TAB has a lot riding on the recently merged One Pool.
After years of tote decline, the hope is that combining the state-based pools into one will spark a resurgence.
This weekend TAB launched One Pool Xtra, removing its take-out on Group 1 exactas, a clear signal it wants punters to come back to pari-mutuel betting.
Parimutuel betting is a system where all bets are pooled together, the operator takes a commission, and the remaining money is distributed among winning punters.
But Cox Plate Day also gave us a good look at two separate issues facing the tote.
One is World Pool, which on Saturday saw the tote consistently pay less than fixed odds.
The other is the exacta promotion, which offered a rare test of whether punters respond when the take-out comes down.
Part one: the World Pool problem
Flemington’s Cox Plate meeting was a World Pool day. This means the win, place, quinella and trifecta pools were merged with Hong Kong Jockey Club betting. Randwick and Eagle Farm, racing at the same time, were not.
Comparing tote dividends with fixed odds on each winner shows a clear difference.
At Flemington, the tote paid less than fixed odds on all nine winners. On a typical winner the tote was about 10 per cent under. Juja Kibo paid $8 fixed but $6.35 on the tote, and Surfin’ Bird $2.80 against $2.35. Even Cosmic Crusader’s Cox Plate win paid $9.50 fixed but only $8.20 on the tote.
At Randwick and Eagle Farm, the picture flipped. The tote beat fixed odds on 13 of 20 winners, and a typical winner paid about 3 per cent more than fixed. Place betting followed the same pattern: about 5 per cent under fixed on a typical runner at Flemington, against about 3 per cent over at the non-World Pool meetings.
Why the gap?
Part of it is simply price. The World Pool take-out on win and place bets is 17.5 per cent, compared with 14.5 per cent on TAB’s domestic pools. That alone shaves about 3.5 per cent off every win and place dividend before a single bet is placed.
But that’s only around a quarter of the gap.
The rest likely comes from the type of money coming from Hong Kong, where big punters receive rebates on their turnover. That means they can bet into the pool at prices local punters can’t afford to take, pushing dividends down for everyone else.
Everest Day a week earlier showed both sides of the coin. World Pool ran on the last five races at Randwick, and the median winner again paid about 10 per cent less than fixed odds.
The Everest itself was the starkest example. Hong Kong money poured onto its champion Ka Ying Rising, who started $1.05 on the tote, against a fixed SP of $1.35 (after $1.40 or better was available for much of the betting). His place dividend of $1.01 against $1.06 fixed meant a punter’s profit was cut to a sixth.
But the flip side was striking. Every other runner in the race paid more on World Pool than fixed odds, most by two or three times. Tempted won at $8.80 on the tote against $7 fixed. It’s a reminder that World Pool isn’t all one-way traffic: if you like a runner at a price, you can often be better off on the tote.
TAB is well aware of the problem. Tabcorp chief executive Gillon McLachlan has spoken frankly about it, it’s understood to be a priority for him, and discussions with the Hong Kong Jockey Club about improving the product are ongoing.
There is also concern at PRA level.
It’s worth stressing this is largely a win and place issue. World Pool’s exotics still hold real appeal. Much bigger quinella, trifecta and first four pools mean punters can bet larger amounts without crushing their own dividend, and the scale of the pool can deliver payouts a domestic pool couldn’t match.
In Victoria, the decision on whether World Pool runs sits with the race club hosting the meeting, and the club is also the big beneficiary of the fees it generates. It’s easy to see why clubs are keen to run it.
But is it for the greater good of the industry? I think the industry needs to think long and hard about that question.
TAB is working to bring punters back to the tote. They’re heavily invest in One Pool. Yet on the biggest days of the carnival, the pools merged with Hong Kong are making the tote look worse value than the fixed odds beside it.
If punters learn that lesson on the days they’re most engaged, it’s a hard one to undo.
Part two: the exacta experiment
The exacta promotion is a separate initiative, and it applied at both Flemington and Randwick. It was designed with short-priced favourites in mind, the kind of race where exacta dividends can otherwise be thin.
What is an Exacta? Read Tote Betting Explained
With no take-out, about 20 per cent more of the pool went to winning punters, lifting dividends by 25 per cent. The Cox Plate exacta paid $105.20, against about $84 at normal take-out. At Randwick, the Spring Champion Stakes exacta paid $9.50, against about $7.60.
Punters responded. Across the rest of the Flemington card, the exacta was consistently around 2.4 per cent of the win and place pools combined. In the Cox Plate it reached 5.7 per cent, about 2.4 times its normal share. At Randwick, the Spring Champion Stakes exacta was 2.3 times its normal share and the highest of any race on the day.
At their usual share, the two exactas would have taken about $140,000. They actually took about $335,000.
“We’ve been working hard to create more value for punters who bet on the Tote,” said Tabcorp’s general manager of trading, David Beirne, in last week’s announcement of One Pool Xtra.
Obviously, TAB can’t run every pool at zero take-out on an ongoing basis. The take-out pays for the business and funds the industry. In these two races, the extra turnover didn’t cover the roughly $67,000 TAB gave up.
But it’s a small demonstration of something punters have long argued: value drives turnover. Lower the price and demand goes up. It’s basic supply and demand, and Saturday showed it working on the tote.
These are two separate stories, but they share one lesson: value matters
The exacta experiment is the encouraging one. When TAB removed its take-out, punters got better value and turned up in numbers. Two races is a small sample, and it’s only a small step on what will be a long road to revitalising the tote.
But punters appear to have voted with their feet. We can call for better value and lower take-outs all we like, but when an opportunity like this comes along, we also have to put our hands in our pockets and show what it can do.
World Pool is the warning. On the carnival’s biggest days, tote win and place dividends are consistently coming up short of fixed odds. That’s exactly when the most punters are watching. If One Pool is to have its best chance to thrive, TAB needs to keep pushing the Hong Kong Jockey Club for a better product, starting with a lower take-out.
In the meantime, the industry bodies that choose to run World Pool (in Victoria, the race clubs) need to ask whether the sugar hit of its turnover and fees is worth the damage it risks to the tote’s reputation.
