The front page of today’s Wall Street Journal reads:  “Ex-SAC Trader Gets 9 Years as Insider Sentences Toughen,” referring to the prison time given to the former fund manager of now-defunct SAC Capital.  This is the latest in a series of high-profile federal convictions for insider trading, including eight at SAC.

If the feds were to ban and prosecute insider trading in horse racing, as they have for trading stocks, there would not be enough federal investigators and courts to make a dent in the practice.  Rampant insider trading in horse racing has been around since the first race was run and is a given.

A couple of years ago, I was visiting a stable at Palm Meadows training center in southeast Florida watching some early morning workouts.  An assistant trainer told me that a 2-year-old he sent out for a breeze would be in an upcoming maiden race at Gulfstream Park and had a great shot to win as a first-time starter.  He was right and I cashed a bet.

This was certainly an exception.  Most of the supposed inside tips I have received over many years have been losers.  Trainers and jockeys generally see their chances through rose-colored glasses, though there are certainly exceptions.   Then there is the prevalent tip based on, say, what the trainer’s cousin told his next door neighbor.

This is not to say that inside information cannot be useful because it can be.  But distinguishing good tips from wishful thinking and gossip is the hard part.  Sometimes, when following the betting action in maiden races with lots of first-time starters, the odds correctly reflect the horses with the best chances based on promising workouts…that backstretch folks spread the word about.  For the most part, however, most tips are to be taken with a strong dose of suspicion.  Why, in the first place, would someone in the know want to share valuable insights and drive down the odds?  Why would trainer D. Wayne Lukas, for example, have told many people to place a large wager on his longshot Charismatic in the 1999 Kentucky Derby, like he did to the tune of a reported $2,000 bet to win?

In order for someone to be convicted of insider trading, it normally has to be shown that one or more of the insiders profited monetarily.  That would be difficult to show in the vast majority of the tips proffered on horses.

Whether it pertains to stocks or horse racing, insider trading goes on and always will.  If an insider gets caught in stock trading, the penalty might be jail.  In horse racing, even the worst tout going can always find a willing listener, and the feds don’t care even if the information leads to a winning bet.

Touts are some of the colorful characters that make horse racing so interesting.

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