The Great Rebate

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One man’s plight is another man’s delight: Massive trots place punter springs Wednesday night bonanza

TAB pool manipulation is nothing new in and around totalisator betting in Australia. We saw several years ago a well pulled off plonk on a greyhound race, where a long odds on greyhound ended up paying ridiculously well on one tote and some savvy punters had cleaned up. They had filled up one particular tote where smallish pools are the norm, backing all other runners in the race to ensure their favoured greyhound was paying way ‘overs’, and proceeded to snatch from corporate bookies a very healthy dividend through whacking their tote based products.

The current kind of place pool manipulation was first noted last year on Monday March 22nd at the Bathurst day harness racing meeting. There were the 3yo heats of the Bracelet and Chalice, and there were a host of very short priced favourites running around. In race 1 there was the top filly and eventual winner Lady Euthenia. She started $1.04 on win markets. The Supertab the place pool was clearly out of whack – it seemed someone had placed a very large bet on LE to run a place which was exceptionally strange on a low hold Monday harness meeting. The place prices seemed so out of kilter on every other runner barring L E. I backed the polemarker Mincarlie to place. When it ran 2nd, I thought I hit the jackpot because the horse was indicating around $9 dividend. Instead, despite the TAB pool indicative odds suggesting around $9, I was actually paid well under that – I think around $4. Over time this occurrence happened more and more. It was always on Supertab and more often than not on harness races where a long odds on shot existed.

Finally someone in the press latched onto it and it appeared in an article in Wednesdays SMH here. The cartoon above is also from the Fairfax press

The first race on Tuesday I noticed the big punter was active on, was none other than the Seymour prelude (or Garrads or whatever it is called now) for 3yo fillies as it was a race we were going to go in until we decided to focus on Breeders Challenge. The mighty Courageous Annie was running, money for jam as she would win easily and so the script was meant to go. History shows she fell in by a short half head over Joyous Times. A perusal of the SuperTAB market on the race shows some interesting stuff

Win pool: $23k. Place Pool? $30,504.

CA was paying $1.00 or money back the place. Indicatively, the 2nd horse Joyous Times was showing $3.80 a place, but SuperTAB only paid the divvie at $2.00. Mmmmmm. 3rd was Kiana Frances and it was showing in their pools as $9.60 after betting closed. TAB only paid $5.10. Mmmmmm. Been happening time and time again. The article referred to Black Caviar’s race on Saturday. Happened there too.

So who is doing this? …..and why the punter is getting robbed. There is no doubt it is a professional punter of sorts. Some trains of thought were that it might have been some individuals who engaged in nefarious activity ‘cleansing’ money on so called certainties but as we all know, there is no such thing as a certainty in life. It is well known that the TAB’s pay large rebates to their biggest customers. Figures brandished around vary from 5% to as high at 9%. So the client will get a rebate on his action to entice them to bet more and more and assist liquidity of totalisator pools etc.

However the anomaly that the big rebate-seeking customer takes advantage of is the fact that the TAB will not declare a dividend shorter than $1.00. This shows the gaping fallacy of pari-mutuel betting and how your average punter is being screwed senseless by it. The whole essence of a totalisator is that the dividend declared is dependent on how much is wagered on a selection into an accumulated betting pool of a race. The TAB take their cut (rumoured to be 14.25% on place betting) and then the remaining pool is divided up into winning tickets.

However when the TAB guarantee to pay a minimum dividend of $1, it actually means that there is no longer a ‘totalisator’ aspect to the betting, for one contingency is actually being paid fixed odds. That is, fixed odds of $1.00. Of course most punters will scream you cannot get back less than you put on….how is that fair?. Very good point, and highlights this endemic weakness in the pari-mutuel model that people like VLandys and Co want so desperately to protect, yet is screws punters blind.

