How painful are bookmaker deductions?

Back a winner and your ticket gets clipped because some other horse played up behind the gates.

Bookmaker deductions are a mathematical reality, of course… those who backed the scratched horse need to be refunded, and that money needs to come out of the market. So it works both ways – you get your money back if your runner is scratched.

##### Bookmaker deductions – what are the rates?

Back in the days of thriving betting rings, there was no debate over the amount to be deducted. The stewards would announce the scratching and the deduction to be applied by all bookies.

For whatever reason, this simple system was never carried over to off-course betting. It’s up to corporate bookies to decide how much the deduction is. And it varies by bookie.

They all publish their rates in their betting rules, so it’s not a mystery to anybody. We thought we’d compare those deduction rates at some of the major Australian bookmakers: Bet365, Sportsbet, TopSport, TAB and Ladbrokes.

Deduction schedules are lengthy, spelling out the rate to be applied at virtually every possible price point. If you’re keen to see the lot, check out the full table here. Otherwise, here’s a summary showing how many cents in the dollar each bookie deducts at different price points:

 Price of scratched horse Bet365 Ladbrokes Sportsbet TopSport TAB \$1.01 72 74 76 75 80 \$1.05 72 74 73 75 80 \$1.10 72 74 72 75 80 \$1.20 72 72 69 73 78 \$1.30 67 66 65 66 72 \$1.40 62 61 60 62 67 \$1.50 58 56 55 58 62 \$1.80 46 46 45 46 52 \$2.00 42 41 40 42 47 \$3.00 27 26 26 28 31 \$5.00 15 13 15 14 19 \$12.00 5 5 5 5 8 \$13.00 – 4 4 5 7 \$21.00 – 2 2 2 4 \$26.00 – – 2 2 3 \$31.00 – – – – 3 \$41.00 – – – – 2 \$51.00 – – – – 2 \$61.00 – – – – –

There are some decent differences across the board. We can make a few observations:

• TAB deductions are the highest across all prices – at every point they deduct the most from a winning ticket
• At the lower end of the market (when a short-priced horse is scratched), Sportsbet is often deducting less than others. As the price of the scratched horse increases however, Sportsbet more or less falls into line with the other bookies other than TAB
• Bet365’s deductions cut out the earliest, with no deductions for any scratched horse priced above \$12. Others cut out at \$21 or \$26, while the TAB is still deducting at \$51!

Here are a couple of charts that might make it a little easier to consume the numbers. It’s the same chart, we’ve just split into two (\$2.50 and under, and \$2.60 and over) to make them easier to read.

##### How do bookmaker deductions work?

When a horse is scratched from a race, bookies refund the money that’s been staked on it.

Depending on how short in the market the scratched horse is, it can have a major impact on the shape of the market. To re-shape the market without the scratched horse and pay out the refunds on it, bookies deduct an amount from the payout of each winning ticket.

The shorter the horse is in the market, the more market percentage it accounts for, and thus the more is deducted from winning bets.

The deduction rate (such as those above) is the cents in the dollar that is deducted from a winning ticket.

For example:

• You have a \$100 bet on a horse at \$3 with Ladbrokes
• A \$5 chance is scratched
• Your horse goes on to win

The pre-scratching value of your winning bet is \$300 (\$100 stake x \$3 dividend).

As per the above table, Ladbrokes’ deduction for the \$5 scratched horse is 13 cents in the dollar.

Rather than receiving \$300, you receive the net amount of \$271.

For a comparison, TAB deduct 19 cents for a \$5 scratching. So if you’d bet with TAB, your deduction is \$57, and you receive a payout of \$243.

As you can see, it can make a significant difference to your collect, depending on the price point we’re talking about. Of course, there’s no way of predicting when a scratching will take place – especially a late scratching – so it’s very hard to know whether to take it into account.

If you’re using a number of different bookmaker accounts, obviously you’ll still choose the best price available. Within that though, when multiple bookies have the same price (as is often the case these days), the deduction schedule could well be a factor in deciding where to bet when all else is equal.

In this episode of The Other Side podcast, Tristan from TopSport digs into deductions from the bookie’s point of view… it’s worth a listen!

He's one of Australia's most experienced form analysts, and Gareth Phillips has made a super-profitable start to 2021. Just click here to get involved with one of the best..

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