AS a reader pointed out the other day, the betting world can be a wonderful and varied beast. He quoted a report from Bobby Chang, the wagering guru at the mighty Hong Kong Jockey Club on the need to treat each market segment differently – mugs gamblers are one thing, serious and professionals punters another.
A few years ago the HKJC became worried about the loss of business to illegal operators and so negotiated a new arrangement with the government (which closely regulates activities). They introduced a 10% discount/rebate for punters betting over $1,300 at a time and immediately gained bigger growth.
Standard takeouts in Hong Kong vary from 17.5% to 25%, somewhat higher than in Australia, so they had room to be more flexible so long as they paid government an agreed annual amount in taxes.
While you will not find the policy written down anywhere, Australian TABs do much the same thing for big customers. Articles on Hobart mathematician and big punter David Walsh and his so-called Punters Club revealed his negotiations with various states around the world were all based on huge rebates. He made profits and they built turnover. He did well enough to build the (loss-making) Museum of Old and Modern Art, now Tasmania’s biggest single tourist attraction. (A little over-rated in my view – the attraction is more the concept than the content).
At the same time the local TAB, then owned by the government and tied to Supertab in Melbourne, did a roaring business but made almost no profits. Then, shortly after its sale to Tatts, the rebates were swiftly cancelled and Tasmanian business pooled with its other three state TABs.
Historically, there are some similarities between Hong Kong and Australia, although in different eras. The offcourse TABs arrived in Australia in the 1960s as government’s plan to halt the illegal SP bookie trade and so gain more tax revenue. The success of that venture, and its ever increasing service quality, meant that business boomed, even allowing for some weakening of the oncourse trade. The introduction of SKY pictures amplified that trend.
Yet high TAB takeouts, primarily needed to cover the expense of suburban shopfronts and influenced by the TABs’ monopoly status, had always left the door ajar. So, from the turn of the century, legal but strange operators based in the Northern Territory bashed the door down and moved in to take over a quarter of all wagering. The racing establishment, geared to lucrative shares of TAB takeouts, hated them but customers loved them. It was all made possible by advances in communication and the availability of the internet. Racing might have fast horses and dogs but is burdened with slow thinkers.
Of course, in practice the TABs’ long established dominance allowed them to continue with their high prices (ie bigger takeouts than in competing gambling fields) and even to raise them further as Fixed Odds products emerged to compete with both oncourse and online bookies. They and the TABs Mystery bets, offering boxed Trifectas etc, are much more expensive that the traditional tote products.
Meantime, the TABs knew they could not get away with overcharging big customers, hence the emergence of rebates (and rebate competition between TABs) so they could maintain their turnover volume. Which is where Walsh & co came in.
The consequence of all this, whether intended or unintended, is that the everyday gambler is paying through the nose in order to satisfy the needs of big punters, the demands of TAB shareholders and the salaries paid to TAB bosses. That would not necessarily be a bad thing were it not that the wagering market is an artificial one, largely created by state governments. They have issued licenses to print money without sufficient controls over how it is done. Moreover, competition is limited to how well you answer the phone and not much else.
Underlying the whole process are two factors; the cultural urge of Australian or Chinese people to have a bet and the relative ignorance of the everyday gambler, who would not have much idea of which takeout figure applies to what bet type. Both elements remove from the equation the use of skill to select a winner even though that is the very thing that separates punting from virtually all other forms of gambling. A risky strategy!
The tragedy of all this is that it is easily repairable, needing only the will of state governments. Sadly, that will seems to be influenced by state Treasurers who prefer a bird in the hand to two in the bush. Which is even more proof that governments are not very good at running businesses.
The ordinary bloke will have no trouble getting a discount on his refrigerator or TV but not on his weekend bet. In fact, the reverse happens – he is paying a premium price.
Ups and downs
A few readers might be disappointed if I did not record the latest outing by their “champion” stayer Sweet It Is.
On Saturday night at The Meadows she took care of a small bunch of honest plodders in a handicap event. After correcting for handicaps and track differences, she ran the equivalent of 15 lengths slower than her win in the Nationals at Wentworth Park a week earlier. The track was on the slow side but not by that sort of margin.
That tells you more about the ranks of Australian stayers than anything else.
Beautiful but broke
A departmental discussion paper has revealed a worrying history of finances for Queensland racing. Racing Queensland profits and losses are …