Lets look at last night example where your average Joe (including this average Joe) cashed in on Mr Big blowing out. Mr Bigs Penrith blowout Last night ‘Mr Big’ – referring to the punter whom is placing massive bets on harness favourites to run a place to rake off the very attractive rebates that this / these people enjoy – took dead aim at ex Kiwi 3yo filly Baby Bling whom had won 4 out of 5 since coming to Oz. You always have to be cautious backing 3yo’s against older company and it was stepping out in an R2/R3 race against some horses that go ok.

Mr Big decided to have a bet I estimate to be in the vicinity of $50k on the place of Baby Bling, crushing it to the minimum return of the essentially fixed odds of $1.00. Run a place as one would expect and there is a nice 7% of $50k windfall for 2 minutes work: or $3500. Fund managers fall over themselves backwards to promote such returns in a quarter, or even half and given recent turmoil on world markets, I am sure many a fund manager would be happy with returning 7% per annum. This is 7% for a roughly a 2.02 mile rate……that’s not bad at all – so long as the horse holds its end of the bargain.

Mr Bigs bets into the place pools in some respects are clear deception of your average punter. Why? A simple spreadsheet and mucking around with the figures show why your average punter – innocuously placing place bets on the event – will be dudded by the actions of the rebate seeker. Lets have a look at last night’s race. See the TAB screen here

The $63,593 in the pool clearly had a massive weight of money on the fav to place. My estimates and a simple creation of a spreadsheet totalisator show that roughly 55-56,000 were on the place of the fav. I happened to be watching this pool closely before the jump, as I quite liked the winner to place and was hoping to secure overs on one of the totes. With a minute or so to go there was 4.3k in the pool from memory, and it only jumped to the astronomical $63k after the final update. With average place pools on Supertab or around $10,000 it is fair to assume that the late bet placed by Mr Big was $50k.

Fiddling around with a spreddie I have come up with the following, based on a pool size of $63,593 with my own little TAB – lets call it MillyTAB: We are assuming the most recent info relating to STAB place pools being subject to a deduction of 14.25% and it is applied to the pool below:

BACMANTURNER: $1550 invested creating dividend of $11.72 (rounded down to $11.70)

SMOKIN LUKE: $1380 invested creating dividend of $13.17 (rounded down to $13.10)

PENNY BLACKJAK: $622 invested creating dividend of $29.22 (rounded down to $22.20)

SIX OF THE BEST: $567 invested creating dividend of $32.06 (rounded down to $32.00)

BABY BLING: $55714 invested creating a dividend of $0.33 (but PAID at $1.00 if places!)

SIGN HIM UP: $550 invested creating a dividend of $33.05 (rounded down to $33.00)

PRESENT FOR PA: $878 invested creating a dividend of $20.70 (no rounding necessary)

CALDETAS: $232 invested creating a dividend of $78.35 (rounded down to $78.20)

BARA INGRID: $2100 invested creating a dividend of $8.66 (rounded down to $8.60)

All the above prices correlate with the final divvies on the STAB website. If you add up all the investments as above: 1550+1380+622+567+55714+550+878+232+2100 = $63,593 original pool size. Take off 14.25% so pool size goes down to $54,531. If you then say take the investment on Bacmanturner of $1550, you divide $54,531 / $1550 = $35.18. However you then need to divide again by 3 as there is 3 place divvies, so $35.18/3 = $11.72 rounded down to the $11.70. Thats Bacmanturners place divvy.

If the pool was allowed to actually run on true pari-mutuel principles without external interference (the placing of the guaranteed $1.00 fixed return for your place bet), the true price of Baby Bling the place with the level of investment upon it would be around $0.33c per $1. Yep, you invest $50k @ 0.33 and you get back $16,500 for your investment. Thats a loss of 2/3rds.

Now while some fund managers seem to get paid an awful lot to generate such negative returns at times, no one in their right mind would engage such an investment strategy. Unless of course your investment is made on the proviso that you will get your money back PLUS 7% rebate if your horse places. In reality, once the pool is closed the final dividends you see are what you should be getting as they are calculated given each individual investment in the race. However, in these circumstances it DOES NOT HAPPEN when Mr Bigs horse places highlighting the rort that exists.

