Who holds the whip hand in racing's royal stoush?

Last year, John Singleton gave an interview to The Sydney Morning Herald in which he described Tom Waterhouse as the very epitome of what a bookie should be - ballsy, smart and industrious, a statistical and marketing thoroughbred with charisma to boot.

Last year, John Singleton gave an interview to The Sydney Morning Herald in which he described Tom Waterhouse as the very epitome of what a bookie should be - ballsy, smart and industrious, a statistical and marketing thoroughbred with charisma to boot.

"It's a long time since we've had bookies like Tom," Singleton gushed. "Most of them have become very beige, but he just seems to have the flair."

Waterhouse was a "genius", Singleton said ("too smart for me"), a fearsome risk-taker who "will take on the big punters", and an IT and new media savant whose willingness to work 24/7 had made him "unbelievably good at what he does". Young Tom "grew up with my daughter Sally," Singleton said, with something approaching pride. "I've known him since he was a kid."

Indeed, the two families go back a long way, the best part of 40 years, in fact, when a teenage Gai Waterhouse (then Smith) turned up at Singleton's Rose Bay home to talk about a career in showbiz.

It was through Singleton's TV show, Racing's New Faces that Gai met her husband to be, Robbie.

Fittingly, the Singleton and Waterhouse children grew up together; they were the same age; they went to the same Neutral Bay preschool and maths tutoring, the same riding camps in the country and North Shore soirees.

There were parties at Singleton's Vaucluse home, and later, catch-ups in Monaco. Then, of course, there was "Singo and Gai", the owner and the trainer whose pairing produced a seemingly endless procession of trophies, prizemoney and group 1 winners, every victory celebrated with the signature trackside love-in, Gai drunk on success, Singo invariably quite happy as well.

All that ended last Saturday in an epic on-course flame-out, with Singleton sacking Waterhouse, live on national television. "It's too much. It's conflict of interest," said Singleton, who claimed that Gai's son, Tom, had been passing on inside information about one of his prize mares, More Joyous.

The scandal has been as good as it gets, a week-long barney involving a jockey, brothel owner and rugby league legend, a technicolour tableau of Chinese whispers, of loose talk in corporate boxes, of mysterious horse drugs and drifting odds.

The racing establishment has urged calm in the lead-up to a stewards inquiry on Monday, but for many observers, lay punters and experts alike, the stoush has confirmed what they long suspected; that when it comes to racing there are two kinds of people: those in the know, and the rest of us.

It all began last Saturday, at Sydney's Royal Randwick, with a six-year-old bay mare named More Joyous. With 21 wins from 31 starts and nearly $4.5 million in prizemoney, the Singleton-owned, Waterhouse-trained champion lined up a favourite in the 1400-metre All Aged Stakes, in a keenly anticipated showdown with Gerry Harvey's All Too Hard.

As race time approached, however, the odds on More Joyous began to drift, easing from $2.50 to $3. At the same time, Singleton appeared increasingly agitated, bickering with Waterhouse in the parade ring. Heads were shaken, fingers waved.

"It's my f---ing horse!" Singleton was heard to say, before issuing Waterhouse with an ultimatum: unless More Joyous won or placed well, he told her, his horses would be leaving her stables. Sure enough, More Joyous tanked, finishing seventh behind All Too Hard.

Singleton erupted. "All my horses are leaving Gai's tomorrow," he told Channel Seven, citing a "conflict of interest" involving Waterhouse and her son Tom. Singleton had wanted to place $100,000 on More Joyous, he said, but had discovered through "trusted friends" on the morning of the race that the horse "had problems". These "friends", including an ex-group 1 jockey, had the night before the race been talking with Tom Waterhouse, who had told them the horse "could never win".

"When Gai's son knows last night exactly the result today, the conflict of interest becomes personal," Singleton said.

Waterhouse denied it all. "I never knew anything [about More Joyous], I never said anything," he told Fairfax. "I actually backed More Joyous, and lost $300,000." He was "stunned" by Singleton's accusations, and was considering legal action.

Nevertheless, it soon became clear that More Joyous did have problems prior to her race. Apparently she'd suffered heat problems in her neck on Thursday morning and been treated with antibiotics, but was cleared to race by Waterhouse's and Singleton's vets on Saturday morning.

In scandals, as in races, pacing is everything. Singleton obliged here by at first refusing to elaborate on his sources. Then came news that one of those rumoured to have been tipped off by Tom Waterhouse was rugby league legend Andrew Johns. (Johns denied this.)

On Wednesday, however, former jockey Allan Robinson outed himself as the person who had, on the morning of the race, rung Singleton to warn him about More Joyous. Robinson claimed that Tom Waterhouse had told Johns the day before the race that he wasn't confident about the horse. The next person to get the tip was punter and brothel owner Eddie Hayson, who then told Robinson.

When it comes to racing scandals, Hayson is like oxygen, the one essential element without which they cannot exist. In 2005, he orchestrated the Lucy's Light greyhound sting, one of the biggest controversies in Australian racing. A year later, he was found guilty of illegal betting on his horse Flying Song, and reprimanded by Racing NSW.

His close friendship with Johns, with whom Hayson owns several race horses, has also proved problematic. In 2006, Hayson won a small fortune when he received information that Johns had injured his neck and would not be taking part in that weekend's game, in which the top-of-the-table Newcastle Knights were playing the lowly placed Warriors. Hayson placed $147,000 on the Warriors winning, which they duly did - 38 to 12. (Betting was later suspended, but investigators found nothing amiss.)

The current scandal has once again highlighted the incestuous nature of racing, where everyone knows everyone and conflicts of interest abound. "Do some people have inside information?" muses Gerry Harvey. "Well, it's the nature of the business that some people know more than others. If you work as a stable hand, you know all the gossip in your stables and the stables next door. And they talk all the time, to themselves and other people, but that's no different to a football or soccer club."

Still, Harvey insists that racing is "99 per cent clean. You can't get away with things. If you do, sooner or later, you'll get caught."

For the first time, Racing NSW has used its powers under the Telecommunications Act to subpoena the telephone records of Tom, Gai and Robbie Waterhouse. They will also be investigating betting accounts, which chief steward Ray Murrihy said "will tell us more than some hearsay report to the owner at a racetrack".

Some remain sceptical. "Hhhmmm, a stewards inquiry? Yeah right," one punter wrote in an online racing forum. "It is in the interest of racing to bury this and move on ... If racing has nothing to hide, have a judicial inquiry . . . Racing could have rules to prevent bookmakers being related to trainers. Such integrity regulations happen in other business so is NOT unique."

One thing is for sure: the scandal is trashing what remains of the already controversial Waterhouse name. "The publicity would definitely not be helping the Waterhouse brand, which Gai relies on to lure customers and owners," said hotelier and horse owner Ross Visalli, several of whose horses are trained by Waterhouse.

"With Tom being a bookie, there is what could appear to be a conflict of interest, and this would not help her sell her services. It is not doing Tommy's brand any good either, right at the stage when it seems he's trying to sell his business."

"Singo loves Gai to death," Visalli says.

"I'm not sure if he likes Robbie as much. But as much as he likes Gai, he also loves his horses, and he is a bad loser.

"I am too! As an owner if your horse gets beaten, you can get paranoid. You can get ideas, and look for patterns that perhaps don't exist."

There's an old saying in racing: "You can speak badly about my wife, but not about my horses. And Singo is like that. He is extremely passionate about his horses. To me it's a hobby, but it's different with him. To me, it doesn't make sense for anyone to be like that. But that's the way it is."

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