Talk of a national tote in Australia has returned, with Chris Roots reporting in the Sydney Morning Herald that “racing authorities are looking to address the leakage of turnover from racing to sport and a more competitive tote product is seen as one of the answers to the problem”.
This would, of course, mean the merging of the three Australian totes (SuperTAB, NSWTAB and UTAB). Let’s take a look at the issues.
The key benefit usually cited for the implementation of a national tote is a reduction in volatility: the theory being that with more money in the pool, prices remain stable, giving punters a better idea of what they’ll be paid and thus making the tote more attractive.
That makes sense. The bigger the pool, the smaller the impact of any one wager.
It’s a bit of an interesting point, however. The introduction of a national tote is generally seen as a tool for stopping the leakage from tote betting to fixed odds.
But the major benefit for punters is supposedly stability?
If price stability and predictability is what punters are after, then the tote will never win the fight with fixed odds. You can’t get more predictable than fixed odds.
If the tote is to compete with fixed-odds betting, it must be by offering a superior price. And there’s only one way to do that.
If the totes – in their current form, or merged together – are going to be revived, then there is really only one silver bullet to make that happen: better dividends.
As stated, punters – especially a newer generation of punters raised on sports betting and fixed-odds – aren’t going to the tote for price stability. The only way it’ll appeal is through better dividends, which can only be brought about with reduced take-out rates.
For win and place betting, take-out rates are around 15 per cent across the three totes. It ramps up further for exotics. To offer better dividends to punters, this would have to be reduced.
This would be somewhat of a leap of faith by racing authorities. The approach on wagering to date has been to squeeze punters as much as possible, mainly through race fields fees. Recent trends suggest that approach has reached it’s limit and a different tack might be required to drive the next phase of growth: lower commissions and better value, leading to increased volumes. Lower tote take-outs would be a step in that direction and surely, if we are serious about reviving tote turnover, a most necessary step.
But even with reduced take-outs, a major factor in declining tote volumes would need to be addressed. The reality is that whatever the tote price, corporate bookmakers have long simply undercut it and offered a better price. They currently offer Best Tote/SP or Best of The Best to do this… simple products that ensure you’re always better off betting with them than your local tote.
The suggestion that a single national tote would end this is naive. Yes, the “Best Tote” product would cease – given there’d only be one tote – but the bookies can still offer the better of Tote and SP, or Tote and Top Fluc (currently Best of the Best).
Or, they’ll just offer something like Tote + 5%, which many already do on overseas racing. So anybody using the tote is immediately costing themselves 5%. It’s a compelling offer that punters respond to.
The only way racing authorities can really combat this is by effectively banning bookmakers from offering tote derivative products. Or charging them such exorbitant fees that it kills them anyway.
If they’re serious about reviving tote volumes, that’s probably another necessary step.
It’s fairly hard to say: it really depends what accompanies it.
If it’s coupled with a drop in take-out rates then it’ll be great for punters, offering them a lower-margin product.
If not, it’s hard to say what a single tote would really deliver to punters. The status quo – three different dividends, but with the best of them (plus SP or Top Fluc) widely available through bookmakers – may well be a superior situation for punters.
Another factor that’s worth mentioning is often forgotten in the tote debate…
What about the exchange?
Australian racing already has a single, national betting pool on Betfair.
Yes, an exchange isn’t a tote – they’re different models – but that doesn’t mean they shouldn’t be considered side-by-side.
Operators love the tote model because they get a guaranteed percentage of the pool in revenue.
That’s the same for the exchange.
And it’s a better offer for punters, who get the choice of a fixed price, or a floating starting price that’s similar to a tote dividend.
In many ways, the exchange is a superior model to the tote for all parties. What’s more, the prices are superior (though that is, of course, dependent on the commission rates. Simply jacking them up would remove a lot of the value of the exchange).
If a national betting pool is what’s desired, perhaps the tote isn’t the model that Tabcorp and racing bodies should be looking most closely at.