In the above pool – as happened exactly last night – Mr Bigs favoured beast didn’t run a place. At that very point in time, Mr Bigs investment becomes fair game for the rest of the investors on the race as he has lost his cash. The $63k pool is sliced up paying a) 14.25% commission, and the balance of the pool on the 3 placegetters dependent on the level of investment on each of them. The entire $54k (63k minus commish) is given back to punters and those hoovering up the MASSIVE overs on Bacmanturner, Six Of The Best and Sign Him Up are laughing at their ridiculous dividends. However the joy isn’t always the same.

Having seen this happen on no fewer than 20 times, this is the first time Mr Big has lost. Every other time the punters are being robbed blind. If Baby Bling placed last night, the TAB would have paid out its dividend at $1.00 – 3 times what it really should have paid in accordance with how a totalisator works without external interference. If Baby Bling placed, then the $50k would have to go back to the customer.

I would make a clear assumption that the TAB do not actually charge 14.25% on this bet to the big rebate customer so this is how I theorise it works: $63k initial pool. Baby Bling places with $50k bet on it. $63k-$50k = $13,593 subject to the 14.25% commission, so 13,593 x 0.8575 = $11,656. From the above estimation, $55,714 was placed on Baby Bling to place so the additional $5,714 over and above the $50k bet needs to be paid back to the punters: So $11,656 – $5,714 = $5,942 to be divided up between the remaining two placegetters. Lets use SIX OF THE BEST and SIGN HIM UP.

According to the model above, $567 was invested on Six Of The Best, and $550 on Sign Him Up. That’s a total of $567+$550= $1117 in total place investments to be reimbursed. 567/1117 = 50.7% of the remaining pool goes to the $567 invested on Six Of The Best, while 49.3% of the pool gets allocated to the place investors on Sign Him Up. 50.7% of $5,942(remaining place pool to be paid out) = $3012.59 to Six Of The Best investors whom invested $567 on that permutation, so final dividend for Six Of The Best will be: $5.31 – rounded down to $5.30. (3012.59/567 = $5.31) 49.3% of $5,942 = $2929.40, divided by $550 (amount invested on SHU the place) = $5.32 rounded down to $5.30. So the fallacy / rort / thieving – whatever you want to call it – is as clear as day.

Every runners place dividend in the race will purely depend in these situations whether the favourite (or horse subject to the massive bet) places or not. The favourite places, Six Of The Best pays $5.30 the place. If the fav doesn’t place, it pays $32 the drum. While some might say wow, you might be subject to a lovely windfall because of it, the other way to look at it is clear and utter deception that gets hidden under the veil of ‘well it is a tote, so you don’t know your final dividend until the races closes’.

For 99.9% of races, the dividend calculated at this point when all the money has arrived in the pool is the final one you will get paid. On the other occasions you have to actually find out who places BEFORE you know your final dividend. Also, when in the final frenetic minutes of betting, if Mr big has placed his bet with say 3 mins to go, surely many prices will light up like beacons for punters whom will invest thinking wow, thats good value the place! The reality is though is that you will get nowhere near that dividend.

Could it be construed as false advertising? Some certainly believe so, especially after the final monies have come into the pool. Some also wonder if it is in the Totalisator Act somewhere where a runners final place dividend is determined by who else places, as opposed to the weight of money actually invested on it. Seems like even in the pari-mutuel world you can obtain fixed odds – being the $1.00 the place. That $1.00 surety is smart in a world where there are inherent fallacies within a working model like the pari mutuel system because it will keep a mass of punters from going bananas if random herd mentality means a horse is bashed the place. However this is not the end of it…….there’s more: Are the TAB’s locking in a loss? A pertinent question. If the favourite placed in the above race last night, is it conceivable that the TAB in fact lost on the race after rebates are paid? Let’s have a looksie. IF the commission of 14.25% is taken from the $50k large bet invested, along with all the other monies invested in the race, then it would appear on face value that the TAB could lose (can someone please tell us otherwise? ).

