Monday 09 June 2014
The TAB minimum commission
Many Australian punters bet with the
three Totaliser's based in QLD, NSW and VIC. These Totalisers (or TABs) have vast
amount of outlets, phone operators and internet services. These services make TAB's a
convenient operation to use. However, for this convenience, there are large
overheads - high shop leases, technology and infrastructure, air
conditioning, staff and wads of paper! Lets not forget corporate management
salaries and shareholders! High costs and overheads require higher margins to
operate, these higher margins reflect in the higher take on each race (e.g. poor odds).
So how much take is there? UNiTAB for example, can retain a commission up to 16%, that's by legislation (excluding exotic betting).
But it doesn't stop there. Rounding down fractions are allowed.
'Rounding down' provides TABs with a significantly higher advantage than one might
initially think (maybe even the legislation!).
On checking the UNiTAB odds over many years, the commission, on
average, is well above
18%, rounding therefore contributes more than 2% more than what legislation allows in general. This equates to 12.5% more in profits to the TAB - a pretty
sneaky way to increase revenue.
We are not suggesting TABs as profiteers, they are just covering their costs for the
"convenience" - so now you know at what cost to you.
On a race by race basis, the commissions are even higher when
the favourites are short priced. Lets look at one such race - IPSWICH Race 02, 20 August 2009.
UNiTAB odds at the jump were:-
||HOT SHOT HENRY
||OUR GREATMATE KATE
|TAB Framed Market:-
The effect of 'rounding down'
In this example, the Framed Market for
UNiTAB was 122.6%, or their commission was 22.6% (for STAB it was 19.6% and NSW TAB 20.9%). If the Favourite alone was
'rounded up' to $1.30 instead of 'rounded down' to $1.20, the Framed Market
would have been 116.2% or a commission of 16.2%. This
example illustrates the additional gains 'rounding down' gives a TAB.
Believe it or not, these extreme commissions are even worse than poker machines.
The "worst of the worst" poker machines only take 17.7%
commission (or a Framed Market of 117.7%, normally quoted as 85% return). Good
venues only take 5-10% or a Framed Market of 105 - 110%. Yes, venues have a choice on how much they pay back! The message here is not to
change your punting habits to pokies ;-) but to show how having the convenience of a TAB really chews up your prifits.
Betting Exchange Odds
Lets consider a popular betting exchange
and the final back and lay odds for the same
race above. It's important to note that these odds
are unmatched, that means, 'unwanted' odds for the back and lay. The true matched odds
are unascertainable as these are never displayed, however, they exist somewhere
between the the back and lay odds. For calculation sake, we will use the average
between them and the Framed Market of 101.8%.
||HOT SHOT HENRY
||OUR GREATMATE KATE
|B/E Framed Market:-
Your Target Market
In our opinion, you should not take the
offered back price but target your market near 100%. Seldom
does a match fail at 100%, 30 seconds before jump time. Part of our service is
to show you the 100% price, please check your 'User Settings' and select 'Calculated
100% betting mark for win odds'. This is the sort of odds that will be
displayed to a 100% market:
UPDATE: Consider "SP" odds on the betting exchange, these odds are set to a 100% market when the race jumps, No effort is required on your part to get the 100% market - however it is more difficult to dutch bet these odds, but you can nominate a match price if that helps.
||HOT SHOT HENRY
||OUR GREATMATE KATE
|Your Framed Market:-
The betting exchange does not allow
fractions for odds over $10, for example, odds between $30 - $50 need to be in
increments of 2. This makes it difficult to get the market framed at exactly
100%. In the example above, this restriction means the market can only be
framed at 100.3% - close enough.
Betting Exchange commission
The highest commission a punter will pay on a betting exchange
is around 4.9% commission, it could be as low as 2% (depending on turnover).
UPDATE: It can be as high as 6.5% on some Australian races, they races should be avoided.
This is considerably less
than the TAB's, because the overheads are so much less. Adding to this
advantage, the betting exchange works commission
on profits per race, not return per horse. This is an important
factor. For example, using the race above, with a Betting Exchange, if the favourite had won, for
the return would have been $136 or a profit of $36, less 4.9% commission or
about $34.25. The TAB however only returned $120.00 or a profit of $20.
