Odds and Commission

Version 1.1

The TAB minimum commission

Many punters around Australia bet with the three Totaliser's based in QLD, NSW and VIC. These TABs, with their vast availability of outlets, phone operators and internet services, make them a very convenient operator to use. However, these services have large overheads. A TAB outlet typically has a dedicated room or shop (with high rents), 10 or more screens (usually LCD), air conditioning, several staff and wads and wads of paper betting slips. Lets not forget their management salaries, the TAB's CEO and their shareholder returns. High costs and overheads require high margins. These margins are reflected in their high commissions or take. 

UNiTAB for example by law, can not retain a commission more than 16%, but fractions arising from rounding down are allowed. 'Rounding down' provides TABs with a significantly higher advantage than one might initially think, maybe even what legislation might have overlooked. 

On checking the UNiTAB odds over many years, the commissions calculate, on average, well above 18%, rounding therefore contributes more than 2 points more than what they claim (or 12.5% more in profits) - a pretty subtle way to increase margins. 

Don't get us wrong, we are not picking on TABs, they provide the atmosphere and convenience for most of us, but we must understand at what cost. Putting it frankly, long term punters are unlikely to profit with the TAB, they will lose and this loss is considered the cost for this enjoyment. 

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, 20th August 2009. UNiTAB odds at the jump were:-

 

 

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 bee 116.2% or a commission of 16.2%. This example illustrates the additional gains 'rounding down' gives to the TAB. 

These extreme commissions are worse that poker machines. Even the worst venues can not take more than 17.7% commission, as a Framed Market this would be 117.7% (normally quoted as 85% return) and good clubs only charge 5-10% commission or as a Framed Market 105 - 110%. The message is not to change to the pokies, but how convenience and the enjoyment are costing you profits!

 

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 matched odds are unascertainable as these are not displayed, however, they exist somewhere between the two odds. For calculation sake, we will use the average of 101.8%, so the Framed Market was likely to have been 101.8% or a commission to the Layers of 1.8%. The advantage normally lies with the Layer with each race, but because odds shift or shorten with each horse every split second, it would be unlikely that someone could take advantage of this small gain of 1.8%.

 

 

Your Target Market

In our opinion, you should not take the offered back price but target your market somewhere between 100% - 97%. Seldom does a match fail at 100%, 30 seconds before jump time. Lets assume you want to target your market at 100%, these odds would be as follows:-

 

 

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, the increments mean we can only frame the market at 100.3%. 

 

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%. Adding further to this advantage, the commission is also calculated differently to the way the TAB calculates it. The betting exchange works out the commission on the profits only per race, not your return per horse. This is an important factor. For example, with a Betting Exchange, if the favourite had won for $1, the return would be $1.36 and the profit 36 cents. The betting exchange would calculate its commission on the 36 cents, the TAB would use the return of $1.36 rather than the profit for commission calculations. It doesn't take much thought to consider 2% of 36 cents profit is much less commission to pay than 18% of $1.36 return!

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 $1 bets on the first two listed horses above and we assume the favourite had won, the TAB would have paid their actual tote price of $1.20 (you are down 80 cents). However, with the betting exchange, since you made a loss in the race, there is NO COMMISSION paid (you are down 64 cents). This might not sound much of an advantage, but for $100 bets, you would have $16 more in your wallet. If you profit more and lose less, it must be a better deal - and it is. 

Dutch Betting

As the example above shows, a $1 bet on two horses result in a loss, however, If you had Dutch bet these horses, then you could still have shown a profit. At the end of the day, we want to show profits, not lower losses! A simple calculation is to divide a static target 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 $90.20 or a profit of $9.80 (less commission on the $9.80).  Therefore a profit rather than a loss as detailed in the first example. This may not seem to be a worthwhile exercise to bet $90.20 for a mere return of $9.80, but odds-on favourites do worsen the net return (but offer a higher strike rate). One could easily avoid races with odds-on horses for a much higher return or avoid favourites in their selections. The point is to show a profit can be made if bets are proportioned correctly, rather than demonstrate any selection process. There are two other Dutch betting calculations that we display in our free calculator on each race page, use whichever suits. 

The two other benefits that should be highlighted are: 1. betting exchanges allow for cent bets, so $73.53 does not need to be rounded. This means you can accurately calculate your return for many bets per race. Secondly, the odds are fixed, not like the TAB, so you can dutch bet on a betting exchange, you can't ( accurately) with the TAB.

 

Selection Process

If you are currently betting with the TAB, changing to a betting exchange and following the above betting ideas will certainly improve your position. However, even with the smallest of commissions being paid, betting in a 100% market will eventually lose you money. If you can determine a selection process that only slightly improves your winning chances in a 100%  market or lower, 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 providing you with even more profit (so consider your betting target as well!). The better the selection process, the higher the profits. Your next move should be to determine a selection process that improves your position. It does not mean you need to show a profit when comparing with TAB odds, even a long term average loss of 10% could provide profits with the above suggestions. 

If you are a punter (which we guess you are if you are reading this webpage), then you are likely to have several selection processes. This is a good start. Keep a log of these selections each day with the winning TAB odds. Along with these, record information from our racing pages for each of your selections. For example, it was a jockey rating of "1" with a value of 10 and a track rating of "3". Over time you will see conditions that suit your selections, you might find that the top jockeys return more profit on your selections, this would then become another factor in your selection process to improve your position. 

 

Betting BOTS

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 humans, by the third race the stress factor would outweigh the efforts! We use our own BOT to do this and it works in conjunction with our website and racing pages. If you have a proven selection process that works with our information, we would not see any issues customising a BOT for you. Please contact us for further information. Otherwise, there are many BOTS available on the internet, just Google 'betting bots'. 

The Bank

Always ensure your Bank is large enough to cover you for the 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.  

Conclusion

Betting Exchanges offer better odds than the TAB. 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 potential 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 with losses, so bet small to keep the cost down! Best of punting!