The $63,593 total pool is whittled down to $54,531 after the 14.25% commission. However, with $55,517 invested on the race on the place of Baby Bling and the minimum $1 dividend declared, $55,517 already usurps the $54,531 to be paid out to placegetters after comm. – and that is even before declaring dividends for the remaining two placegetters! So it HAS to be in place that the full TAB commission isn’t actually charged on at least the big bet.

Let’s say the 14.25% is charged on the remainder of bets as we had in our example earlier. Taking out the $50k from the original pool, the remainder of $13,593 is subject to deductions……..leaving $11,656 to be distributed. 14.25% commission of $13,593 = $1937. So if the TAB does not take commission from Mr Bigs bet, but only rake off the remaining investments, they will receive $1937 in commission. Rounding down I estimated to equal about $101 so total raked in by the TAB is: $2038.

So for doing very little, and the entire essence of RFL (Race Fields Legislation) is that in every race something is supposedly returned to the industry. Is that really so? If Mr Big is getting paid a Rebate of 5% – not even the 7% and suggested in the SMH article, then his rebate would be $2500. So he bets $50k, gets it back, plus $2500 on top. Where does that $2500 come from? It has to come from somewhere.

Given that the commission received by the TAB only equated to $2038, a rebate of $2500 @ 5% would result in a locked in $462 loss on the race. Now this poses more than one curly question. I and many, many others understood that there would be no race in the land where the TAB wouldn’t make a positive return on, based purely on investments into the pools alone. The TAB rake a percentage off each and every dollar, yet right here is an example of how based purely on investments alone, the TAB can in fact LOSE money on a race due to rebates.

I have no doubt rebates are probably tucked away in some other ‘expenditure’ account to be covered from, but from where many of us are standing, Mr Big punting into such pools on such a scale cannot be doing anything other than two VERY important things:

a) Pissing punters off with wayward and unreasonable dividends based on where other horses place as opposed to amounts invested in the pool

b) The TAB – the main source of funding through the RDA to all three race codes can lose on a race based purely on the investments into it (so not referring to other costs like wages of staff, and all other associated costs – these must come from somewhere and is covered by accumulated commissions from betting pools).

Maybe these are the concessions made to someone whom turns over so much money elsewhere that to concede a couple of free hits isn’t such a bad thing. Secondly, if like last night he fills up a pool to the equivalent of 6 races hold, and the fave get rolled then its fair game, punters cheer whom cop the massive overs and the TAB get to tear a 14.25% chunk out of the 50k, only paying back say 7% some coming out 7.25% in front.

The overall problem is that it does not do the integrity of the pool any good at all and simply reinforces why punters – and especially newer more tech savvy punters – like the attraction of fixed odds. Totalisator betting is old school and a very outdated model to be operating in this world of competition and technology.

While the TAB does fund a large slice of the racing pie, there is also the cold, hard reality that a 14-16% slice off the top even before dividends are determined is quite simply uncompetitive and will slowly but surely lose out to other mediums in future. You cannot force people to fight against a large house take. As more and more people are born into a world where having a bet on the races ISN’T the norm like generations before, the new punters will look at offerings like the TAB and simply turn their noses up at it.

Also the turnover argument. We all know that turnover stimulates turnover. But if the argument say for joint pools or one national pool is based on giving people more substance to bet into (therefore not smashing your own dividend) then how on earth do you explain that argument in the light of rebates and so forth that can dramatically alter a final payout?

This wrong un has far more spin on it than even Warney could ever muster!

May 20, 2011

http://vertigal.wordpress.com

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One thought on “The Great Rebate

    danny said:
    June 14, 2013 at 11:21 am

    great article

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