Itsallaracket case RESULT OF AN ENQUIRY HEARD BY THE DISCIPLINARY PANEL ON FRIDAY 7TH MAY 2010 - Phelan Michael and Declan Phelan each disqualified for 12 months 1. On 7 May 2010, the Disciplinary Panel held an enquiry into whether Michael and Declan Phelan were in breach of Rule 247 of the Rules of Racing, the allegation being that as owners of ITSALLARACKET (IRE), they placed lay bets against the mare when she ran at Folkestone on 1 December 2008 in the Romney Marsh Mares’ Intermediate Open National Hunt Flat Race. 2. There was no dispute that both of the Phelans had placed lay bets against the mare in this race: the issue was whether they were ever subject to the Rules of Racing at all. Nobody gave live evidence at the hearing, which was conducted on the basis of the statements and interview transcripts collected by the BHA’s Investigators. The BHA’s case was presented by Richard Liddell; the Phelans were represented by Bryan Kennelly instructed by Andrew Coonan. 3. The Phelans own and operate Pipe View Stud at Tullogher in County Kilkenny. They bought the mare from Daniel Fogarty, who bred and trained her until 14 November 2008. He had agreed to sell the mare to the Phelans if she won a bumper at Downpatrick, which she did on 5 November 2008. On the same day that they bought her, the Phelans entered into a lease agreement with the trainer Seamus Lynch whom they had recently met as a visitor to their stud. The lease is short and simple: it reads – “To whom it concerns the filly named Itsallaracket 2004 by Rudimentary ex Allaracket owned by Mr Declan Phelan and Mr Michael Phelan Is from this day to the end of the 2008-2009 national hunt racing season on a free lease to Mr Seamus Lynch (trainer) all earnings if any by the filly are his likewise all costs are to be covered by him during this period.” 4. The idea behind this arrangement, according to all its parties, was to get a bit of black type for the mare, without the Phelans having the expense of earning it. After the lease was agreed, the mare was registered with the Irish Authority with Sean Lynch described as sole owner with effect from 21 November 2008. 5. Lynch took a number of horses to England to race at the beginning of December 2008, among them ITSALLARACKET (IRE). The Phelans said they learnt of this plan from the Racing Post entries pages. They disapproved of the plan to run her at Folkestone, but Lynch told them that he was in charge. They decided to lay her on the exchanges, they said, because they did not rate Lynch’s prospects of a successful campaign in England and particularly because they thought the ground would be unsuitable. Michael Phelan had 3 Betfair accounts (opened in September 2008) and a Betdaq account. He used the Betfair accounts to lay the mare in the win and place markets. In all he risked £23,779 in the win market to make £16,278, and risked £3,083 in the place market to make £5,988. On his Betdaq account he made a total of €8,600 by risking €3,841 in the win market and €4,775 in the place market. Declan Phelan also had a recently opened Betfair account and he won £16,039 on his lay bets for a stake of £24,161 in the win market (at prices ranging between 2.3 and 2.92), plus £2,945 for a stake of £1,430 in the place market (with prices between 1.46 and 1.59). 6. ITSALLARACKET (IRE) went off as the 5/4 favourite in the Folkestone race in heavy ground and was pulled up by the jockey Eoin McCarthy over 2 furlongs out. As there had been a suspicious betting alert just before the off, the Folkestone Stewards enquired into events. The jockey said that he pulled the mare up because she lost her action in unsuitable ground, and the trainer said that when she came back she seemed distressed. She was inspected by the racecourse veterinary surgeon. He found her to be distressed and she was violently rocking backwards. She had no wounds but there was nothing consistent in her behaviour. He gave her an anti-inflammatory injection of Bute, and she calmed down within half an hour. A later veterinary inspection back in Ireland on 4 December diagnosed neck pain. The Panel therefore concluded that there was no suspicion attaching to the fact that she was pulled up: the mare had suffered muscular spasms during the race and the jockey was right to do this. Neither he nor the trainer was the subject of any allegation of breach of the Rules of Racing. 7. That said, the Panel also noted that the Phelans had both primed their exchange accounts with large amounts to enable their lay betting some time before the race – on 24 November in the case of Declan Phelan. But there was no investigation at the hearing about whether the decision to lay the mare was prompted by inside information. The Panel proceeded on the basis that they did this for the reasons they gave: i.e. their view that the trip to England was a bad idea and the state of the ground. 8. Whatever the motive for the bets, the fact remains that Rule 247 clearly outlaws bets by “Owners”, and it explicitly includes lessors within the term “Owners”. 9. When the BHA was first asked to explain why it contended that the Phelans were subject to the Rules of Racing, they relied upon the reference to “overseas Owners” in Rule 231, which provides – “All persons who have agreed to be bound by the Rules of Racing and the overseas Owners, Riders, Trainers and their employees of horses trained outside Great Britain and which are entered to run under these Rules are subject to these Rules and are deemed to have knowledge of them howsoever amended...” 