Another important factor is the "profits only per race". This means
that you only pay commissions on the NET profit. This is a huge advantage if you
punt more than one horse per race. If you had placed $100 each on the first two listed
horses and assume
the favourite had won, the TAB would have paid their actual tote price of $120 -
you are down $80 from your outlay of 2x$100. However, with the betting exchange, since you made a
loss in the race, there is NO COMMISSION paid. $136 less your loss of 2x$100
means you are only down $64.
This might not sound much of an advantage, but I'm sure you would prefer to have
an extra $16 in your wallet after the race.
As the example above shows, a $100 bet on
the top two
horses result in a loss, even though one wins. However, If you had Dutch bet these horses, then you
could still have shown a profit. At the end of the day, we want profits,
not less losses! A simple calculation is to divide a fixed return amount by
the odds. Lets assume the target is $100 per horse per race for the day. On the
Favourite at $1.36 you would place a bet of $73.53 and on the second horse
$16.67. This makes a total bet of $90.20. Regardless which one wins, the return
will be $100 for your total bet of $90.20 or a small profit of $9.80 (less commission on the
$9.80). As mentioned above, flat betting would have resulted in either two ways, a win of $36 or a loss of $64 - which approach is better? ..... Lowering your risk/exposure is usually considered a better position.
The point is, a
profit may be possible if the bets are proportioned correctly. There are three Dutch betting calculations that
can be used. Go to your 'User Settings' and turn on 'Dutch Betting' to check it
Ok, so you are now betting with a betting exchange, working your market at 100% and dutch betting - well done! However,
even with the smallest commission charges, dutch betting in a 100% market will
eventually lose you money because of the commission loss. If you can determine a selection process that only
slightly improves your winning chances in a 100% market, you
are set to profit over time. With large bets, even the smallest profit
percentages will provide you with a sizeable return over time. With large bets,
your betting exchange commission also drops to a lower level (from 4.9% to
The better the selection process,
the higher the profits. Your next move should be to determine a selection
process that improves your position. You've come to the right place - our website should be able to help here! Review our information per race and see how you can increase your strike rate. Make sure you keep a log of your selections each day with the average Betting Exchange odds and once you find a return of around 110%, you are set.
How much should my Profit on Turnover be?
Good question, I see many selection processes offering a turnover profit of 20% or more, even insanely 100%+ in some cases! Apart from the fact that these turnovers are not substanable, you don't need to focus on such high levels to profit. Lets assume you have kept your log book running and have found your MAXIMUM runs of outs is 20 races in a row (this should be determined over 1000's of races). Therefore it makes sence your Bank should be 20 times your intended bet size (or 50 times if you use the Bank suggestion below). You have worked out your selection process provides a 10% profit on turnover. Calculate it this way, if you flat bet say $10 per race, you need a bank of $200. So your investment is $200 - that's what you stand to lose. If you bet $10 per race on say 300 races per week and 52 weeks per year, your turnover is in excess of $150,000. A 10% profit on turnover would be $15,000. So for a $200 investment, you're making $15,000 or 7,500% return. That's why a small profit on turnover can still be very attractive. Of course commissions need to be taken out etc, but that can't be determined as it is based on profit, not return and wins not losses.
Working out the 100% (or better) market
prices for multiple selections and then calculating the Dutch Betting per horse
all within a split second before jump time, then placing these bets can be a
daunting task for mere mortal humans! We use our own BOT to do this and it works in conjunction
with our website and information. If you have a proven selection process that
works with our information, we would consider customising a BOT for
you. Please contact us for further information. Otherwise, there are many BOTS
available on the internet, just Google 'betting bots'.
Always ensure your Bank is large enough to
cover your anticipated worst number of losses in a row. Even favourite punters have
seen race meetings when favourites have missed the line all day. Normally a
figure of 2% of your bank is an acceptable target. If you bet on several horses
per race, your strike rate will be much higher, so a slightly higher target
could be acceptable.
Betting Exchanges offer better odds over the
TAB's. Don't take the back odds offered, try to frame your market to at least
100%. Betting on more than one horse for the win increases your strike rate and
you should consider Dutch Betting to proportion your risk. Decide on a selection process that
shows some potential and automate your betting strategy through a betting bot.
Always be prepared with a sizeable bank to cover a reasonable run of outs. This way, over time, the odds
should be in your favour to profit. If you are betting at the TAB, understand
you are paying for this enjoyment and keep your bets to a minimum! Best of punting!