK. With a market share of 17%, exchange betting accounts for a disappointing 5% of the betting levies, or the equivalent return to racing.

In a pool market like the U.S., the relative return to racing from exchange betting would probably be even less significant. So if you already are having a problem with rebating, exchange betting would certainly not be your cup of tea.

Another action we undertook recently to promote best practices and our key wagering principles was the launch of our Racing Trust Mark.

The idea of the Racing Trust Mark is simple: the online betting operator that agrees with our two betting principles mentioned earlier can carry the trust mark on its website.

It means in practice that the operator must have some systems in place to prevent people from using their website when they live in places where online gambling through its site is forbidden. Secondly, the operator should only offer bets on races with the agreement of the race organizer or its rights holder.

The label does not try to do more than that. For example, it does not show consumers that their transaction is safe, nor does it interfere in any other aspect of commercial relations.

The advantages for the labeled betting site are important. It will show best practice to regulators, racing and betting bodies, financial institutions, investors and any other interested parties. It shows the commitment to the basic principles of "rule-based trade," which is particularly relevant for those operators interested in foreign markets.

For example, the label is the best way for you to recognize trustworthy partners in South America, Europe and Asia.

I made a trip to this country back in April to visit with racing industry executives to introduce the Racing Trust Mark. And I'm happy to report that some North American betting operators, like Woodbine, Americatab and Youbet, have already signed up to use the mark.

We invite others to do the same. The fee for the mark is nominal so as to encourage its use.

With the support of The Jockey Club, the NTRA and the U.S. racing industry, we will continue to develop initiatives to promote rule-based trade in the racing product, lobby governments and international bodies for law enforcement, and promote best practices in cross-border betting and distribution of your racing product.

I look forward to coming back here in the future to report on our additional progress in these important areas.

Thank you for your attention.

Ogden Mills Phipps: Thank you Alan, Maurits and Frank. Wagering integrity is certainly a priority for this industry and these programs should help to achieve and preserve it.

We'll take a brief 10-minute break and then resume with the second half of our program.

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