10. Mr Kennelly for the Phelans submitted that this did not make them subject to the Rules because the definition of “Owner” appearing in the definitions section that precedes the Rules specifically excludes lessors from its scope when a horse is leased. The Panel agreed with that argument. 11. But that was not an end of the matter. Rule 231 also operates in the case of “all persons who have agreed to be bound by the Rules”. When Lynch entered the mare for the Folkestone race, he did so subject to the Standard Conditions which apply for every entry accepted for a race in Great Britain, whether that horse is home trained or trained abroad. When a trainer enters a horse for a race here he does so on behalf of the “Owner”. The Standard Conditions define “Owner” to “include the Owner as defined in the Rules of Racing or any person in any way legally interested in the horse in question...”. Plainly, the Phelans were legally interested in ITSALLARACKET (IRE). 12. So the next question to be answered was whether Lynch had authority to commit the Phelans as well as himself when making the entry for the Folkestone race. In the Panel’s view he did, because the lease gave him a general power to decide when and where the mare should race. It contained a time limit (the 2008-9 National Hunt season) but no geographical limit on where he could enter it. It was argued that the evidence disclosed in the transcripts of interviews by BHA Investigators with Lynch and the Phelans about their disapproval of the trip to England showed that Lynch lacked the authority to bind them. The Panel decided, however, that he had already got their authority from the terms of the lease. Their objections to the trip were irrelevant. In any event those objections were based upon their feelings that the prize money was not worthwhile, the race was not important enough, and that the ground was likely to be unsuitable. They did not argue that the lease prevented Lynch from taking the mare to England. Indeed, if he had selected a more prestigious race – say at the Cheltenham Festival – the Panel had no doubt they would have been in favour of it. That accords with the view that the Panel formed of the legal position established by the terms of the lease. 13. So the Phelans were subject to the Rules of Racing, including Rule 247 which expressly outlaws lay betting against a horse by persons who have leased it to someone else. 14. Before turning to the question of penalty, the Panel records that the issue raised for decision in this enquiry – whether the Phelans were subject to the Rules of Racing – was not going to determine finally the issue of whether there was a breach of Rule 247. In the Panel’s view, there can be a breach whether or not the alleged rule breaker was subject to the Rules. Even if the Panel’s conclusion had been that the Phelans were not subject to the Rules, the ultimate finding would have been that there was a clear breach of Rule 247, because the Phelans were lessors who admittedly placed lay bets against their horse. That would have exposed them to an exclusion order. But as they were subject to the Rules, they were exposed to the wider range of penalties that can be imposed upon those who break them. Penalty 15. The Guide to Procedures and Penalties prescribes a penalty range of 3 months to 10 years’ disqualification for a breach of the modern equivalent of Rule 247, which is Rule (E)92.2, with an entry point of 18 months. In mitigation, Mr Kennelly relied on three features of the case. Firstly, the Phelans had co-operated with investigators and been frank about their activities in interview. Secondly he suggested that the number and value of the bets was relatively modest. Finally he argued that there was no intention to break the Rules: they did so in ignorance of them and in good faith because they believed the Rule here was the same as in Ireland. 16. As for this last point, the Panel concluded that ignorance of the Rule is scant excuse. While it is the case that the Irish equivalent of Rule 247 does not contain words that prevent lessors of a horse from laying it, it does not follow that they were acting in good faith when they did so here. There was nothing to indicate that they had actually checked that the Irish Rule allowed them to lay a horse that they had leased out. If they did, then they were at fault in failing to check what the English Rule provided. The likely truth was that they did what they did without any such check of the Rules either here or in Ireland. Though it is possible that they may have had some understanding that what they did was within the Rules in Ireland, the point remains that they had no warrant for making the same assumption about the position in England. This Panel would not view a plea of ignorance of the Rule here as mitigating a breach by an English based owner, and it is entitled to expect the same level of compliance with the Rules by foreign based owners as it demands from home based owners. 17. The Panel did not see the size of their lay betting as a mitigating factor. It was substantial. They won over £40,000 and €8,000. 18. The Phelans did however co-operate with the BHA Investigators and it is for this reason that the Panel decided to drop below the entry point penalty and to impose a disqualification of 12 months from Friday 8 May 2010 until 7 May 2011 inclusive.
