“You have virtually the same odds of winning the lottery whether you buy a ticket or not.”
Kind of depressing huh?
The whole business of probability and advanced mathematics was always beyond me. At a time when I should have been taking ‘A’ level maths, I was acquiring the skill of getting pissy sawdust out of kennel corners with shovel and broom.
But for those interested in the mathematical laws of diminishing returns as they apply to the lottery, check this out.
For most of us, or me anyway, mathematics starts out logically and develops into something a bit fuzzy. Or as I might have put it:
“The point of diminishing returns can be realised, by use of the second derivative in the above production function. Which can be simplified to: Q= f(L,K). This signifies that output (Q) is dependent on a function of all variable (L) and fixed (K) inputs in the production process.”
As I am sure you will agree.
One more example of quirky maths. A few days ago I was sent a Tiktok video of a talk by Rory Sutherland. He demonstrates a car speedometer with the inner continuous band that nobody ever looks at, the paceometer.
He explains that the difference in traveling at 20mph or 30mph over a 10 mile distance is 10 minutes. But the difference in travel time between travelling at 70mph and 120mph over the same distance is just four minutes.
We’ve all experienced something similar on a long journey where you bomb along pushing your luck on speed limits and 90 minutes later you are just four minutes ahead of schedule.
Hopefully lessons to be taken on board by the kennel staff driving thousands of open race miles this year.
(Yes – I am specifically referring to you John ‘Warp Factor Four’ Mullins)
But you don’t have to be a mathematical genius to see the massive potential following the announcement that GRI have given permission to run a 12.5% win and place tote deduction at the Irish Derby quarter finals, semi finals and final meeting.
This is a huge and complex subject that I will try to summarise in two statements.
- Betting, not welfare, should now be the single most important focus of the racing authorities in Britain and Ireland. Unless betting recovers, neither country will be able to afford its welfare bill.
- The current model for betting on greyhound racing is broken beyond repair.
To explain what has gone wrong with greyhound betting, I feel I will need to briefly run through a few basics. So apologies to the real punters for this Ladybird Guide to Dog Betting.
There are primarily two types of betting on greyhound racing, or at least there were. Betting with bookmakers (on-course or off-course) and betting with the tote.
Since the early days, the two have run side by side and in a vibrant sport, they were reasonably closely mirrored.
The betting market was estimated, normally by the leading track bookmaker, with a ‘tissue’ which was a rough guide to the opening prices.
These tended to be quite conservative until the bookies had ‘money in the satchel’ and they could then increase the prices of those runners that hadn’t been backed.
The aim was to work to an ‘over-round’ percentage.
This was achieved by calculating all prices, including the stake to 100%. So, an even money chance would be 50 percentage points. A 1/3fav would be 75%, a 4/1 chance would be 20% and so on.
The aim, in a good strong market was to be looking for around 112-114%. In other words, if he could lay all six runners to the optimum amount the bookie would retain £12-£14 for every £100 that he laid and paid out.
The tote pool is, as implied, a pool of money which was shared out equally, after a small deduction, between the holders of the winning tickets.
The pool punters tended to be smaller players since significant bets might adversely reduce the odds. Nevertheless in the sports boom days, even the big punters might keep an eye open on the tote betting to see if they could get better value ‘on the nanny’ than betting with the layers.
Things started to go wrong as track attendances began to fall away.
Fewer punters, particularly fewer mug punters, made it harder for bookmakers to produce a profitable market.
Prices were shortened to increase percentages and the betting industry took less and less notice of ‘the ring’ and manipulated the prices “to be more reflective” of the market.
They currently ‘reflect them’ to around 128% for you average betting shop race.
At least that is what the SPs tell us. In reality, there is always a last moment adjustment in odds, usually as the dogs are entering the traps, that are impossible for punters to benefit from.
Meanwhile, tote betting has got even sillier.
As tracks lost more and more racegoers, they upped and upped the deductions.
Since it has been many years since I was mug enough to have a bet on a track tote, I had to do some research.
The current deductions are around 34%.
You may want a double take on that!
In fact, with ‘round downs’ whereby the winnings after the decimal point are rounded down, rather than up, the actual deduction is closer to 36%.
There is, however, one additional form of betting that is relevant to the story.
Some 23 years ago, Chancellor Gordon Brown scrapped the 9% betting tax and replaced it with a 15% Gross Profit Tax.
At the time, as I recall, the bookies were jubilant.
But be careful what you wish for because the scrapping of betting tax saw the creation in the same year of Matchbook, Flutter and Betfair, with the latter pair then joining forces.
The Government still got their rake off – remember, the 15% tax was on profit, not turnover –and punters benefitted with deductions of as little as 2%.
But it was a disaster.
Although the introduction of betting changes decimated the turnover of traditional bookmakers (no I don’t hear the sound of violins either!), there were other serious repercussions.
While the track layers and traditional off-course bookies were helping to finance the industry, their margins were cut to ribbons.
How do even the best chalk monkeys work to 110-114% – as Walthamstow bookies often did – when the punter sitting in the restaurant is ‘exchanging’ to 104% on his mobile?
Yes – that is a gross simplification and doesn’t consider things like liquidity in the market and the buzz of betting in the ring, but mi££ions left the industry to be shared by punters and Betfair shareholders.
The issue was never better emphasised than by the two sets of odds facing punters watching a race on the dearly departed RPGTV.
Blushes were barely spared by the exchanges betting in decimals while ‘the firms’ were still displaying fractions. The disparity in value was shocking.
The exchanges have had a parasitic effect on betting and greyhound racing. To compound the issue, for many years, Betfair even refused to pay into the BGRF, thus entirely avoiding any direct responsibility for welfare.
So what is so special about the Shelbourne 12.5% deduction experiment, half of the current 25%?
Well, if we look traditionally, 12% seems to be just about ‘the sweet spot’. While punters would like 0%, that doesn’t pay for the product.
The Australian greyhound tote is 14.2% and it is the powerhouse that has made Australian greyhound racing the world leader.
So, just of out of interest, let’s have a look at the bookies’ SPs from Shelbourne last Saturday as an example: 145%, 143%, 151%, 152%, 135%, 146%, 133%, 141%, 149%, 144%.
This is Ireland’s biggest meeting of the week but . . . really?
The man behind GRI’s tote experiment is Tim Lucey who only took over the CEO role in July. His decision might have been bold, but it wasn’t uninformed.
I assume that the Board examined the 10% tote returns from Lifford for the first three months of the year which averaged €35K per night on winter crowds of less than 200 customers.
Now while that figure may sound inflated, we should never lose track of ‘churn’. That is the process whereby bigger winnings result in more money being recycled, with additional deductions, throughout the meeting. All that liquidity is fuelled by seeding of between €225-€230 per race
No other track in Britain or Ireland would even come close to those figures on a ‘per customer’ basis.
So is a ‘low tote’ the future for Irish racing?
I sincerely think it could be – for a number of reasons. There are so many things that just fit.
Shelbourne Park during the Derby is a brave move, but a brilliant one. An innovation like this couldn’t happen on a cold Friday night at Kilkenny in December.
You need volume of customers and top class racing and while it may take some while for traditional punters to adjust, the rewards will soon be obvious.
I have long argued that greyhound racing in Britain has been obscenely slow to embrace digital betting. You don’t need to be at Shelbourne to have a bet on the Irish Derby, you can be anywhere via the Barking Buzz website and Apps.
Us non-mathematicians would also do well to remember that low deduction betting pools will start to be of interest to the big on-line gamblers, particularly in the Asian market.
I have no doubt that, like Lifford, the pools will be ‘seeded’ to provide initial equity with algorithms applied to reflect true market value. Another thought, doesn’t this form of betting just lend itself to AI?
Let’s also remember that Rásaíocht Con Éireann (GRI’s official title) is a semi state body and is therefore much closer to the Australian model than it is to the British.
The Irish Government ultimately control the product from start to finish and would be the ultimate beneficiaries of any financial success. Just as happens with the Australian state racing commissions.
As for the rest of Britain, they will no doubt be viewing the Irish experiment with interest.
What would it mean for the UK tracks if low deduction tote betting on Irish racing takes off?
Personally, I have long held the view that ARC didn’t get involved in greyhound racing without a long term plan.
I have never thought that ‘simply owning horse and dog tracks’ was their long term objective. Nor was it simply as a media provider.
Sure they can do both, but what about having their own global totalisator outlet too? Or maybe it is already in hand?
“Editors Chair is an opinion article written by Floyd Amphlett who has been with the Greyhound Star since 1987. Floyd has experienced all of the major developments in greyhound racing for the past 40 years and maintains an enthusiastic interest in the progress and future development of the industry.”
